Good morning!
Heavy price pressure this morning... Wheat futures led a sharp drop in prices early this morning as news of Russia resuming its participation in the Black Sea grain export initiative hit markets. As of 6:30 a.m. CT, SRW wheat futures are trading mostly 47 to 52 cents lower, HRW wheat is 38 to 41 cents lower, HRS wheat is 30 to 34 cents lower, corn futures are 13 to 15 cents lower and soybeans are 8 to 14 cents lower. Front-month crude oil futures are holding near unchanged and the U.S. dollar index is around 200 points lower this morning.
Russia resumes participation in Black Sea grain deal... Russia will resume its participation in the Black Sea grain export deal, the country’s defense ministry announced. “The Russian Federation considers that the guarantees received at the moment appear sufficient, and resumes the implementation of the agreement,” the defense ministry said in a statement. The ministry said thanks to the involvement of the United Nations and Turkey, it obtained written guarantees from Ukraine that it would not use the humanitarian corridor and Ukrainian ports to conduct military operations against Russia.
Bolsonaro doesn’t concede but calls for protesters stop blockades... Brazilian President Jair Bolsonaro on Tuesday did not concede defeat in his narrow election loss to leftist Luiz Inacio Lula da Silva. He told protesters to avoid destroying property or “impeding the right to come and go,” though he didn’t tell them to stop the protests. The country’s infrastructure ministry asked for protesters’ “support” to avoid supply shortages. Brazilian livestock and poultry processors said they may have to stop slaughtering at some production sites are early as today if protesters continue to block roads.
Fed decision on interest rates this afternoon... The Fed is widely expected to raise interest rates another 75 basis points at the conclusion of its two-day monetary policy meeting this afternoon. Markets will focus on Chair Jerome Powell’s post-meeting press conference for clues as to whether the Fed will begin to slow the pace of rate gains amid weakening economic data. He will likely explain that future decisions depend on data, leaving the Fed wriggle room to deliver yet another jumbo rate rise if inflation remains uncomfortably high.
China tries to ease mounting economic concerns... Chinese policymakers pledged on Wednesday that growth was still a priority and they would press on with reforms, in an apparent bid to soothe fears that ideology could take precedence as Xi Jinping began a new leadership term. Strict Covid-19 lockdowns are weighing heavily on China’s business activity, consumer confidence and financial markets. In pre-recorded interviews for the Global Financial Leaders’ Investment Summit in Hong Kong, senior officials from China’s central bank, securities and banking regulators assured their audience Beijing would keep its currency and property markets stable, and remained committed to a pro-growth economic strategy. Yi Gang, governor of the People’s Bank of China, said: “The Chinese economy has remained broadly on track despite some challenges and downward pressure.”
Euro zone manufacturing sector weakens further in October... S&P Global’s final euro zone manufacturing purchasing managers index (PMI) fell to a 29-month low of 46.4 in October, below market expectations and the preliminary reading. An index measuring output dropped to 43.8, marking the fifth straight monthly contraction.
China to sell more wheat reserves... China will auction another 40,000 MT of wheat from state reserves on Nov. 9. All the wheat put up for sale in the two previous auctions was purchased.
Growing concern over Jones Act waivers... Sen. Roger Wicker (R-Miss.) is criticizing the Biden administration’s recent Jones Act waivers granted for shipments to Puerto Rico. “I urge you to consider the implications of unnecessary waivers, abide by the law, and put the domestic maritime industry ahead of foreign competition,” Wicker wrote in a recent letter to Homeland Security Secretary Alejandro Mayorkas. Bipartisan leaders of the House Transportation and Infrastructure Committee expressed similar concerns in a recent letter to Mayorkas and Transportation Secretary Pete Buttigieg.
Iran to attack Saudis?... Saudi Arabia and the U.S. have shared information indicating Iran may attack the kingdom or other countries in the region sometime soon, leading the two nations to adjust their military posture, reports note. They described the possible attacks as an effort to distract from nationwide protests that have roiled Iran in recent weeks.
U.S. banks spent $1 billion on ransomware payments last year... U.S. financial institutions spent nearly $1.2 billion on likely ransomware-related payments last year, most commonly in response to breaches originating with Russian criminal groups, according to the Treasury Department. The payments more than doubled from 2020, underscoring the pernicious damage ransomware continues to wreak on the private sector. The Financial Crimes Enforcement Network, or FinCEN, said its analysis “indicates that ransomware continues to pose a significant threat to U.S. critical infrastructure sectors, businesses and the public.”
Vilsack to announce grants, loans for meat and poultry processing... USDA Secretary Tom Vilsack today will announce $223 million in taxpayer grants and loans to expand meat and poultry processing capacity and to address supply chain problems. Projects are divided among $73 million in 21 grants through the first round of the Meat and Poultry Processing Expansion Program (MPPEP), $75 million for eight projects through the Meat and Poultry Intermediary Lending Program, and $75 million for four meat and poultry-related projects through the Food Supply Chain Guaranteed Loan program. Tuesday’s announcement was the first round of funding made available through Phase I of MPEPP, USDA said. Additional announcements are coming. USDA will also begin taking applications for a new phase to deploy an additional $225 million, for a total of up to $375 million, to provide gap financing for independent processing plant projects that fill a need for more diversified processing capacity.
December live cattle hold no premium... After price losses since posting a contract high on Oct. 24, December live cattle futures ended Tuesday at $151.95 – the same as last week’s average cash cattle price. For a market that has tightening supplies and the highest cash price since mid-2015, the lack of premium in front-month futures portrays an overly cautious tone.
Pork cutout under $100... The pork cutout value dropped $2.73 on Tuesday to $97.21, as every cut weakened aside from bellies. Price dips under $100.00 have consistently triggered increased retailer demand and packers moved a solid 336.7 loads yesterday. The question is whether there’s enough retailer demand to push the cutout back above $100.00 or if packers must further reduce prices to keep up with the seasonally increasing supply of pork.
Overnight demand news... Jordan tendered to buy 120,000 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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS