Good morning!
Quiet overnight trade... Corn mildly favored to the downside, while soybeans and wheat were mostly firmer during a lightly traded overnight session. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 3 to 5 cents higher, SRW wheat is fractionally higher, HRW wheat is narrowly mixed and HRS wheat is 2 to 4 cents higher. Front-month crude oil futures are around $1.75 higher and the U.S. dollar index is more than 300 points lower this morning.
U.S. threatens legal action over Mexico’s GMO corn ban... The U.S. on Monday threatened legal action against Mexico’s plan to ban imports of GMO corn in 2024, saying it would cause huge economic losses and significantly impact bilateral trade. Following a meeting with Mexican President Andres Manuel Lopez Obrador, USDA Secretary Tom Vilsack said, “I emphasized in no uncertain terms that – absent acceptable resolution of the issue – the U.S. Government would be forced to consider all options, including taking formal steps to enforce our legal rights under the USMCA. Mexico’s import ban would cause both massive economic losses for Mexico’s agricultural industries and citizens, as well as place an unjustified burden on U.S. farmers.” He also warned any such move would “have significant impact on the U.S.-Mexico trade relationship.”
Consultant lowers Argentine crop estimates... Weather and early growing conditions in Argentina remain “problematic,” according to South American crop consultant Dr. Michael Cordonnier. As a result, he cut 1 MMT from his Argentine corn crop estimate, which he pegs at 49 MMT. Cordonnier also cut 1 MMT from his Argentine soybean crop estimate, which stands at 49 MMT as well. He kept his Brazilian soybean and corn crop estimates at 151 MMT and 125.5 MMT, respectively.
Ukraine’s winter grain seeding nearly complete... Ukrainian farmers have seeded 4.5 million hectares to winter grains – or 94% of expected area as of Nov. 29 – according to the country’s ag ministry. That included 3.8 million hectares of winter wheat, 613,000 hectares of barley and 79,200 hectares of rye. Last year, Ukrainian farmers planted 6.2 million hectares to winter wheat.
Kazakhstan has no plans to lower rail tariffs for Russian grain... Kazakhstan has no immediate plans to reduce tariffs on the railway transportation of Russian grain through the country, as no specific agreements have been reached yet, Deputy Prime Minister Serik Zhumangarin said. “The issues of reducing tariffs had not been on the agenda, but we talked tete-a-tete about these things, he said. “I want to emphasize that our decision will always be driven by pragmatic considerations. We need to be pragmatic by thinking about the long-term interests of our country. No one is going to cut (fees) until there are concrete proposals on what volumes of which goods will be shipped.”
House to consider bill to avoid rail strike this week... President Joe Biden late Monday called on Congress to pass legislation immediately to adopt the tentative agreement between railroad workers and operators that was approved by labor and management negotiators in September “without any modifications or delay — to avert a potentially crippling national rail shutdown.” House Speaker Nancy Pelosi (D-Calif.) said in a statement the House this week would “take up a bill adopting the tentative agreement — with no poison pills or changes to the negotiated terms — and send it to the Senate.” Biden said a rail shutdown “would devastate our economy.” Biden said he is “reluctant to override the ratification procedures and the views of those who voted against the agreement. But in this case — where the economic impact of a shutdown would hurt millions of other working people and families — I believe Congress must use its powers to adopt this deal.”
DOT rejects farm groups’ request for longer trucker driving time... The Biden administration denied a request for truckers who transport livestock, insects and aquatic animals to be exempt from some federal driving time regulations, according to a notice set to published today in the Federal Register. Several farm groups asked for an exemption to allow for additional time on the road on behalf of truckers moving the animals. The Federal Motor Carrier Safety Administration (FMCSA) rejected the request, saying it wouldn’t meet an acceptable safety level. “Research studies demonstrate that long work hours reduce sleep and harm driver health, and that crash risk increases with work hours,” FMCSA said in its decision.
WTO: Trade growth likely to slow as demand weakens... The World Trade Organization (WTO) said on Monday its goods barometer had fallen below trend, indicating trade growth was set to slow in the closing months of 2022 and into 2023. The Geneva-based trade body said its barometer fell to 96.2 from its previous reading of 100, reflecting “cooling demand for traded goods.”
EU countries again fail to agree on Russian oil price cap... EU ambassadors ended another round of negotiations Monday without a deal on a Russian oil price cap, as Poland continued to push for a lower price to hit the Kremlin’s sources of income. The European Commission proposed a cap of $62 per barrel (down from the original $65 to $70), but Poland, as well as Estonia, are holding out for a lower price, according to reports. The original plan was for a cap to enter into force on Dec. 5, when the EU’s partial embargo on Russian oil comes into effect. But the U.S. has told the EU it will require 90 days between agreement and enforcement.
Big slaughters driving cash cattle rally... Packers continue to run heavy slaughters in the face of tightening market-ready supplies, fueling a strong cash market advance. Last week’s estimated slaughter was the biggest for a Thanksgiving week since 2012, which helped fuel the $3.18 advance in the average cash cattle price to $156.07. Another large slaughter is expected this week, signaling cash prices will likely rise again, even with fresh contract supplies available to packers.
Strong wholesale pork trade, but cash index falls... The pork cutout value firmed $1.89 on Monday as all cuts except butts and hams posted strong gains. Packers moved 290.4 loads of pork amid the higher prices, signaling there was strong retailer demand coming out of Thanksgiving. While the wholesale pork market showed strength, the CME lean hog index dropped another 93 cents to $84.63 (as of Nov. 25).
Overnight demand news... South Korea purchased 70,000 MT of corn expected to be sourced from South America or South Africa. Turkey provisionally bought around 395,000 MT of milling wheat, with more purchases possible. Jordan made no purchases in a tender to buy 120,000 MT of 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
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Outlook for U.S. Agricultural Trade: November 2022 — ERS