Good morning!
Soybean meal extends gains overnight... Soybean meal futures mildly built on Friday’s strong gains overnight, though that failed to trigger buying in soybeans or corn. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 2 to 3 cents lower, winter wheat futures are narrowly mixed and spring wheat is mostly 3 to 4 cents higher. Front-month crude oil futures are around $1 lower, while the U.S. dollar index is around 100 points lower this morning.
Big rebound expected in October NOPA crush... Traders expect NOPA members to report soybean crushings of 181.9 million bu. in October, according to a Reuters survey. If realized, the figure would be up 18.3% from September and the fourth largest crush for any month on record. But it would be 1.8% below October 2020, which was the largest-ever crush for any month. Soyoil stocks are expected to rise for a fourth straight month, with the average estimate at 1.724 billion pounds.
Xi, Biden have their virtual summit this evening... President Joe Biden will tell Chinese leader Xi Jinping at the virtual meeting that China must “play by the rules of the road” like a responsible nation, a senior U.S. administration official said. The video dialogue will be about setting terms for future U.S.-China competition, the official said. The official declined to answer questions on whether the U.S. will send officials to the Beijing Winter Olympics in February. Activists and U.S. lawmakers have urged the Biden administration to boycott the Olympics.
The week ahead in Washington... President Biden is scheduled to sign the bipartisan infrastructure framework into law this afternoon. He appointed former New Orleans Mayor Mitch Landrieu as senior adviser responsible for overseeing distribution of infrastructure funding. As for the Build Back Better (BBB) measure, White House and Democratic leaders are confident in a vote this week, but the Congressional Budget Office (CBO) will in large part determine when the House will vote on the social/climate spending measure. No Republicans will back the BBB, which means Democrats can afford just three defections from their side in the House and none in the Senate. Sen. Joe Manchin (D-W.V.) has leverage and is the key Senate vote, while Moderate House Democrats have said they want more “fiscal information” from the CBO about the bill.
How White House is trying to deal with inflation... National Economic Council (NEC) Director Brian Deese on Sunday pointed to the Democrats’ social spending package as a solution to rising inflation in the United States. Asked by host Jake Tapper on CNN’s State of the Union how the White House plans to address inflation, Deese touted the party’s social spending package to lower costs for Americans across the nation. He said the spending package would help lower prices for prescription drugs, childcare and home ownership, all of which he argued would “go right at lowering costs for American families.” He also underscored the claim from the White House that the bill “is fully paid for” by increasing taxes on the highest earners in the country. As a result, Deese said the bill would not “add to inflationary pressures.” He said it would be “quite the opposite because we’re going to pay for everything in this bill by raising taxes on big companies, large corporations and the highest income Americans.”
Fed head decision time... President Biden is expected to decide as soon as this week whether to appoint Federal Reserve Chair Jerome Powell or governor Lael Brainard to a four-year term leading the U.S. central bank beginning next February, the Wall Street Journal (WSJ) reports. Because Brainard’s views on inflation and interest rates have been similar this year to Powell’s, policy continuity seems likely no matter who is chosen, WSJ noted. Biden met separately to interview both candidates on Nov. 4. Members of Biden’s economic team and several Democratic lawmakers have favored Powell for a second term. But resistance from some progressive Democrats, who want someone more committed to toughening financial regulation and addressing climate change at the Fed, has complicated the White House’s calculus for months. Powell is a lawyer by training; Brainard is an economist.
Deutsche Bank calls on ECB to tighten monetary policy as inflation surges... The head of Germany’s biggest bank has called on central bankers to tighten monetary policy to provide “countermeasures” against surging inflation. Deutsche Bank chief executive Christian Sewing warned that inflation was producing risky side effects and would last longer than policymakers expected.
China clears way for commercial GMO corn production... China’s ag ministry on Friday released details of a planned regulatory overhaul for the country’s seed industry. The draft document is open for public comment until Dec. 12. The changes implement decisions by the cabinet and the powerful central committee of the ruling Communist Party on safe management of GMOs and development of a modern seed industry. Top policymakers have also urged progress in biotech breeding, seen as key to ensuring the country’s food security. Once approved, China could plant 33 million hectares to GM corn, estimated Hua’an Securities in a note on Sunday.
China’s industrial output, retail sales rebound... China’s industrial output and retail sales grew more quickly than expected in October, despite fresh curbs to control Covid-19 outbreaks and supply shortages. China’s industrial output grew 3.5% in October versus year-ago, rising from a 3.1% increase in September. Retail sales increased 4.9% versus the 4.4% growth in September. China’s fixed asset investment continued to slow, rising 6.1% in the first 10 months from the same period a year earlier, compared with a 7.3% rise in January-September.
Choice beef prices in a comfort zone... Choice boxed beef prices dropped 84 cents on Friday and are now down $5.92 since the short-term peak of $290.22 on Nov. 4. Based on price action over the past month, Choice beef appears to have found a comfort zone for both packers and retailers in the $280.00 to $290.00 area. While the beef price advance has stalled, packer margins remain strong, giving them room and incentive to keep bidding up for cash cattle, if needed.
Bigger drop in cash hog index... The CME lean hog index is down $1.27 today to $76.68, the lowest level since mid-February. While December lean hog futures finished 80 1/2 cents below today’s cash index quote on Friday, the accelerating drop in the cash market limits the upside to modest corrective buying and may spur some fresh seller interest.
Weekend demand news... Turkey purchased 325,000 MT of corn – likely to be sourced from Ukraine. Taiwan tendered to purchase 48,000 MT of U.S. milling wheat. Algeria tendered to buy 50,000 MT of optional origin milling wheat.
Today’s reports
- 10:00 a.m. Fruit and Tree Nut Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 3:00 p.m. Crop Progress — NASS