NOPA SOYBEAN CRUSH SHY OF EXPECTATIONS... While this morning's National Oilseed Processors Association (NOPA) soybean crush report failed to meet traders' lofty expectations of 161.3 million bu. in November, crush of 160.145 million bu. was still the largest since January 2010 and came in 1.8% above year-ago. Soyoil stocks of 1.486 billion lbs. came in 49 million lbs. above the average trade guess, but are 37.7% smaller than year-ago.
The report reflects aggressive crush thanks to strong margins and product demand. Soymeal futures rose on the news and soyoil softened amid spreading due to the higher-than-expected soyoil stocks estimate.
WEATHER OUTLOOK FAVORABLE FOR SOUTH AMERICA... Meteorologist Gail Martell of MartellCropProjections.com says while heavy rains in Mato Grosso, Brazil, have raised concerns about the spread of rust, updated satellite vegetation images indicate producers have been effectively treating for the fungus.
"Soybean prospects have improved in South Brazil also, thanks to increased rainfall in recent weeks," notes Martell. "Both Parana and Rio Grande do Sul are 'greener' in the early December satellite depiction, confirming improvement relative to late November."
Meanwhile in Argentina, Martell says rains delayed planting efforts last week. The ideal soybean planting window is open into mid-January. "Above-average temperatures this week would rapidly advance crop growth and development," says Martell. "An El Nino signal in recent weeks may be the reason for strong showers." Click here for related images.
UPDATE ON MEXICO RESTARTING CORN AND SORGHUM IMPORT TARIFFS... As we reported in "First Thing Today," Mexico's ag minister announced last Friday the country was restarting import tariffs on corn and sorghum that had been scrapped since 2008 for corn and 2012 for sorghum. Corn imports into Mexico will now be taxed at a 20% rate, while sorghum imports will incur a 15% tariff. All indications are this pertains to white corn imports, not yellow corn. Unclear is whether these tariffs apply to U.S. products. The U.S. exports 15 MMT to 20 MMT of corn and sorghum (mostly sorghum) to Mexico annually. Some industry sources believe the issue is linked to the ongoing country-of-origin labeling (COOL) dispute with between the U.S. and Mexico (and Canada).
Sources tell us they do NOT believe this can impact U.S. products due to the North American Free Trade Agreement (NAFTA), but that's still uncertain. If it does include U.S. products, it would be a major story.
CHINA TO RAISE BENCHMARK FOR CALCULATING SLIDING SCALE FOR COTTON IMPORTS... China plans to raise its benchmark for calculating the sliding scale tariff that applies to cotton imports outside of its quota beginning Jan. 1, according to the country's finance ministry. China currently permits cotton imports of 894,000 MT that are taxed at a 1% rate, as per its World Trade Organization commitments. Beyond that, it permits several thousand in cotton imports that are taxed at a sliding scale of taxes ranging between 5% and 40%. For 2014, cotton valued at more than 15,000 yuan ($2,500) per ton will be subject to a fixed tariff of 570 yuan (roughly $94) per ton. For cotton imports valued below that level, duties will be assessed based on the sliding scale issued by the ministry. The cotton market responded positively to this news today as it signals the country will not cap imports and will still allow purchases beyond the tariff rate quota despite sitting on very hefty government-owned cotton reserves.
ISSUES PUSHED BACK TO 2014... Besides a new farm bill, other topics bumped into 2014 include extending unemployment insurance, raising the minimum wage, renewing "fast track" trade authority and rewriting federal water resources programs. Senate Majority Leader Harry Reid (D-Nev.) said many of those items, particularly an unemployment insurance extension, will be dealt with when the Senate begins a new session in January.