Good morning!
Weaker price tone overnight... Corn and soybean futures pulled back from gains earlier this week, while wheat futures extended this week’s declines. As of 6:30 a.m. CT, corn futures are trading mostly 4 cents lower, soybeans are 8 to 11 cents lower and wheat futures are 4 to 7 cents lower. Front-month crude oil futures are modestly weaker and the U.S. dollar index is around 775 points higher.
StoneX lowers corn, soybean production forecasts... StoneX raised its corn yield estimate by 0.7 bu. from last month to 173.9 bu. per acre, but cut its production forecast 112 million bu. to 14.056 billion bushels. The brokerage firm cut its soybean yield estimate by 0.5 bu. to 51.3 bu. per acre and lowered its production forecast 73 million bu. from last month to 4.442 billion bushels.
Ukraine in grain talks to ensure exports past next month... Ukraine is holding tough talks to ensure grain continues flowing from its Black Sea ports even after a deal on such exports expires next month, an adviser to the Ukrainian government said. “We hope for a prolongation of the mandate to bring grain out of Ukraine’s ports,” Mykhailo Podolyak, an adviser to the Ukrainian president’s chief of staff said, said in a Bloomberg TV interview on Tuesday. He declined to elaborate on when any results can be expected, describing the talks as “complicated.” Ukraine doesn’t negotiate with Russia directly, according to Podolyak. Instead, there are sub-negotiating groups that also include Turkey and the United Nations.
Attaché forecasts smaller China corn crop... USDA’s ag attaché in Beijing estimates China’s corn crop at 270 MMT, 4 MMT lower than USDA’s official forecast and 2.5 MMT lower than last year’s crop. The attaché cited reduced planted area and yield losses caused by excessive rains in the major production area of northeast China.
OPEC+ considering even bigger production cut... Members of OPEC+ are expected to announce cuts to oil production after its meeting today that reportedly could total as much as 2 million barrels per day. The U.S. is pushing OPEC not to proceed with the cuts arguing that fundamentals don’t support them.
EU agrees to cap on Russian oil prices... The European Union agreed to a price cap on Russian oil as part of a new sanctions package to punish Russian President Vladimir Putin for his nuclear threats and illegal land grab in Ukraine. The bloc has tried to reduce its reliance on Russian energy since the invasion began, but member states with large shipping industries had been anxious about the costs of an oil price cap to their economies. Meanwhile, the Group-of-Seven industrialized economies are within weeks of announcing a formal cap on the price of Russian oil, according to Ben Harris, the U.S. Treasury’s assistant secretary for economic policy. The step will be announced “substantially before Dec. 5,” Harris said. That’s the date when aggressive European Union sanctions on Russian oil exports are due to enter into force.
Gas prices climbing again... The White House is warning the oil industry that it could take “extraordinary” measures to rein in gas prices, the Washington Post reports. Democrats also want to blame big corporations politically for high prices, which have now hit $6.38 per gallon in California and are particularly acute in the West. “The most potent policy option the White House has is emergency authority to limit exports to other nations, a strategy that would be targeted at boosting inventories at home but which could destabilize global markets and exacerbate the energy crunch.”
Russia officially annexes four Ukrainian regions... Russian President Vladimir Putin signed laws annexing four Ukrainian regions. Earlier this week, both houses of the Russian parliament ratified treaties making the Donetsk, Luhansk, Kherson and Zaporizhzhia regions part of Russia. Ukrainian forces have driven back Russian troops in three partially occupied Ukrainian territories. In recent weeks, Kyiv has recaptured large swaths of territory while nearly 200,000 Russians have fled to bordering nations to escape Putin’s conscription order. “Russia isn’t winning. Putin’s great nationalist celebration of conquests is turning out to be a debacle,” said Daniel Fried, a fellow at the Atlantic Council and a former U.S. ambassador to Poland.
U.S. national debt tops $31 trillion for first time... Public debt outstanding in the U.S. surpassed $31 trillion for the first time ever, Treasury Department data published Tuesday showed. A trillion dollars of debt was added just in the past eight months and it’s close to reaching the $31.4 trillion debt ceiling Congress imposed on borrowing until early 2023. Higher rates could add $1 trillion more to what the federal government spends on interest payments this decade, according to Peterson Foundation estimates.
Global CEOs expect a brief recession... Business leaders worldwide expect a recession to hit the global economy within the next 12 months, according to new survey findings from KMPG. Many of them project it to be a “mild and short” slowdown, and they see more growth prospects emerging soon, however. “CEOs worldwide are displaying greater confidence, grit and tenacity in riding out the short-term economic impacts to their businesses as seen in their rising confidence in the global economy and their optimism over a three-year horizon,” said Ong Pang Thye, a managing partner for KPMG Singapore.
Taiwan official: China has ‘destroyed’ tacit agreement on Taiwan Strait... China has destroyed a tacit agreement on military movements in the Taiwan Strait by crossing an unofficial “median line” running down the waterway, Taiwan Defense Minister Chiu Kuo-cheng said. Chiu told Taiwan’s parliament Taiwan would react if China crossed its “red line” without saying what that was, though he suggested it included Chinese aircraft, including drones, flying into Taiwan’s territory.
China again bans residents from leaving Xinjiang over Covid-19 outbreak... The new restrictions come just weeks after the far-western region began relaxing restrictions from a stringent extended lockdown, fueling public frustration among those fretting over food shortages and plunging incomes. On Tuesday, the region — home to 22 million people, many belonging to ethnic minorities — reported 38 new asymptomatic Covid cases. Since July 30, Xinjiang has reported a total of 5,790 infections.
Another day of strong gains in Choice beef... Choice boxed beef prices firmed $2.10 Tuesday on the heels of a $2.19 gain Monday, while Select firmed 60 cents. That widened the Choice/Select spread to $26.13. Wholesale beef price action continues to signal marketings are current, despite heavy carcass weights. The extra beef from the heavy carcasses is holding back cash cattle gains, but we still expect steady/firmer cash prices this week and a strengthening cash market through 2023.
Ugly price action for hogs... Lean hog futures posted a downside breakout from the bear flag formation on the daily charts Tuesday, which projects contracts to around their lows. While we feel traders are overly pessimistic, that won’t likely stop additional near-term selling given the technical breakdown.
Overnight demand news... Exporters reported no tenders or sales.
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
- 2:00 p.m. Broiler Hatchery — NASS