Good morning!
Mild corrective buying overnight... Corn futures built on Thursday’s late corrective rebound during overnight trade, while soybean and wheat also firmed on short-covering. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents higher, soybeans are 8 to 9 cents higher, SRW wheat futures are around 7 cents higher, HRW wheat is 2 to 3 cents higher and HRS wheat is mostly 3 to 4 cents higher. Front-month crude oil futures are around 60 cents lower and the U.S. dollar index is around 250 points lower this morning.
UN official hopes for longer extension of grain deal next time, working on fertilizers... A senior United Nations official welcomed the 120-day extension of the deal allowing Ukrainian grain exports from Black Sea ports but hopes the next deal will extend beyond that timeframe. Rebeca Grynspan also said there was still work to be done, especially on fertilizers, as there is around 300,000 MT of fertilizers blocked at Russian ports. She said there aren’t problems with U.S. sanctions exemptions on Russian exports but the situation is more complex with the European Union.
Two big rail union votes coming this weekend... The two largest rail worker unions are expected to conclude voting this weekend on a deal brokered by the White House to stave off a strike. “It must be prevented,” Sen. Roger Wicker (R-Miss.), ranking member of the Senate Commerce, Science and Transportation Committee, said of a potential rail strike in an interview with Bloomberg. “When the moment arrives, and I hope it will not, Congress will step in and impose the Biden administration’s backstop plan.”
Argentine gov’t slashes wheat crop estimate... The Argentine government slashed its wheat crop estimate to 13.4 MMT from 22.1 MMT previous due to drought and freeze impacts. The government also raised its 2022-23 soybean planted area forecast by 200,000 hectares to 16.5 million hectares after recent rains and forecasts calling for more rainfall.
India’s wheat, rapeseed planted area pacing 15% ahead of year-ago... Indian farmers have so far planted wheat and rapeseed on nearly 15% more area than a year ago, the latest data from the ag ministry showed. Wheat was planted on 10.1 million hectares as of Nov. 18, up from last year’s 8.8 million hectares. The area planted to rapeseed stood at 6.3 million hectares, up from last year’s 5.5 million hectares.
Russia lowers wheat export tax... Russia’s wheat export tax for Nov. 23-23 will be 2,735.2 rubles ($45.31) per metric ton based on an indicative price of $312.50. That’s down from a rate of 2,922.1 rubles per metric ton the previous week.
Japan’s inflation hits 40-year high but BOJ seen standing pat on rates... Japan’s core inflation, which excludes fresh food, jumped 3.6% year-on-year in October, its highest level since 1982. That far exceeded the Bank of Japan’s (BOJ) target rate of 2% but has not altered expectations that it will not hike interest rates, resisting the hawkish winds that have swept round the rest of the world.
Lagarde warns monetary tightening may slow growth... The European Central Bank (ECB) may need to raise interest rates so much that it dampens economic growth as it fights runaway inflation, its chief Christine Lagarde said on Friday. She also noted any runoff in ECB’s bond holdings must be “measured and predictable.” Lagarde said, “We expect to raise rates further – and withdrawing accommodation may not be enough. Interest rates are, and will remain, the main tool for adjusting our policy stance. Acknowledging that interest rates remain the most effective tool for shaping our policy stance, it is appropriate that the balance sheet is normalized in a measured and predictable way.”
Adviser: China should set 2023 GDP target no lower than 5%... China should set its economic growth target no lower than 5% for 2023, Liu Shijin, a policy adviser to the People’s Bank of China, said on Friday. It is urgent for China’s economic growth to return to a reasonable range, Liu said at the Caixin Summit.
China issues rules to lure foreign investors into bond market... China’s central bank issued new rules on Friday to make the country’s bond market more attractive to foreign institutional investors, expanding currency hedging channels and making it easier for them to repatriate funds. China will unify its rules on cash accounts and cash payments for foreign investors and improve the way it manages foreign exchange sales and purchases for foreign investors, according to the rules published on the central bank’s website. China will encourage foreign institutional investors to use the yuan in cross-border settlements, and complete deals through China’s Cross-Border Interbank Payment System (CIPs), according to the rules that will take effect from Jan. 1, 2023.
China’s pork imports remain far below year-ago... China imported 160,000 MT of pork in October, which was up 6.7% from September but down 20.6% from last year. Through the first 10 months of this year, China imported 1.38 MMT of pork, down 58.8% from the same period last year.
Feedlot numbers expected to be below year-ago... USDA’s Cattle on Feed Report this afternoon is expected to show the Nov. 1 feedlot inventory down 1.7% from last year, with all pre-report estimates below year-ago levels. This would mark the second month in a row with a year-over-year decline in feedlot inventories after last month’s report showed the first such instance since December 2021. Analysts expect USDA to show placements dropped 3.5% last month, while marketings are anticipated to have increased 0.8% from October 2021.
Cash cattle prices strengthen... Cash cattle traded in the $151 to $152 area in the Southern Plains on Thursday, up around $1 to $2 from last week. Trade in the northern market turned active in the $154 to $155 range, also around $1 to $2 higher than last week.
Pork movement slows despite more price pressure... The pork cutout value fell another $1.00 on Thursday amid pressure on all cuts except hams and butts. Despite the weakness, pork movement slowed to just 252 loads on the day, signaling packers may have to further lower prices to encourage retailer demand amid seasonally strong slaughters.
Overnight demand news... Egypt purchased 60,000 MT of wheat from an unspecified origin via a private deal.
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
- 8:00 a.m. Food Expenditure Series — ERS
- 2:00 p.m. Supply and allocation of milk fat and skim solids by product (Annual) — ERS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC