Good morning!
Quiet overnight grain trade... Corn, soybeans and wheat held in relatively tight trading ranges during a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 1 to 3 cents lower, SRW wheat is around a penny lower, HRW wheat is fractionally higher and HRS wheat is 2 to 3 cents higher. The U.S. dollar index is around 650 points higher, surging to a two-year high, while front-month crude oil futures are around 70 cents lower.
China willing to work with U.S. and Trump to support bilateral trade... China is willing to conduct active dialogue with the United States based on the principles of mutual respect and promote the development of bilateral economic and trade relations, vice commerce minister Wang Shouwen said. China is also willing to “expand areas of cooperation and manage differences” with Washington. Wang, also China’s International Trade Representative, said China would be able to “resolve and resist” the impact of external shocks, responding to a question about the impact of potential tariffs from U.S. President-elect Donald Trump.
U.S. to blacklist more Chinese companies in Xinjiang region... The Biden administration plans to add 29 Chinese companies to a blacklist for alleged links to forced labor in the Xinjiang region, marking the largest expansion of the ban list since its implementation in 2022. This move will increase the total number of banned entities to over 100. Most of the newly targeted companies operate in the agricultural sector, but the blacklist also includes entities from industries like mining and smelting of metals such as aluminum and lithium.
GOP skepticism over Biden’s disaster aid request... Republicans are scrutinizing President Joe Biden’s nearly $99 billion supplemental disaster aid request following Hurricanes Helene and Milton. While generally supportive of aid, lawmakers, including Rep. Tom Cole (R-Okla.), expressed concerns about non-disaster-related provisions, such as education and climate change initiatives, included in the proposal. Cole emphasized that Democrats, controlling the White House, remain key players in negotiating the final package. Of note: Some farm-state lawmakers may want to add policy-related language to the disaster measure that would boost reference prices and some crop insurance incentives. Those policy changes could find their way into a stopgap spending bill into March that is expected to be approved sometime in December.
Brazil facing domestic pressures that could impact its exports of UCO... As Brazil ramps up its biodiesel blending mandates, demand for soybean oil — of which used cooking oil (UCO) is a crucial component — has surged. This shift in focus toward meeting domestic biodiesel needs may lead to a reduction in the availability of UCO for export. The Brazilian government has also introduced measures that could further complicate the export landscape. For instance, recent tax changes aimed at restricting tax credits for certain exports could raise costs for grain and oilseed exporters, adding pressure to the already strained market. Additionally, with U.S. imports of UCO from Brazil now authorized and increasing due to favorable biofuel policies in the U.S., Brazil’s domestic market dynamics may shift further toward prioritizing local biodiesel production over exports. Bottom line: Brazil’s amendments to its domestic policies and increasing biodiesel mandates are likely to reduce the availability of UCO for export, potentially reshaping its role in the global biofuel market.
Western Australia on track for unexpectedly large wheat crop... Western Australia is on track for a surprise bumper wheat crop, despite low rainfall earlier in the season that had been expected to reduce output. Australia’s largest wheat-producing state is set to produce 10.33 MMT in 2024-25, according to the Grain Industry Association of Western Australia. That would be the third-biggest harvest on record and about 1 MMT higher that what the group was expecting in September.
French wheat conditions unchanged, above year-ago... France’s ag ministry rated the country’s winter wheat crop 88% good/excellent and 2% poor/very poor as of Nov. 18, unchanged from the previous week. Last year at this time, the crop was rated 83% good/excellent and 3% poor/very poor.
Winter rail logistics and grain shipments... USDA’s Grain Transportation Report highlights the critical period ahead for railroads and shippers following the completion of the corn and soybean harvests. “During the winter months — when rail-service demand is heaviest — inclement weather tends to pose the most challenges to service,” the report states. The interplay of high demand and reduced shuttle services, particularly by BNSF, may drive up premiums in the secondary market for shuttles this winter. However, improved performance in shuttle services into 2025 could alleviate long-term concerns.
Euro zone PMI falls to 10-month low... The preliminary composite HCOB euro zone purchasing managers index (PMI) compiled by S&P Global fell to a 10-month low of 48.1 in November. The PMI reading for manufacturing slumped to 45.2, while services dropped to 49.2, the first contraction for that sector since February.
Nov. 1 feedlot inventory expected to be slightly below year-ago... Analysts expect USDA’s Cattle on Feed Report this afternoon to show the large feedlot (1,000-plus head) inventory down 0.1% from year-ago at 11.944 million head as of Nov. 1. The report is expected to show a 3.8% increase in the number of cattle moved into feedlots last month, while marketings are anticipated to be up 5.2% from October 2023.
Brazil, China close to signing pork offal export protocols... Brazil is close to finalizing protocols for exporting pork offal and fish to China, two people familiar with the matter told Reuters. The sources said negotiations for both protocols were advanced and should be completed soon, but declined to give a specific timeframe. A deal could impact exports of U.S. pork products, as China imports around half of all U.S. pork offal shipments.
China widens EU dairy probe... China’s commerce ministry expanded the scope of its anti-subsidy investigation into dairy imports from the European Union to cover additional EU subsidy programs in Denmark, France, Italy and the Netherlands. Despite this broadened scrutiny, the probe remains focused on cheese, milk, and cream products. The addition does not include new dairy products and takes into account the claims made by EU members and consultations with EU representatives, the ministry said. The EU is China’s second largest source of dairy products.
Choice/Select beef spread still wide... After topping $37.00 earlier this week, the spread between Choice and Select wholesale beef prices has narrowed a little but remains wider than normal. Choice beef firmed 40 cents to $306.79 on Thursday, while Select rose $1.93 to $272.92, tightening the spread to $33.87.
Traders narrowing discount in December hogs... The CME lean hog index is down another 39 cents to $87.44 as of Nov. 20, extending the recent price slide. December lean hog futures finished Thursday $6.64 below today’s cash quote, implying traders expect seasonal pressure to build into mid-December when the contract is settled against the cash index. The five-year average from now until mid-December is a $3.20 decline in the cash index.
Overnight demand news... Exporters reported no tenders or sales.
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
· 11:00 a.m. Cotton Ginnings — NASS
· 2:00 p.m. Cattle on Feed — NASS
· 2:00 p.m. Chickens and Eggs — NASS
· 2:00 p.m. Peanut Prices — NASS
· 2:30 p.m. Commitments of Traders — CFTC