Good morning!
Mild price pressure to open the week... Corn, soybeans and wheat traded mildly lower overnight amid a pullback from last Friday’s gains. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are mostly 4 to 5 cents lower and wheat futures are 4 to 6 cents lower. Front-month crude oil futures are nearly $1 lower and the U.S. dollar index is around 250 points lower this morning.
China will continue ‘dynamic-clearing’ Covid policy... China will persevere with its “dynamic-clearing” approach to Covid-19 cases as soon as they emerge, Chinese health officials said on Saturday. Speculation grew last week China would relax its zero-Covid policy, buoyed on Friday when a former disease control official said Beijing would make “substantial” changes to its policy in the coming months.
China’s trade data slumps in October... China’s exports fell 0.3% from year-ago in October, the first drop since May 2020 amid lackluster overseas demand. Its imports declined 0.7%, the first drop since August 2020 as domestic demand slumped amid strict Covid restrictions. That left China with a trade surplus of $85.2 billion, up marginally from $84.8 billion in September but well shy of expectations for an increase of $96.0 billion. China’s trade surplus with the U.S. narrowed to $34.2 billion from $36.1 billion in September.
China soybean imports fall to lowest in eight years in October... China imported 4.14 MMT of soybeans in October, matching the lowest for any month since October 2014. Chinese soybean imports plunged 46.4% from September and were 19.0% below year-ago as weak crush margins reduced demand. Through the first 10 months of this year, China imported 73.18 MMT of soybeans, down 7.4% from the same period last year.
The week ahead in Washington... Tuesday is election day, with all 435 House seats and 34 Senate seats to be determined. Republicans are expected to take control of the House. Control of the Senate will be close and may not be determined until election night or later. The key economic data this week will be Thursday’s U.S. consumer price index for October, which will show whether underlying price pressures persisted or eased. The highlight for agriculture will be Wednesday’s Crop Production and Supply & Demand Reports. USDA is expected to modestly adjust its corn and soybean crop estimates, along with minor fine tuning to the domestic balance sheets, though there could be some major changes to global wheat production.
Administration urges Ukraine to undertake negotiating strategy... The Biden administration privately encouraged Ukrainian President Volodymyr Zelenskyy to show Russia that Ukraine is open to negotiating an end to the war. The request by American officials is not aimed at pushing Ukraine to the negotiating table, according to people familiar with the matter. Rather, it’s a calculated attempt to ensure the government in Kyiv maintains the support of other nations.
Potential meeting between Biden, Xi at G20 summit... Negotiations are underway for a potential meeting between Chinese President Xi Jinping and President Joe Biden at the G20 summit in mid-November, with the hope of improving U.S./China relations, which could benefit the global economy. U.S. midterm election results could complicate the picture if Republicans make gains and press for a harder line on China, especially in access to advanced technology.
China again sells all wheat put up for auction... China sold all 40,476 MT of state-owned wheat reserves put up for auction last week. The average selling price of the wheat from the 2014, 2015 and 2016 crops was 2,865 yuan ($398.88) per metric ton, up from 2,843 yuan ($392.14) the previous week. China has sold all of the wheat put up for sale at the three weekly auctions that began in mid-October.
China’s forex reserves unexpectedly rise... China’s foreign exchange reserves rose $23.47 billion to $3.052 trillion last month. The increase in October reserves mainly reflected valuation effects, as the dollar weakened. China’s foreign exchange reserves dropped $197.74 billion in the first 10 months of the year.
Machinists’ union approves rail deal... Members of the International Association of Machinists voted Saturday to approve a second tentative labor agreement with freight rail carriers, potentially putting off a complete rail shutdown in the next several weeks. The two largest rail unions — the Brotherhood of Locomotive Engineers and the SMART Transportation Division — are scheduled to vote on the rail deal later this month. Meanwhile, Department of Labor Secretary Marty Walsh said he’s communicating with railway companies and unions daily after two other unions rejected the deal forged with help from the Biden administration.
China’s meat imports slowed in October... China imported 630,000 MT of meat last month, down 20,000 MT (3.1%) from September and 30,000 MT (5.1%) less than last year. China doesn’t break down meat imports by class in its preliminary data, though the reduction was due to fewer pork imports. Through the first 10 months of the year, China imported 6.03 MMT of meat, down 25.0% from the same period last year.
USDA confirms HPAI in Mississippi commercial flock... USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in a commercial breeder chicken flock in Lawrence County, Mississippi. This is the first commercial HPAI discovery in Mississippi after the state reported a case in wild American blue-winged teal in Issaquena County in October.
Steady/firmer cash cattle expectations... Traders will have to wait until later this morning to get last week’s average cash cattle price from USDA. While the price should be slightly higher than the previous week, cash trade wasn’t as strong as originally hoped. As a result, traders have a cautiously optimistic outlook for this week’s cash trade.
Hog slaughter building... Last week’s estimated hog slaughter was 2.577 million head, the highest for the year, though down 1.3% from year-ago. Hog slaughter will continue to rise seasonally but is running right in line with levels suggested by USDA’s September Hogs & Pigs Report. As slaughter levels rise, the cash hog index likely will face more seasonal pressure.
Weekend demand news... Egypt tendered to buy an unspecified amount of wheat from multiple sources, with results expected later this morning.
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