Good morning!
Quiet overnight session... Corn and soybean futures favored the upside in overnight trade while wheat futures traded mostly lower. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are steady to a penny higher, winter wheat futures are 2 to 4 cents lower and spring wheat is 3 cents lower to 2 cents higher. Front-month crude oil futures are around $1.75 lower and the U.S. dollar index is nearly 200 points lower this morning.
Happy Thanksgiving from Pro Farmer... Grain and livestock markets will trade normal hours today. Markets and government offices are closed on Thursday for Thanksgiving. As a result, there will be no Pro Farmer market updates tomorrow. On Friday, markets are open for an abbreviated trading session from 8:30 a.m. to 12:05 p.m. CT. Due to the shortened schedule, we will only send out two reports – “First Thing Today” Friday morning around 8:00 CT and “After the Bell” highlighting the day’s price action after the closes. Happy Thanksgiving from your Pro Farmer staff.
Rail strike risks build... The risk of a rail strike in early December is growing after some unions voted down the deal the White House brokered in September. But based on the performance of stocks tied closest to rail transport, investors expect the issue to be resolved without a strike. December 9 is now the first possible rail strike as the Brotherhood of Railroad Signalmen (BRS) union said it will set the end of its cooling off period relative to negotiations with railroads at Dec. 8, now in sync with two other unions that are still negotiating with railroads after rejecting the initial labor agreement.
China widens Covid curbs... Chinese cities imposed more curbs on Wednesday to rein in rising Covid cases. In Beijing, malls and parks were shut and once-bustling areas of the capital resembled ghost towns as authorities urged people to stay home. Numerous other cities across China have imposed localized lockdowns as infections neared highs seen in April. Localities accounting for nearly one-fifth of China’s total GDP are under some form of lockdown or restrictions, brokerage Nomura estimated earlier this week, a figure that would exceed the GDP of Britain. “While there is little prospect of the authorities opting to step back from the zero-COVID policy during the winter, there is a significant risk that containment efforts fail,” analysts at Capital Economics wrote.
IMF urges China to boost Covid vaccinations, support property sector... The International Monetary Fund (IMF) urged China on Wednesday to boost Covid-19 vaccination rates and give more robust support to its troubled property sector to restore confidence and reduce risks from a global economic slowdown and high energy prices. IMF maintained its economic growth forecasts for China at 3.2% this year and 4.4% in 2023, assuming a gradual lifting of China’s strict zero-Covid strategy in the second half of next year. IMF said economic risks for China were tilted to the downside, due to headwinds from a global slowdown, higher energy prices and tighter global financial conditions. IMF recommended China’s fiscal policy should be neutral in 2023 after strong support this year but should protect the recovery and facilitate rebalancing toward more domestic consumption. It said China’s monetary policy should remain accommodative and rely on interest-rate based measures.
U.S. aims to sanction Brazilian deforesters... Washington is looking to crack down on environmental criminals behind surging deforestation in the Brazilian Amazon, using penalties such as Magnitsky sanctions to tackle climate change more aggressively, U.S. sources and officials told Reuters. Deforestation is surging as President Jair Bolsonaro approaches the end of his leadership under which clearing of the Amazon rainforest hit a 15-year high. President-elect Luiz Inacio Lula da Silva will take office on Jan. 1 and has already pledged to end deforestation. Magnitsky sanctions aim to punish those accused of corruption or enabling human rights abuses. They would freeze any U.S. assets and bar all Americans and U.S. companies from dealing with sanctioned individuals or entities.
Brazil corn exports could make big jump in 2023... Brazilian corn exports could jump exponentially next year if farmers harvest a full crop and Chinese demand is strong, Brazil’s National Association of Grain Exporters (Anec) said on Tuesday. The head of Anec says Brazil could export between 40 MMT and 50 MMT of corn in 2023, up from Anec’s projection of 20.6 MMT this year. Brazilian state statistics office Conab forecasts 2022-23 Brazilian corn exports at 45 MMT.
Ukraine grain crop expected to fall to 51 MMT... Ukraine has harvested 39 MMT of grain from this year’s crops to date, according to the country’s ag ministry. It forecasts production will fall to 51 MMT from a record 86 MMT in 2021. Planting plans for corn next year partly will depend on the condition of the winter wheat crop when it breaks dormancy next spring but the ag ministry says area planted to corn could decline.
China will auction more wheat next week... China will auction another 40,000 MT of state-owned wheat reserves on Nov. 30. Demand has been high for the older wheat, with all of the supplies offered for sale purchased thus far.
U.S., allies looking to agree on a price cap for Russian oil... The U.S. and its allies could agree to a price cap on Russian oil as early as today, according to reports. Officials are talking about setting it at $60 a barrel as the group rushes to put the plan into place before Dec. 5. The plan is designed to crimp Russia’s energy export revenue while avoiding a surge in oil prices.
Euro zone manufacturing PMI improves but sector still in contraction... The euro zone reported its November manufacturing purchasing managers index (PMI) rose to 47.3, slightly above market expectations and up from a reading of 46.4 in October. Still, a reading below 50.0 suggests contraction in the sector. It was the fifth month in a row of manufacturing sector contraction for the Euro zone.
Cash cattle activity expected today... Negotiations in the cash cattle market have been limited thus far, but are expected to pick up today. While trade could drag into Friday, it’s expected most packers and feedlots will want to wrap up cash activity today ahead of Thanksgiving. Traders continue to expect firmer prices compared with last week’s $152.89 average.
More seasonal pressure on cash hogs, pork cutout... The CME lean hog index is down another 43 cents to $86.54 (as of Nov. 21), the lowest level since Feb. 4 but still $13.39 (18.3%) above year-ago. Last year, the cash index bottomed on Nov. 29 and then started a strong price recovery that lasted into August.
Overnight demand news... Turkey tendered to buy 455,000 MT of milling wheat from unspecified origins, including supplies already stored in domestic warehouses.
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
- 11:00 a.m. Cotton Ginnings — NASS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Farm Labor — NASS
- 2:00 p.m. Livestock Slaughter — NASS