China’s top diplomat Wang Yi: Relations with Russia ‘solid as sock’ | Super wild pigs in Canada?
In Today’s Digital Newspaper |
Abbreviated format today as I am in the Ozarks speaking at the 2023 Missouri Pork Expo.
Global stock markets were mixed but mostly lower overnight. U.S. stock indexes are pointed toward slightly lower openings and at three-week lows when the New York day session begins. The stock index bulls have faded recently, including near-term price uptrends on the daily bar chart being negated to suggest near-term market tops are in place, says analyst Jim Wyckoff. In Asia, Japan -1.3%. Hong Kong -0.5%. China -0.5%. India -1.5%. In Europe, at midday, London -0.9%. Paris -0.6%. Frankfurt -0.4%.
The three major indices each fell by at least 2% on Tuesday, with the Nasdaq dropping the most. The Dow is now in negative territory for the year.
Key outside markets this morning; the U.S. dollar index slightly higher. Nymex crude oil futures prices are lower and trading around $75.50 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.943%. A Wall Street Journal headline Wednesday reads: “Rising bond yields rattle 2023 stock rally.”
Grain price pressure overnight. Corn and soybean futures pulled back from Tuesday’s gains during overnight trade, while the wheat market extended yesterday’s losses. As of 7:30 a.m. ET, corn futures were trading around 2 cents lower, soybeans were 4 to 5 cents lower, SRW wheat was 7 to 8 cents lower, HRW wheat was mostly 10 to 15 cents lower and spring wheat was mostly 1 to 2 cents lower. Front-month crude oil futures were around 50 cents lower, and the U.S. dollar index was near unchanged.
Wholesale beef prices continue to climb. Wholesale beef prices firmed another $4.31 in Choice boxes and $2.79 for Select on Tuesday. At $287.20, the Choice cutout value reached the highest level since Jan. 31, 2021. Surging wholesale beef prices are keeping packer margins solidly in the black and giving them incentive to actively compete for a tightening supply of market-ready cattle.
Cash hog index continues to strengthen, pork cutout reverses. The CME lean hog index is up another 35 cents to $76.76 (as of Feb. 18), extending the string of recent price gains. The cash index is now $4.65 off its Jan. 23 low. The pork cutout value fell $4.71 on Tuesday, nearly erasing all of Monday’s strong gains as all cuts except hams and pics declined.
Supreme Court may announce a decision relatively soon on the controversial Proposition 12 case that deals with California trying to dictate how hogs are raised, sources inform. The California law being challenged bans the sale of pork within the state unless pregnant pigs are allowed at least 24 square feet of space and the ability to stand up and turn around in their pens. The measure was approved with more 68% of the vote as part of a 2018 ballot initiative known as Proposition 12. The National Pork Producers Council and the American Farm Bureau Federation, which sued in 2019, say the measure violates the so-called dormant commerce clause, a doctrine that says the U.S. Constitution limits the power of states to regulate commerce outside their borders without congressional authorization. Check Key Links for more background information.
The U.S. may be facing a new problem: Canadian “super pigs.” Crossbred and highly intelligent pigs are set to come into the U.S. by way of its northern neighbor. The pigs are “highly elusive,” as they can survive the cold by tunneling beneath the snow. The United States estimates that wild pigs already cause $1.5 billion in damage each year already; consider what more the super pigs can do.
Ukraine grain shipments slow as export deal with Russia nears end. Grain exports from Ukraine have slowed markedly in recent weeks, pushing up global prices, amid shipping delays and concerns about the looming expiration of a United Nations-backed deal to give food cargoes safe passage. Russia’s invasion of Ukraine last year had initially trapped shipments of wheat, sunflower oil and other agricultural products, sparking concerns of a global food crisis. Shipments then recovered later in the year after Moscow and Kyiv agreed to a U.N.-backed pact to resume food exports. Now, with tensions high ahead of the first anniversary of the invasion, some traders are worried Russia won’t extend the grain deal, which is due to expire on March 19, the Wall Street Journal reports (link). (Reuters says the deal expires March 18.)
Only thing President Biden and Russia leader Vladmir Putin agreed with in dueling Tuesday speeches was the Russia/Ukraine war would not end soon. Biden repeatedly blamed Putin for dragging Europe back to brutality and warfare on a scale not seen since World War II. He accused the Russian leader of wide-ranging atrocities and called on the world to stand up to him and other “tyrants.” Putin blamed the U.S. and its allies for turning the conflict into a “global confrontation.” Putin also announced plans to suspend Russia’s involvement in its last remaining nuclear arms treaty with the U.S.
China’s top diplomat Wang Yi arrived in Moscow. He was named Chinese leader Xi Jinping’s top foreign policy adviser last month. He will meet with Russian Foreign Minister Sergey Lavrov today Russian state media TASS reported, citing the Russian foreign ministry. While neither country has specified whether Wang will hold talks with President Vladimir Putin, Kremlin spokesman Dmitry Peskov said Monday that “we do not exclude” such a meeting. Wang met with the head of Russia’s Security Council, Nikolai Patrushev, on Tuesday, according to a readout from China’s Foreign Ministry. The readout said the two officials agreed to oppose “the Cold War mentality, bloc confrontation and ideological opposition” — a thinly veiled criticism of the U.S. — and to make more efforts to “improve global governance,” in an apparent reference to Beijing and Moscow’s ambitions to reshape the global order in their favor. Wang also told Patrushev that “Sino-Russian relations are mature and solid as a rock, and will withstand the test of the changing international situation,” according to Russian state-owned news agency Sputnik.
China’s Foreign Minister Qin Gang reiterated Beijing’s messaging on Ukraine at a security forum in the Chinese capital. China was “deeply concerned” the conflict would spiral “out of control,” and would continue to urge peace talks and provide “Chinese wisdom” to bring about a political settlement, he said. “At the same time, we urge relevant countries to immediately stop adding fuel to the fire, stop shifting blame to China, and stop hyping up the discourse of Ukraine today, Taiwan tomorrow,” he said, in an apparent reference to the U.S. and its allies.
Traders today will watch the content of the FOMC minutes. Says ING Economics: “We must remember that the 1 February meeting was held before the strong jobs and inflation figures, and crucially before the hawkish repricing in Fed expectations. With markets pricing in close to a 5.50% peak rate, we would essentially need to see evidence that multiple members voiced the desire to hike by 50bp at the start of February. That would back the cause for a 50bp move in March, and likely lift the dollar. However, the bar is set quite high after the recent hawkish comments, and we don’t see a very high chance of a hawkish surprise today.”
Bottom line: U.S. central bankers will publish minutes at 2 p.m. ET of their Jan. 31-Feb. 1 gathering, at which they voted unanimously to raise rates by just a quarter percentage point. The readout of the gathering could offer insight on whether two hawkish policymakers, Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard, who do not vote in monetary policy decisions this year, were alone in seeing the case for doing another 50 basis-point hike or if others shared their view.
The European Union slashed its gas demand this winter by almost a fifth, beating a voluntary 15% goal that was made to help it survive the heating season with much lower Russian flows. The bloc’s consumption between August and January was 19% below the average of the previous five years, according to data published by Eurostat on Tuesday. Finland saw the biggest drop — with usage more than halving — with demand rising in only Malta and Slovakia.
Norfolk Southern feels Biden administration heat for its handling of the fiery freight train derailment in Ohio. Federal authorities took control of cleanup operations and two state governors raised the specter of prosecutions in conjunction with the disaster. Under a formal order issued by the Environmental Protection Agency (EPA), the company will be required to conduct cleanup operations in accordance with an EPA work plan and pay for the remediation costs. The company has two days to respond to the directive, which marks the federal government’s strongest move yet to address the disaster.
Norfolk Southern said it is “committed to thoroughly and safely cleaning the site,” while “reimbursing residents for the disruption this has caused in their lives… We are going to learn from this terrible accident and work with regulators and elected officials to improve railroad safety,” the company said.
President Biden called on Congress to implement rail safety measures. “We’ll continue to hold rail companies accountable when they fail to put safety first. But first, we’ve got Norfolk Southern’s mess to clean,” Biden said in a tweet. Meanwhile, Transportation Secretary Pete Buttigieg wants tougher regulation of high-hazard flammable trains and stiffer penalties for violations in the aftermath of the chemical train derailment in Ohio. The Transportation Department is pushing freight rail companies to accelerate their phase-in of safer tank cars and opt in to a reporting system with the agency that protects whistleblowers who spot safety problems, the agency announced Tuesday.
Meanwhile, former president Donald Trump is headed today to East Palestine, Ohio, making the town — ravaged by toxic chemicals — the third stop in his slow-moving campaign to win back the White House.
The Biden administration proposed tougher border restrictions. The U.S. would deny asylum to those who have not sought protection elsewhere on their journey, a rule first proposed under the Trump administration. But there are some Biden differences with Trump’s approach — White House officials on Tuesday rejected the comparison to the Trump administration, saying that it’s not a categorical ban on asylum and emphasized efforts to expand access to legal pathways to the U.S. The rule could enter into force in May and last two years. President Joe Biden is keen to avoid a surge of asylum-seekers when Title 42 , a different rule allowing for migrants’ rapid expulsion from America, expires in May.
South Korea’s birth rate hit a record low. Just 249,000 babies were born in 2022, down 4.4% from the previous year, making it the third year in a row that deaths exceeded births. By 2100 the country’s population is expected to fall by 53% to 24 million. It is the fastest-shrinking population among rich economies.
Virginia House race. State Sen. Jennifer L. McClellan (D-Richmond) defeated conservative pastor Leon Benjamin to become the state’s first Black congresswoman.
Wisconsin. Milwaukee County Judge Janet Protasiewicz and former state Supreme Court justice Daniel Kelly will advance to the April 4 general election in a race that could tilt the court’s balance of power and have a profound effect on abortion rights in the state.
Presidential race. Several Republicans have been making moves suggesting interest in a national presidential campaign and openly considering presidential bids. The primary field is early in its stages, but candidates are beginning to come forward —- and many more are expected in the coming months. The latest GOP hopeful to announce a run for the Republican presidential nomination is entrepreneur Vivek Ramaswamy.
More than 65 million people under winter weather alerts. A massive coast-to-coast storm has hit the country with heavy snow and high winds. The alerts extend from as far west as California to Minnesota through Maine, but the Upper Midwest is expected to bear the brunt of the storm in terms of snowfall totals. Minnesota’s Minneapolis area is at the highest risk to pick up at least 15 inches of snow, according to the latest forecasts. The expected conditions today have spurred states to take safety measures as travel conditions continue to deteriorate. More than 500 flights scheduled for today have also been canceled, with Minneapolis and Denver each accounting for more than 100 cancellations, according to FlightAware.
Finally…
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Russia/Ukraine war timeline | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package | Gov’t payments to farmers by program | Farmer working capital | USDA ag outlook forum |