Good morning!
No overnight trade... Grain and livestock markets were closed overnight and will reopen at 8:30 a.m. CT. Front-month crude oil futures are trading around $1 higher and the U.S. dollar index is up nearly 500 points this morning. Grain and livestock markets close at 12:05 p.m. CT.
Weekly export sales... For the week ended Nov. 17, USDA reported net 2022-23 sales of 1.850 MMT for corn (trade expected 1.7 to 2.5 MMT), 511,800 MT for wheat (trade expected 250,000 to 600,000 MT), 690,100 MT for soybeans (trade expected 500,000 MT to 1.7 MMT), 516,400 MT for soymeal (trade expected 150,000 to 300,000 MT) and net reductions of 100 MT for soyoil (trade expected 0 to 20,000 MT). USDA also reported net 2022-23 sales reductions of 116,400 running bales for upland cotton. For 2022, USDA reported net sales of 12,900 MT for beef and 45,8000 MT for pork.
First Brazilian corn headed to China... The first vessel carrying Brazilian corn to China was set to sail after a deal earlier this year between the two nations. The Star Iris is moored in Santos port, loaded with about 68,000 MT of corn for Chinese trader Cofco Corp., according to the shipping agency Alphamar. In October, China approved over 130 facilities for export. According to Alphamar, three more vessels are scheduled to leave in November, which could put the total shipments for this month close to 200,000 MT. There’s also another ship expected to sail in the first days of December. Bottom line: China is diversifying its corn purchases outside the U.S. market.
Brazil freight rates soar amid protests... Protests over Brazil’s election result that blocked roads in Mato Grosso state earlier this week lifted truck freight prices, affecting the operations and margins of global grain traders. Truck freight rose 20% or 50 reais ($9.40) per tonne in Mato Grosso, industry group Abiove said. Some companies reported loading less corn than scheduled for export on Monday, Tuesday and Wednesday, while others said the situation was having no material effect on export volumes.
China is facing one of its biggest Covid-19 outbreaks... A record 31,656 infections were reported Thursday. Major cities including Beijing and Guangzhou have ordered residents in some areas to stay home. China’s strict “zero-Covid” strategy means most of its 1.4 billion people have never been exposed to the virus, leaving them with no natural immunity.
China cuts banks’ RRR... China’s central bank said on Friday it would cut the amount of cash banks must hold as reserves for the second time this year, releasing about 500 billion yuan ($69.8 billion) in long-term liquidity to bolster its slowing economy. The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for banks by 25 basis points (bps), effective from Dec. 5. PBOC last cut the RRR in April when the central bank announced a 0.25-basis-point reduction following 0.5-point cuts in both July and December last year.
Slow Ukrainian grain exports after new deal... Ukraine’s grain exports have gotten off to a slower start after the Black Sea grain initiative was extended last week. Since the agreement was extended beyond Nov. 19, no more than five ships a day have departed Ukraine, United Nations data showed, down from previous weeks and months when up to 10 vessels departed per day. Meanwhile, Russian Defense Minister Sergei Shoigu discussed the situation in Syria and the Black Sea grain deal in a phone call with his Turkish counterpart, Russian news agency TASS reported.
Argentine soybean planting severely slowed by drought... As of Wednesday, Argentine farmers had planted 19.4% of expected soybean area due to prolonged drought, 19.9 percentage points behind last year, according to the Buenos Aires Grain Exchange. The exchange said, “The lack of surface moisture and the absence of a short-term rainfall forecast, will continue to limit planters’ progress.” Corn planting was also delayed at 23.8% done, 6.2 points behind last year at this time.
Floods hurting Aussie wheat quality... Flooding in eastern Australia is hurting the quality of the wheat harvest in one of the world’s biggest exporters, worsening a global shortage of the high-grade variety. The lack of milling-quality wheat across the east coast this year means demand for more general-purpose wheats with lower-protein content is gaining traction, said James Maxwell, senior manager at Australian Crop Forecasters. Rains have also slowed the harvest in parts of Western Australia, another huge growing region, where the local industry association is predicting a further bumper crop. For the country as a whole, wheat exports could still reach 26 MMT this season.
Russia mildly raises wheat export tax... Russia’s wheat export tax for Nov. 30-Dec. 6 will be 2,788.0 rubles ($45.91) per metric ton based on an indicative price of $312.50. That’s up from a rate of 2,735.2 rubles per metric ton the previous week.
Some pushing new farmerworker visa deal in lame-duck session... Backers of an overhaul of farmworker visas want to reach a deal before Republicans take control of the House in 2023. Lawmakers, agriculture groups and farmworker organizations are pushing the bill, which would provide a path to citizenship for about one million farmworkers and create a capped number of new year-round visas. A version of the bill passed the House in March 2021. House Republicans are unlikely to bring it up in the next Congress, unless they first get border security actions.
Sharply higher cash cattle trade... Cash cattle trade wrapped up on Wednesday as packers raised bids to $154 to $155 in the Southern Plains and around $157 in the northern market – up around $3 from the previous week. December live cattle futures should find support from the strong cash gains as the lead contract finished last Wednesday at $153.35.
Cash hog index continues to weaken... The CME lean hog index continues to face seasonal pressure as slaughter tallies rise. But slaughter is running under year-ago levels and we anticipate a seasonal low in the index and nearby futures will be posted soon. Last year, the seasonal low came at the end of November.
Holiday demand news... Egypt purchased 175,000 MT of wheat in private deals, mostly Russian and Ukrainian supplies. Algeria purchased at least 300,000 MT of durum from unspecified origins. South Korea tendered to buy 70,000 MT of food-grade non-GMO soybeans that can be sourced from optional origins. Pakistan pushed back the end date on its tendered to buy 500,000 MT of optional origin milling wheat until Nov. 30.
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
- 7:30 a.m. Weekly Export Sales — FAS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Peanut Stocks and Processing — NASS