Good morning!
Thank you, veterans!... Today is Veterans Day, a U.S. federal holiday. We honor all who have served in the military. Due to today’s holiday, export sales data for the week ended Nov. 4 will be pushed back to Friday morning.
Varied price tone in light overnight trade... Corn, soybeans and wheat posted light two-sided trade in a quiet overnight session. As of 6:30 a.m. CT, corn futures are fractionally to a penny lower, soybeans are mostly 1 to 2 cents higher, winter wheat futures are fractionally to 2 cents lower and spring wheat futures are 5 to 7 cents higher. Front-month crude oil futures are around 60 cents lower and the U.S. dollar index is around 110 points higher this morning.
Brazil raises its 2021-22 soybean, corn crop forecasts... Brazil is expected to produce a record soybean crop of 142.009 MMT, according to Brazilian crop estimating agency Conab, as planted acreage is forecast 400,000 hectares higher than previously thought. Conab also raised its Brazilian corn crop estimate by 399,000 MT from last month to a record 116.712 MMT.
It’s not if the Fed will raise rates to tame inflation but rather how quickly and how much... U.S. inflation data this week highlights why Fed officials have backed away from characterizing price pressures as “transitory” and have started saying “sticky.” While senior central bank leaders still believe inflation could slow as supply-chain kinks abate, they now see that process taking longer than expected, extending into 2022. That is in part because the spread of the Delta variant of Covid has extended a series of disruptions in the economy. Together with evidence that the labor market is rapidly recovering, this means the Fed is more likely to raise interest rates next year, possibly as soon as next summer, the Wall Street Journal reports.
IRS: Tax brackets will be higher in 2022 due to faster inflation... The threshold for the top federal income-tax bracket in 2022 will climb by nearly $20,000 next year for married couples, and that 37% rate will apply to income above $647,850, the Internal Revenue Service said Wednesday as it implemented automatic tax-code updates to reflect faster inflation in 2021. The new inflation adjustments are for tax year 2022, for which taxpayers will file tax returns in early 2023.
Will biofuels sector still get much-delayed $700 million in aid with surge in ethanol prices?... Yes, say sources, with one contact signaling the announcement is ready to be made “at the right time.” Prices for ethanol have risen about 50% year-to-date, with the near-term contract trading at about $2.20 a gallon on the Chicago Board of Trade. The price pushed through $2 a gallon earlier this year, the first time since 2014 it has done so. Gasoline prices, meanwhile, are the highest they have been in seven years.
BIF signing ceremony Nov. 15... A signing ceremony for the bipartisan infrastructure framework (BIF) bill will be next Monday at the White House. In addition to members of Congress, the White House said some governors, mayors, labor and business leaders will also be at the ceremony. “At the signing ceremony, the President will highlight how he is following through on his commitment to rebuild the middle class and the historic benefits the Bipartisan Infrastructure Deal will deliver for American families,” according to a news release from the White House.
U.S./China reach surprising climate pact... The U.S. and China issued a surprise joint statement agreeing to “accelerate the transition to a global net zero economy.” Although the statement did not offer much new, the joint nature of it signals a warming of relations ahead of a likely virtual meeting between Presidents Joe Biden and Xi Jinping, tentatively set for next Monday. China also committed to developing a “national plan” to cut methane emissions, although it did not sign up to an international pledge to cut emissions of the gas 30% by 2030. The agreement between the world’s two largest greenhouse gas emitters may help pave the way for a broader climate agreement at COP26 in Glasgow. A first draft of the COP26 deal released Wednesday received a mixed response from climate activists and experts.
Russian moves unsettle Ukraine, United States... U.S. Secretary of State Antony Blinken on Wednesday expressed his concern over “unusual Russian military activity” near the Russian border with Ukraine amid an unexplained military buildup. Last week the Ukrainian Defense Ministry confirmed that 90,000 Russian troops were stationed across its border, although it’s not clear how many were only recently positioned there. The U.S. concern comes amid reports garnered from commercial satellite imagery that Russian tank and artillery units had moved close to Ukraine’s northern border over the past month. Unlike in April, the military’s movements can’t be explained away by training exercises and have caused enough concern in the Biden administration that CIA chief William Burns was dispatched to Moscow last week to warn Russian officials against any further escalation.
USDA announces faster line-speed trial program for pork plants... USDA said Wednesday nine U.S. pork plants can apply to operate faster processing-line speeds under a one-year trial, after a federal judge in March struck down a Trump-era rule that removed line speed limits. In the pilot program, plants will implement worker safety measures under agreements with labor unions or worker safety committees. Plants will collect data on how line speeds affect workers and share it with OSHA and the data could be used to make future rules for the industry, USDA said. Pork companies lost 2.5% of their slaughtering capacity following the March court decision, according to the National Pork Producers Council.
Packers chasing cash cattle... Initial cash cattle trade this week started at $3 to $4 higher prices, with cash sources noting packer demand was stronger than available market-ready supplies. While some cattle traded at the sharply higher prices, other feedlots passed in hopes of even stronger cash prices later this week – similar to what happened last week.
Cash hog fundamentals weaken... The CME lean hog index is down 51 cents today to $78.72, while the pork cutout value dropped $1.98 to $90.57 on Wednesday. While December lean hog futures rebounded after earlier losses yesterday amid the discount the contract holds to the cash index, the upside is limited to mild corrective buying until cash fundamentals find a bottom.
Overnight demand news... Japan purchased 157,987 MT of wheat from its weekly tender, including 62,364 MT U.S., 63,240 MT Canadian and 32,383 MT Australian. South Korea bought 65,000 MT of corn – likely South American or South African origin. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat.
Today’s reports
- No reports – Veterans Day holiday