Phase 2 of ERP still not released | Mexico to rework GMO corn decree
In Today’s Digital Newspaper |
An abbreviated report today as I am in Champaign, Illinois, for a speech at the Strategic Farm Marketing & Crop Insurance conference, then off to Austin, Texas, to speak at the USA Rice Federation annual meeting.
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward narrowly mixed openings. In Asia, Japan -0.4%. Hong Kong +3.4%. China -0.1%. India +0.3%. In Europe, at midday, London -0.1%. Paris +0.1%. Frankfurt -0.1%.
Key outside markets today see the U.S. dollar index firmer after hitting a 3.5-month low earlier this week. Nymex crude oil prices are a bit higher trading around $72.50 a barrel. Prices Wednesday hit an 11-month low. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.442%.
Modest followthrough buying overnight. Corn, soybean and wheat futures modestly built on Wednesday’s gains during overnight trade. As of 7:30 a.m. WT, corn futures were trading steady to a penny higher, soybeans were mostly 2 to 5 cents higher and wheat futures were 1 to 3 cents higher. Front-month crude oil futures were more than $1.50 higher and the U.S. dollar index was trading just above unchanged.
Beef, pork exports rise in October. The U.S. exported 301.1 million lbs. of beef during October — a record for the month. Beef shipments increased 25.3 million lbs. from September and 26.6 million lbs. from October 2021. Through the first 10 months of 2022, the U.S. shipped 2.993 billion lbs. of beef, up 5.1% from the same period last year, driven by a 26% increase in exports to China. U.S. pork exports totaled 539.7 million lbs. in October, up 26.7 million lbs. from September and 487,000 lbs. above last year. Through the first 10 months of this year, U.S. pork shipments totaled 5.198 billion lbs., down 12.1% from the same period last year as exports to China plunged 54%.
Slow developing cash cattle trade. Cash cattle trade has yet to turn active, with only a few animals changing hands around steady prices in the Southern Plains thus far. Feedlots in the northern market passed on steady bids yesterday in hopes packers will raise prices later this week. December live cattle futures finished Wednesday at a $4.495 discount to last week’s average cash cattle price, reflecting traders’ negative attitudes.
Cash hog index still searching for a seasonal low. After a 15-cent gain on Wednesday, the CME lean hog index is down 16 cents today (as of Dec. 6), signaling a seasonal low is not yet in place. December lean hog futures finished yesterday at a modest discount to the cash index, signaling traders aren’t yet convinced a seasonal low is in place.
U.S. starts FY 2023 with a small ag trade surplus. The U.S. exported $17.5 billion of ag goods in October against imports of $17.1 billion for a trade surplus of $424 million during the first month of fiscal year (FY) 2023. Ag exports declined modestly from $17.7 billion in October 2021, but imports rose significantly from the year-ago figure of $14.8 billion.
Mexico economy minister signals new decree coming on GMO imports; U.S. meeting could happen next week. Mexican Secretary of Economy Raquel Buenrostro told reporters in Mexico Wednesday the decree to bar imports of GMO crops into Mexico will be pushed back to 2025, adding the country is looking to put together a plan that will “make clearer” the presidential decree. “Right now, we are working here within the government to make this new decree and present it,” she said, adding that U.S. and Mexican officials could meet December 16 to discuss the new proposals from Mexico. Mexican President Andrés Manuel López Obrador said after meeting with USDA Secretary Tom Vilsack Mexico would allow imports of GMO yellow corn for animal feed over the next two years while the government studies any potential impacts on human health. Estimates are that 18% to 20% of U.S. corn to Mexico is white corn for food use while the remainder of nearly 18 million tonnes in corn imports are yellow corn imported for animal feed. It appears Mexico is coming to the realization that they are unlikely to be able to halt imports of U.S. GMO corn for feed use. US officials are not likely to react positively to the suggestion of a need to study the potential impacts on human health.
Bank of Canada signals end of tightening campaign. The Bank of Canada raised its main interest rate by a half-percentage point and signaled it is at or near the end of its rapid-fire tightening campaign because of slowing growth and early signs of easing price pressures. The central bank on Wednesday increased its target for the overnight rate to 4.25% from 3.75%, the highest level in nearly 15 years.
High oil prices lift Saudi Arabia. The Saudi government posted a $27 billion budget surplus Wednesday, as this year’s high oil prices accelerate Crown Prince Mohammed bin Salman‘s ambitious plans and boost resource-rich economies across the Persian Gulf. Buoyant crude prices helped the kingdom’s economy expand at one of the fastest rates globally.
Prices of used vehicles hit the lowest level in over a year last month, tumbling from record levels as interest rates rise and new cars, held back by supply constraints, become more widely available. Cox Automotive’s Manheim Used Vehicle Value Index, which tracks used-vehicle prices at its wholesale auto auctions, has fallen six consecutive months.
Vladimir Putin, Russia’s president, warned that the war in Ukraine would be a “long process.” Putin said his invasion had already yielded “significant” results and that he would not mobilize more troops. Speaking at a televised meeting, he also acknowledged that the risk of a nuclear war was growing but insisted that Russia would only ever use nuclear weapons in response to an attack. A spokesman for America’s State Department said, “any loose talk of nuclear weapons is absolutely irresponsible.”
USDA still has not released Phase 2 of Emergency Relief Program (ERP). Farmers and some farm-state lawmakers apparently were unable to convince USDA officials to make the coming announcement less onerous relative to tax information needed.
USDA extends election period for 2023 DMC program. USDA will extend the registration and election period for producers to choose coverage levels under the Dairy Margin Coverage (DMC) program for 2023 to Jan. 31. The original deadline was Dec. 9. USDA has often extended this deadline in the past. Upshot: You can pretty much count on death, taxes and DMC signup extensions!
Holds continue on USDA, USTR nominees. Senators are continuing with holds on nominees for roles at USDA and the Office of the US Trade Representative (USTR), keeping prospects of the nominees being dealt with before year end uncertain. Sen. Dan Sullivan (R-Alaska) has a disagreement with USDA Secretary Tom Vilsack over USDA plans to end logging in the Tongass National Forest. Sullivan has put a hold on the nominations of Jose Emilio Esteban to be undersecretary for food safety; Margo Schlanger to be assistant secretary for civil rights; and Alexis Taylor to be undersecretary for trade and foreign agricultural services. CQ reported that Sen. Cory Booker (D-N.J.) also has a hold on Esteban over meat labeling standards and he voted against sending the nomination to the full Senate. Meanwhile, Politico reported that Sen. Bob Menendez (D-N.J.) has continued his hold on the nomination of Doug McKalip to be chief agricultural negotiator at USTR as he wants the trade agency to be more transparent and wants to establish an inspector general at the office.
More Americans are moving to places where extreme weather events are commonplace, a new study found. Hurricane-prone Florida and states in the drought-stricken West have seen exceptional population increases in recent decades, researchers say, signaling climate risks are not at the top of people’s minds when it comes to relocating.
The Biden administration has appealed a federal court decision that blocked the use of Title 42 —- a controversial Trump-era policy allowing for the swift removal of migrants at the U.S./Mexico border. The authority has been heavily criticized by public health experts and immigrant advocates, and has largely barred asylum at the U.S./Mexico border. While its origins were in the Trump administration, Title 42 has become a key tool for the Biden administration as it faces mass migration in the Western hemisphere. Officials have been bracing for an influx of migrants when the authority lifts on Dec. 21. The Department of Homeland Security is projecting up to 14,000 migrants may attempt to cross the U.S. southern border per day when the policy is lifted.
Saudi Arabia is rolling out the red carpet for Chinese President Xi Jinping, who has arrived in the country for a four-day visit. Xi’s plane was escorted by Saudi fighter jets on the way into Riyadh, while he was greeted at the airport by the capital’s governor and the Saudi foreign minister. It’s a stark contrast to when President Biden visited the country in July after previously pledging to make a “pariah” out of the Kingdom over the killing of U.S.-based columnist Jamal Khashoggi. Some $30 billion worth of agreements are expected to be signed, including energy and infrastructure deals, and sectors that could benefit from U.S.-blacklisted firms like telecoms equipment giant Huawei Technologies. The two sides are also expected to coordinate China’s Belt and Road Initiative with Saudi Arabia’s Vision 2030 development plan, while talks on a free trade agreement between China and the Gulf Cooperation Council are entering their final stage.
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