Corn 675-6 (-0.77%) | Soybeans 1449-0 (-0.91%) | SRW Wheat 846-2 (-0.18%)
KC Wheat 957-2 (+0.42%) | Live Cattle 153.050 (+0.92%) | Lean Hogs 87.050 (+4.91%)
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Welcome to your weekly agriculture report, where we cover everything you'll need to know for the week ahead. The weeks have started to feel redundant as China, Russia, Ukraine, and Brazil continue to dictate the markets. We will dive into market-moving influences, big and small, for your “This Week in Ag” update.
Soybean Swings
Soybeans may not be swinging from the chandeliers, which is surprising considering last Friday’s big gain. However, this weekend China reported some not-so-good news the markets were banking on, leading to the quick rise and fall of the crop.
- Covid Policy Perplexity… China announced that Covid policies would ease in the country with some of the strictest measures taken to control the virus. As quickly as this was announced, it was reported that new Covid infections were at a high. With demand still posing huge questions for the market, only time will tell how this will be realized and what policies will persist.
- Im(port)ant… Brazil is expected to increase exports to China. After several experts have stated the projected record crop for the South American country, China will now look to them to fulfill the increasing demand for corn and soy following the approval of several new sources in an effort to diversify food sources.
- Settle for a Slowdown… Dierks Bentley was not singing about commodities in the hit country song. Still, the slowdown of China’s soybean imports in October is causing conflicting opinions and arising questions regarding the status of the country. This is the worst reduction of soybean imports and exports since May of 2020. This is due to a multitude of factors but the domestic economic situation seems to be playing the biggest role. The Chinese government has announced that the current recession risk and economic slowdown will be the center of focus for policymakers.
“I’m Just a Bill” – A Farm Bill That Is
“It’s a long, long journey to the capital city” but hopefully this brings back some fun nostalgia as we remember the midterm elections that will be taking place on November 8th. This election will be one to watch as Congressional seats are up for grabs.
- Farm Bill Battle… While the Farm Bill itself isn’t the battle on the horizon, getting to that point may be. Razor thin margins have been reported throughout this pre-election phase, as we wait to see who will maintain or gain power in the House and Senate. This trickles down to the Ag Committee and thus the 2023 Farm Bill. Priorities of Ag Committee leadership will set the next 5 years of agricultural standards and budgets.
- Climate Change in the Hot Seat… With midterms just around the corner, climate change has reappeared as a major focal point in the upcoming election. The USDA, especially their Partnerships for Climate-Smart Commodities program, is a major talking point. The expanding budget and proposal for climate-smart programs will put the USDA in the hot seat this week.
Russian Repeal
Again and again with the Black Sea Grain Deal. The news headline that has been a hot topic for close to four months continues to keep markets interesting and very active with the interjection of Turkey, Russia’s revocation threats and Ukraine in the middle of it, geographically and politically.
- Backpedal on the Black Sea… After four days of leaving the Black Sea Grain Deal, Russia rejoined following the interjection of Turkey. With their ties to Russia, this likely came as a shock when Turkey and the UN pushed for the resumption of the agreement. While the focus for Ukraine is grain exportation, Russia is concerned with the backlog of fertilizer and ammonia stuck in European ports.
- Russia’s Rosselkhozbank… The state-owned main agricultural bank is now being called out by President Putin in the hopes of easing restrictions. According to anonymous sources, the bank is hoping to restore relations with Western organizations despite imposed sanctions. These efforts are an attempt to restore payment methods for fertilizer and food. The restoration of these relationships is currently the main bargaining chip for the extension of the deal following November 19th.
What else you need to know…
- High Protein, High Dollar… Bayer Ag has invested in NuCicer, a California based company focused on the development of high-protein chickpeas. Bayer’s investment branch led the funding round, expanding their footprint yet again in the startup space.
- Diesel in Distress… Diesel fuel supply has reached an all time low for this time of year, while prices continue to skyrocket. The current supply sits at just 25 days of use remaining in supply. The shortage will bring trouble to trucking and transportation already struggling in harvest, along with consumer goods prior to peak-shopping time during the holiday season.
- That’s a Wrap…The Crop Progress Report is set to be released today, November 7th. The what-to-watch items include winter wheat crop ratings, as it has seen a 45% decline in ratings compared to the previous year, and market positions prior to the WASDE set to be released Wednesday, November 9th at 12pm.
That's all we have for you this week, do you have anything for us? We'd love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input.
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