Good morning!
Active followthrough selling overnight... Corn, soybean and wheat futures sharply extended Wednesday’s losses overnight on news the Black Sea grain export deal was extended and pressure from outside markets. As of 6:30 a.m. CT, corn futures are trading mostly around 9 cents lower, soybeans are 12 to 13 cents lower, SRW wheat is 15 to 16 cents lower, HRW wheat is 6 to 7 cents lower and HRS wheat is 4 to 6 cents lower. Front-month crude oil futures are more than $1 lower and the U.S. dollar index is more than 500 points higher this morning.
Black Sea grain export deal extended... The deal allowing Ukrainian exports of grain from Black Sea ports was extended for 120 days from Nov. 18 without any changes. “I welcome the agreement by all parties to continue the Black Sea grain initiative to facilitate the safe navigation of export of grain, foodstuffs and fertilizers from Ukraine,” UN Secretary General Antonio Guterres said. He said the UN was also “fully committed to removing the remaining obstacles to exporting food and fertilizers from the Russian Federation” – a part of the deal Moscow sees as critical. The export of Russian ammonia via a pipeline to the Black Sea has not yet been agreed as part of the renewal, a source familiar with discussions told Reuters. The UN and Ukraine had sought a one-year extension of the deal.
Turkey again offers to process Russian wheat and export as flour... Turkish President Tayyip Erdogan said Russian grain exports could be processed into flour in Turkey and then shipped to Africa to help relieve food shortages there, reiterating a previous pledge. Erdogan said Russian grain was meant to be delivered to countries such as Mali, Djibouti, Sudan and Somalia free of charge. “We will also contribute to the free delivery of this (Russian grain)... We already have such an agreement. Hopefully, this wheat will come to us (Turkey) and be turned into flour in our country and sent (to Africa) in this form. It will offer a significant relief to them (countries in Africa),” Erdogan said.
Weekly Export Sales Report out this morning... For the week ended Nov. 10, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 700,000-1,400,000 | 265,335 |
Wheat | 250,000-500,000 | 322,501 |
Soybeans | 900,000-1,700,000 | 794,806 |
Soymeal | 90,000-300,000 | 170,161 |
Soyoil | 0-20,000 | 2,725 |
Strategie Grains modestly increases EU wheat, corn crop forecasts... Strategie Grains raised its 2022-23 EU wheat production forecast by 100,000 MT to 125.6 MMT, though that would still be down 4.2 MMT (3.2%) from last year. The EU corn crop estimate was raised 400,000 MT to 50.8 MMT, which would be down 19.4 MMT (27.6%) from last year. In its first forecasts for 2023-24, Strategie Grains forecasts the area sown with soft wheat in the EU at 21.67 million hectares, down from 21.78 million hectares in 2022-23 but slightly above the five-year average.
China again sells all wheat put up for auction... China sold all 39,843 MT of state-owned wheat reserves put up for auction. The average sales price was 2,965 yuan ($414.57) per metric ton, which was up from 2,865 yuan per metric ton the previous week.
Goldman boosts Fed rate call... Goldman Sachs Group added a quarter percentage point to its forecast for the peak in the Federal Reserve’s benchmark interest rate, due in part to the likelihood of inflation remaining “uncomfortably high” for some time. The bank’s economists said in a note to clients on Wednesday they now anticipate the Fed boosting the key rate to a range of 5% to 5.25%, up from the previous call of 4.75% to 5%. Others have forecast the same outlook.
Euro zone October inflation revised lower, still record-high... Eurostat reported consumer inflation in the 19 countries sharing the euro rose 1.5% month-on-month in October, for a 10.6% year-on-year increase, a revision from the 10.7% annual reading reported previously. Of the annual increase, 4.44 percentage points came from energy prices, which were 41.5% higher in October than a year earlier. Another 2.74 percentage points came from food, alcohol and tobacco. Excluding energy and unprocessed food prices, so-called core inflation rose 0.7% on a monthly basis and 6.4% annually.
IMF: Covid strategy key in sustaining economic recovery... Calibrating China’s zero-Covid policy to mitigate the country’s economic impact will be critical to sustain and balance a recovery, Gita Gopinath, the first deputy managing director of the International Monetary Fund (IMF), told the Caixin Summit on Thursday. “For China, inflation and weakening growth allow for greater support for vulnerable households, which together with strengthening social safety nets would promote consumption,” she said.
China asks banks to report on liquidity after sudden bond slump... Chinese regulators have asked commercial banks to report on their ability to meet short-term obligations. The request was prompted after a rapid selloff in bonds triggered investor withdrawals from fixed-income products, Bloomberg News reported, citing people familiar with the matter.
UK finance minister announces tax hikes and spending cuts... The United Kingdom government on Thursday unveiled a sweeping £55 billion ($66 billion) fiscal plan as it seeks to plug a gaping hole in the public finances and restore Britain’s economic credibility, even as the country teeters on recession. Finance Minister Jeremy Hunt, in his inaugural Autumn Statement, outlined around £30 billion in spending cuts and £25 billion in tax hikes.
Some complaints with USDA’s ERP Phase 2... Some farmers and others are already in talks with lawmakers and USDA officials regarding concerns with Phase 2 of USDA’s Emergency Relief Program (ERP). One of the complaints pertains to USDA relying on Schedule F for information, which one naysayer said “doesn’t tell the whole story.”
GOP captures control of the House... It’s finally official, Republicans garnered the 218 seats needed to control the House, ushering in an era of divided government and a check on the Biden administration agenda. Most look for Biden to increase his use of executive orders and regulations to fulfill some other goals. It was ironic that it took several GOP House races in liberal California to get the Republicans to 218 votes. More House races need to be called so the GOP majority number could rise by a few seats. “The era of one-party Democrat rule in Washington is over,” Rep. Kevin McCarthy, the House Republican leader from California, said this week on Capitol Hill, as his Republican colleagues nominated him to serve as House speaker. “Washington now has a check and balance.”
Farm Bureau: Thanksgiving dinner will cost 20% more this year... Farm Bureau’s 37th annual Thanksgiving dinner survey showed an overall 20% jump in prices from last year, with the biggest bump being stuffing mix, which is up 69% due to a flour shortage stemming from Russia’s invasion of Ukraine. The price of turkey is up 21%, according to the survey.
Steady starter trade for cash cattle... Some light cash cattle trade surfaced around $150 in the Southern Plains on Wednesday, about steady with initial trade in the state last week, though most feedlots held out for higher prices. Cash sources signaled packer interest was picking up, suggesting it’s just a matter of time before firmer prices surface. The northern market remained relatively quiet, though firmer prices are expected to develop there, as well.
Cash hog fundamentals continue to weaken seasonally... The CME lean hog index is down another 22 cents to $88.22 (as of Nov. 15), the lowest level since Feb. 9. The pork cutout value fell $2.07 to $93.63, the lowest price since Feb. 2. Seasonal pressure at this time of year is normal as supplies build seasonally. But we anticipate seasonal lows will be posted relatively soon as slaughter numbers and pork production are expected to peak earlier than normal.
Overnight demand news... Pakistan tendered to buy 500,000 MT of optional origin milling wheat.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- 7:30 a.m. Weekly Export Sales — FAS