Good morning!
Mostly weaker tone overnight... Corn, soybean and SRW wheat futures faced pressure overnight amid concerns with mounting Chinese Covid protests. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents lower, soybeans are 4 to 5 cents lower, SRW wheat is 6 to 8 cents lower, HRW wheat is narrowly mixed and HRS wheat is mostly 9 to 12 cents higher. Front-month crude oil futures are more than $2 lower and the U.S. dollar index is down around 350 points this morning.
China’s mounting Covid protests roil markets... Protests against China’s strict Covid lockdowns raged across the country during the weekend, including in Shanghai and Beijing and dozens of university campuses, as protesters made a show of civil disobedience unprecedented since leader Xi Jinping assumed power a decade ago. Some protesters called for Xi to step down. There was no sign of new protests on Monday in Beijing or Shanghai, but dozens of police were in areas where the weekend demonstrations took place. State media did not mention the protests, instead urging citizens in editorials to stick to the strict Covid rules. The global marketplace is uneasy to start the trading week amid the civil unrest in China.
Ukraine grain exports slowed in November... Exports of Ukraine’s grain will not reach 3 MMT in November as Russia tries to limit ship inspections at ports, Ukraine’s Infrastructure Minister Oleksandr Kubrakov said late Sunday. That would be down from 4.2 MMT of grain that left Ukrainian ports in October. Kubrakov said 77 ships were queuing to pass inspection in Turkey while the three Black Sea ports were using only 50% of their capacity. Since July 1, Ukrainian grain exports totaled 17.2 MMT, down 31.9% from the same period last year, including 9.1 MMT of corn, 6.6 MMT of wheat and 1.4 MMT of barley.
Ukraine announced new effort to ship grain to Africa... Ukraine President Volodymyr Zelenskyy announced a new effort to move grain to Africa, with the U.S., France, U.K., Sweden, Austria and Canada all committing financial resources to the effort. Ukraine originally proposed the action at the G20 summit and the “Grain from Ukraine” effort was formally unveiled over the weekend. The Guardian reports the effort would aim to send up to 60 ships of grain to poorer countries in Africa. Countries contributing to the effort include $30 million from Canada, $20 million each from the U.S. and France, $9.5 million from Sweden, $6 million from the U.K. and $3.9 million from Austria. Politico reported the European Commission said it would finance the transport of 40,000 MT of Ukrainian grain in the effort.
Russian grain exports increased in November... Black Sea consulting firm SovEcon estimates Russia will export 4.9 MMT of grain in November, up 200,000 MT from October, including 4.4 MMT of wheat. Grain exports would be up from 3.958 MMT in November 2021. After a slow start to 2022-23, Russian grain exports have gradually built after record production.
Argentina revives ‘soy dollar’ FX rate through year-end... Argentina on Friday announced a boost in the exchange rate for U.S. dollars brought in through soy shipments until the end of the year, seeking to rev up exports. The 230 pesos per U.S. dollar exchange rate for soybeans and soy products starts today, Economy Minister Sergio Massa announced. The country’s central bank is looking to bolster its international currency reserves, needed in large part to meet debt payments. The “soy dollar” exchange rate boost to 200 pesos per dollar in September was highly effective in freeing up soy shipments.
Relief rains this week in areas of Argentina, Brazil... Argentina was very warm to hot with limited rainfall during the weekend. World Weather Inc. expects central and southeastern parts of the country to receive some relief rains during the middle of this week, while northern areas will stay dry. Portions of western and southern Brazil will also receive some needed rains this week into next week, but World Weather says “there is concern for crops in a part of Mato Grosso and immediate neighboring areas because of dryness,” while conditions in most areas are favorable.
Brazil soybean, first corn planting nearly complete... Soybean planting reached 87% done in Brazil as of last Thursday, according to AgRural, slightly behind the 90% pace last year at this time. AgRural says in only four states – Santa Catarina, Rio Grande do Sul, Piauí and Pará – planting had not yet reached 70%, but this as more due to differences in the growing cycle than to significant delays. AgRural forecasts Brazilian soybean production at 150.5 MMT on planted area of 43.2 million hectares and trendline yields. It will begin to assess yield prospects based on weather conditions next month. AgRural says 88% of Brazil’s first corn crop was planted, slightly behind 93% at this time last year.
The week ahead in Washington.... Congress returns from Thanksgiving with a focus on trying to pass a spending measure for fiscal year 2023, which began Oct. 1. The current continuing resolution runs through Dec. 16. Despite some talk to the contrary, no agreement appears to be near. There will be several key economic focal points, including a speech by Fed Chair Jerome Powell and the second estimate of U.S. third quarter GDP, both of which will come Wednesday, and Friday’s employment data for November. Key agricultural data this week includes USDA’s outlook on ag trade on Tuesday and the UN Food and Agriculture Organization food price index on Friday.
China again sells all wheat put up for auction... China sold all 39,995 MT of state-owned wheat reserves put up for auction last week. The average sales price was 2,815 yuan ($389.59) per metric ton.
HPAI confirmed in Nebraska commercial egg layer flock... Nebraska announced the Animal and Plant Health Inspection Service (APHIS) has confirmed highly pathogenic avian influenza (HPAI) in a commercial layer flock with 1.8 million birds in Dixon County. This marked the seventh commercial flock with HPAI in the state and the thirteenth overall operation affected. This puts Nebraska second relative to the number of birds affected at 6.8 million compared with 15.5 million in Iowa.
Firmer cash cattle expectations... Cash cattle prices rose sharply last week as packers were apparently short-bought on needs for this week’s full slaughter schedule. With another big slaughter likely next week, packers are expected to be active in their pursuit of cash cattle again this week, though fresh contract supplies for December could temper their demand in the negotiated market.
Seasonal pressure on cash hog index continues... The CME lean hog index is down another 61 cents to $85.56 (as of Nov. 23), extending the seasonal slide to the lowest level since early February. December lean hog futures finished last Friday $1.785 below today’s cash quote, indicating traders expect the cash index to continue its seasonal decline into the contract’s mid-December expiration.
Weekend demand news... South Korea purchased 138,000 MT of optional origin corn.
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
- 10:00 a.m. Export Inspections — AMS
- 3:00 p.m. Crop Progress — NASS