Good morning!
Light followthrough buying in corn, wheat overnight... Corn and wheat futures mildly extended Monday’s gains during overnight trade, while soybeans failed to find sustained followthrough buying. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are mostly 2 cents lower and wheat futures are 1 to 3 cents higher. The U.S. dollar index is around 125 points higher and front-month crude oil futures are about 35 cents lower.
Cordonnier increases Brazilian soybean crop forecast... The Brazilian soybean crop is rated mostly in good condition and more rains are in the forecast. As a result, South American crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop forecast by 1 MMT to 166 MMT. He maintains a neutral to higher bias, noting the only concern is dryness starting to creep into far southern areas. Cordonnier left his Brazilian corn crop peg at 125 MMT with a neutral bias. For Argentina, Cordonnier kept his crop forecasts at 57 MMT for soybeans and 48 MMT for corn with a neutral bias toward both.
HRW CCI rating improves, SRW crop slips... USDA rated the winter wheat crop 49% “good” to “excellent” and 15% “poor” to “very poor.” On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 10.2 points to 330.4, driven by gains in Kansas, Oklahoma and Texas. The SRW CCI rating slipped 0.2 point to 371.3. The HRW crop is now 9.5 points above year-ago, while the SRW CCI rating is 2.9 points below last year on this date. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of Nov. 17:
· Winter wheat: 49% good/excellent (44% last week); 94% planted (96% average); 84% emerged (84% average).
· Cotton: 77% harvested (72% average).
Ukraine wheat, corn plantings to rise for 2025 harvest... Ukrainian Agriculture Minister Taras Vysotskiy told Reuters the country’s winter wheat plantings could increase to 5 million hectares for next year’s harvest from 4.6 million for this year. That may increase production to 25 MMT from 22 MMT this year. Vysotskiy also said corn plantings next spring are expected to increase 500,000 hectares to 4.4 million hectares, while soybean area will decline. The area seeded to sunflowers is expected to hold around 5.5 million hectares in 2025.
Stabenow gets lambasted for timing, details of very late farm bill proposal... Most farm bill observers wonder why Senate Ag Chair Debbie Stabenow (D-Mich.) even bothered to release text of her long-awaited farm bill at this late date, especially after seeing its contents. Even optimistic House Ag Chair Glenn “GT” Thompson (R-Pa.) signaled it’s time to focus on a 2018 Farm Bill extension by year’s end. Sen. John Boozman (R-Ark.) characterized Stabenow’s dead-before-arrival measure as “insulting.” Stabenow offered Republicans very little other than agreeing to language regarding Commodity Credit Corporation funding restrictions, thereby boosting the farm bill baseline. But she gave nothing on her must-not-change items dealing with food and nutrition and conservation funding. With Thompson remaining as House Ag Chair in the new Congress, and Boozman taking the top Ag gavel in the Senate, a more serious attempt at an omnibus farm bill is likely, especially dealing with likely new Senate Ag ranking member Amy Klobuchar (D-Minn.) who has a track record of working across the aisle. She is also less fixated on specialty crops than Stabenow is, and instead will focus on corn, soybeans and wheat, key crops in Minnesota.
Disaster aid more a December timeline than November... Despite the Biden administration asking Congress to provide $24 billion in aid to the U.S. ag sector, as part of a $98.4 billion disaster aid package, Congress will likely modify key provisions when they return after a one-week Thanksgiving break. Look for farm-state lawmakers to include specific language on the operation of the coming ag disaster funding to avoid how USDA implemented the last aid to farmers. Of note: Of the $24 billion for agriculture, $21 billion would allow USDA to compensate farmers and ranchers for crop and livestock losses. This is significantly above the around $14 billion in disaster aid recently cited by a USDA official. It’s possible emergency aid could be attached to any spending bill designed to keep federal agencies operating after current funding expires Dec. 20.
House GOP solicits feedback on biofuel credits amid expiring provisions... House Republican tax writers are reaching out to biofuel supply chain stakeholders for input as existing tax credits near expiration, with no replacement guidance yet from the Treasury Department. The focus is on the 45Z credit established in the 2022 tax-and-climate law. GOP Reps. Adrian Smith (R-Neb.) and Randy Feenstra (R-Iowa) lead the initiative, seeking stakeholder insights on maximizing the impact of biofuels provisions for energy production and rural development. Industry calls for extending existing credits have increased amid bipartisan interest in updates for biodiesel and sustainable aviation fuel incentives, alongside broader discussions on new credit parameters.
California tightens LCFS... Shortly after the recent U.S. elections, California’s Air Resources Board (CARB) approved significant updates to the state’s Low Carbon Fuel Standard (LCFS), a program that generated $2.8 billion in regulatory credits last year. The new measures will make it harder for biofuel producers to earn credits while favoring electric vehicle (EV) charging infrastructure, anticipated to become the main beneficiary by 2030. Funding for EV initiatives, estimated at $500 million to $1.4 billion annually, will be supported by fossil-fuel suppliers. The shift, designed to stabilize credit prices and reduce credit oversupply, will intensify emissions reductions targets for transport fuels and impose stricter standards on biofuels. As a result, biofuels producers may need to adapt by lowering carbon intensity or adopting new technologies to stay competitive. This evolving policy is expected to influence similar initiatives globally.
GOP considers cuts to safety net programs to offset tax reductions... President-elect Donald Trump and congressional Republicans are discussing overhauling Medicaid and food stamp programs to balance the cost of extending Trump’s 2017 tax cuts, projected to add over $4 trillion to the national debt, the Washington Post reports. Proposed changes include new work requirements, spending caps and eligibility checks. While framed as measures to reduce wasteful spending, potential cuts to programs serving over 70 million low-income Americans raise political concerns within the GOP. Past attempts to cut Medicaid met public backlash, complicating efforts to navigate tax policy reforms amidst growing debt concerns.
Beijing, Shanghai announce tax breaks to boost ailing property sector... Beijing and Shanghai have announced tax breaks to spur home purchases as distress in the property sector continues to drag on the economy. Beijing and Shanghai residents looking to sell an existing property will be exempt from paying the value-added tax so long as they have held onto it for more than two years, statements from local authorities said. The two cities also raised the standard for levying deed taxes to properties larger than 140 square meters (1,500 square feet), up from 90. Other major Chinese cities are widely expected to follow suit.
Euro zone consumer inflation rises in October... Annual inflation in the euro zone increased to 2% in October, up from 1.7% in September which was the lowest level since April 2021, and in line with the preliminary estimate. Core inflation, excluding food, energy, alcohol and tobacco, increased 2.7% last month, unchanged from September.
Choice beef surges... Choice boxed beef prices surged $3.94 on Monday to $307.28, while Select fell 69 cents to $275.45. The jump in Choice beef could signal prices have reached a level of value for retailers after the recent sharp drop, though the slowdown in movement on Monday to 109 loads, including 70.5 loads of Choice, suggests the uptick in price may be temporary.
Seasonal pressure building in cash hog index... The CME lean hog index is down another 78 cents to $88.49 as of Nov. 15, the sixth decline in the last seven days and the biggest drop during that span. December lean hog futures finished Monday $8.465 below today’s cash quote.
Overnight demand news... Jordan passed on a tender to buy up to 120,000 MT of optional origin milling wheat. Algeria tendered to buy up to 240,000 MT of corn to be sourced from Brazil or Argentina.
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
· 11:00 a.m. Fruit and Tree Nuts Data — ERS
· 11:00 a.m. Vegetables and Pulses Data — ERS