Good morning!
Soybeans face light followthrough selling, corn and wheat bounce... Soybean futures failed to rebound from yesterday’s sharp losses overnight as corrective buyer interest was limited. Corn and wheat futures mildly rebounded. As of 6:30 a.m. CT, soybeans are trading mostly 3 to 4 cents lower, corn is steady to a penny higher and wheat futures are 1 to 5 cents higher, led by HRS contracts. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is around 175 points higher this morning.
Stronger jobs data expected this morning... Economists expect the Labor Department to show the U.S. economy added 450,000 non-farm payrolls in October, more than double the number gained in September and the biggest jump since July. The past two employment reports have shown gains in payrolls far less than economist expected. The unemployment rate is expected to decline to 4.7%. Average hourly earnings will be closely monitored for inflation clues – and are expected to be up 4.9%, year-on-year, compared to a 4.58% increase in the September report.
House signals votes on BBB, traditional infrastructure... Barring a final whip count going astray, the House is slated to vote today on both a $1 trillion bipartisan infrastructure (BIF) bill and the larger Build Back Better (BBB) package of social spending and climate measures. The House will first debate the rule for BBB on the floor, a process expected to take an hour. Members then will vote on the rule and if it passes, as most expect, that is the sign BBB will pass. House Speaker Nancy Pelosi (D-Calif.) ruled out the possibility of voting first on the traditional infrastructure bill. The House is out of town next week and much of the Democratic leadership is going abroad, so there’s a push to do votes today or this weekend. Are the House votes in place? The whip count on the reconciliation bill remains unclear, but leaders have repeatedly asserted in the past that they will not bring either measure to the floor without the votes needed to pass. Whatever happens in the House, the Senate is likely to alter its version of the BBB package. BIF would go to President Joe Biden for his signature after House passage.
Midwest governors query EPA on potential state level year-round E15 sales fix... A bipartisan group of Midwest governors are seeking guidance from EPA Administrator Michael Regan on provisions of the Clean Air Act allowing them to request that the agency grant an exemption to Reid vapor pressure (RVP) volatility requirements for ethanol, which would again open the door to year-round sales of E15 (15% ethanol/85% gasoline) in their states. The governors said they were “extremely disappointed” by the DC Circuit Court decision last summer that struck down EPA’s rule that allowed nationwide sales of E15 during summer months. Since the ruling, biofuel interests and their supporters in Congress have been exploring a variety of ways to restore the RVP waiver through legislation and regulatory processes. According to the Renewable Fuels Association, “a universal move from E10 to E15” across the eight states that have inquired about the 1-psi waiver exemption would boost ethanol consumption by almost 700 million gallons and increase corn demand by 225 million bushels.
Xi, Biden likely to agree to reopen consulates... President Biden and Chinese leader Xi Jinping are likely to announce the reopening of consulates shuttered last year, Politico reported, which would be one of the biggest steps yet to repair ties fractured during the Trump administration. The two leaders, who are planning a virtual summit soon, are also likely to announce an easing of visa restrictions, the news outlet reported, citing unidentified sources. The U.S. is also seeking to make progress on trade and climate issues, as well as start a bilateral nuclear weapons dialogue — something Beijing has resisted.
China’s damage control on food shortage scare continues... China’s state planner tried to ensure consumers vegetable supplies in the country are sufficient to meet their needs and says efforts are being made to stabilize prices. Chinese consumers went into a panic after Beijing issued a stock-up warning for food and other daily necessities to citizens ahead of the coming winter season. Since then, a series of damage-control statements have been issued by Chinese government officials and offices.
OPEC+ rejection puts solution to high oil price in Biden’s hands... Saudi Arabia and its OPEC+ allies put oil prices in the hands of President Biden, rejecting his demands for a large bump in production and leaving him the choice of whether to tap America’s Strategic Petroleum Reserve. After a meeting Thursday, the cartel approved a 400,000 barrel-per-day output hike for December. The U.S. asked for as much as double that amount. After the meeting, the White House reiterated it’ll consider “the full range of tools” to protect the economy.
Cattle pressure causes concern of repeat performance... Live cattle futures have shot higher the past two weeks only to see the market sharply pull back on Thursday and Friday. As a result, yesterday’s moderate to sharp losses sparked concerns about a repeat performance. While cash cattle traded $2-plus higher earlier this week, some of that optimism has faded as packers so far have refused to raise bids more, resulting in a cash standoff for this week’s remaining market-ready supplies. If packers don’t raise cash bids from earlier in the week, it could cause more selling in futures to finish the week.
Hogs looking for a strong weekly close... Lean hog futures posted strong gains Thursday on the heels of big weekly export sales. That strengthened the technical picture, suggesting a short-term low has been posted. But the CME lean hog index remains under pressure and the pork cutout value weakened after two days of gains. Traders may be reluctant to extend corrective gains in hog futures until cash fundamentals strengthen.
Overnight demand news... Exporters reported no sales or tenders overnight.
Today’s reports
- 10:00 a.m. Livestock and Meat International Trade Data — ERS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders Report — CFTC