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Firm slashes Brazilian soybean estimate under last year’s record level... Due to recent crop stress from heat and dryness commodity brokerage firm StoneX cut its estimate for Brazil’s soybean and corn crops. For soybeans, the firm cut its estimate 11 MMT to 134 MMT, which would be below last year’s record of 138 MMT. For corn, the crop was cut 2.5 MMT to 117.5 MMT.
“Production has been reduced by as much as a quarter in some southern regions, while northern regions have failed to achieve high yields, as expected,” StoneX said in a statement.
Traders will watch weather over the next couple months to see if rains improve in southern Brazil to avert further drought losses and if favorable conditions further north will compensate for any poor southern yields.
World Weather Inc. expects January weather to be about the same as December across Brazil, with southern areas trending drier than normal and plentiful rains continuing across northern areas. It expects safrinha corn crop planting prospects to remain favorable in Mato Grosso and areas south into Parana and Sao Paulo this year.
Brazilian soybean exports rose in December... Brazil’s soybean exports totaled 2.71 MMT in December, up slightly from 2.59 MMT in November and well above just 270,000 MT a year ago, according to official Brazilian government data. The country exported 3.44 MMT of corn last month, compared to 2.40 MMT in November and 4.86 MMT last year.
Brazil exported 126,915 MT of beef in December, compared with 81,174 MT in November and 142,524 MT a year ago.
November soy crush shy of expectations... U.S. processors crushed 190.5 million bu. of soybeans in November, down 6.4 million bu. (3.3%) from October’s all-time record and 0.5 million bu. (0.3%) shy of last year’s pace. Traders expected USDA to report November soybean crush of 191.8 million bu., based on a Bloomberg survey.
Soyoil stocks totaled 2.415 billion lbs., up from 2.386 billion lbs. in October and 2.117 billion lbs. last year, despite the smaller-than-expected crush.
Corn-for-ethanol use bigger than expected... The U.S. consumed 468.7 million bu. of corn for ethanol production in November, up 721,000 bu. (0.2%) from October and 37.0 million bu. (8.6%) more than last year. Traders expected corn-for-ethanol use to total 453.1 million bushels. Total corn used for ethanol and other industrial purposes was 520.6 million bu., up 1 million bu. (0.2%) from October and 40.0 million bu. (8.3%) more than November 2020.
Production of dried distillers grains with solubles (DDGS) totaled 1.997 million tons, up from 1.949 million tons in October and 1.794 million tons last year.
The price of Prop 12... California voted for it, but were the voters aware of what they were voting for? Michael Formica, AVP & General Counsel at the National Pork Producers Council, joins Chip Flory and Jim Wiesemeyer to explain the law, its various consequences, and NPPC’s legal avenue to stop it on this week’s DC Signal to Noise podcast, which you can listen to here.
Gov’t to take more aggressive anti-trust efforts for meat packers... At a White House meeting today, USDA and Department of Justice announced a joint initiative to coordinate their efforts and will launch a new portal for reporting concerns about potential violations of competition laws within 30 days.
U.S. Attorney General Merrick Garland urged Congress to boost the Department of Justice’s funding for antitrust enforcement. “Too many companies have pursued corporate conduct and more aggressive mergers that made all of us vulnerable,” Garland said during a White House meeting on meat and poultry supply chains.
President Joe Biden said the federal government would vigorously enforce existing competition laws at the meeting, and that a handful of firms dominate too many industries.
“The Biden administration continues to ignore the No. 1 challenge to meat and poultry production: labor shortages,” said Julie Anna Potts, President and CEO of the North American Meat Institute. “This tired approach is not surprising because they have refused to engage with the packing and processing sector they attack, going so far as to hold a roundtable on meatpacking without a single beef or pork packer present.”
Mandatory bioengineered labeling begins... Jan. 1 brought a new set of regulations to U.S. food and agriculture: mandatory genetic engineered (GE) labeling. These new standards, outlined first by the Obama administration, require food manufacturers, importers and other entities that label foods for retail sale to disclose information about genetically engineered food and food ingredients. Shoppers will no longer see labels marked “genetically engineered” or “genetically modified organisms.” Instead of “GMO” or “GE,” products will be marked “bioengineered” or include a QR code, website or phone number for shoppers looking for more information. USDA also opted to provide an exemption for “highly refined” ingredients if they did not contain detectable genetic material, a situation which translates into many processed foods made with ingredients that come from GMO crops not being subject to the labeling requirement.
USDA said the change is in the name of consistency, to eliminate “a patchwork of state labeling regulations.” Food safety advocates and others see confusion ahead and will challenge the matter in court.
Argentina extends export ban of some beef cuts until 2023... Argentina extended its export ban on seven beef cuts until the end of 2023, a measure previously agreed with the sector. These are the beef cuts that cannot be exported until the end of 2023 including, roast with or without bone, skirt, matambre, roast topside, buttock, shoulder and vacuum. “The measures contribute to generating a balance between the Argentine market and the export of meat products,” the government said of the decision.
It is also suspended the export (fresh, chilled or frozen) of half carcasses, forequarter with bone, hindquarter with bone, incomplete half-carcasses with bone and incomplete forequarters on the bone.
OPEC+ expected to stick with planned February output increase... OPEC+ is likely to keep to its plans for a February output increase when it meets on Tuesday. Current plans would see the oil cartel raise its February production target by 400,000 barrels per day (bpd) as it has done each month since mid-2021. In a technical report seen by Reuters on Sunday, the group downplayed the impact on the oil market from the Omicron variant.
While the group has been raising its targets, production increases have not kept pace as some members struggle with capacity constraints. OPEC+ oil producers missed their production targets by 650,000 bpd in November and 730,000 bpd in October, the International Energy Agency (IEA) said last month.
OPEC+, a grouping of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, has been gradually unwinding record oil production cuts agreed in 2020 to counter the demand destruction from the pandemic.
USDA announces November DMC payment... Farmers that selected the $9.50 Tier I margin trigger level will get a 36-cent-per-cwt. payment minus a 5.7% sequester factor, USDA announced on Monday. The actual national average margin for November is $9.14 per cwt., according to the USDA.
For 2022, North Korea’s Kim talks rural development, food... North Korean leader Kim Jong Un capped off his 10th year in power with a speech that made more mention of tractor factories and school uniforms than nuclear weapons or the United States, according to summaries by state media over the weekend.
For 2022, North Korea’s main goals will be jump-starting economic development and improving people’s lives as it faces a “great life-and-death struggle,” Kim said in a speech at the end of the 4th Plenary Meeting of the 8th Central Committee of the Workers’ Party of Korea (WPK).
Kim has used previous speeches around the New Year to make major policy announcements.
Most of the speech focused on domestic issues from an ambitious plan for rural development to people’s diets, school uniforms and the need to crack down on “non-socialist practices.”
The big focus on rural development is likely a populist strategy. The domestic focus of the speech underscored the economic problems Kim faces at home. International aid organizations are warning of possible food shortages and a humanitarian crisis, where self-imposed anti-pandemic border lockdowns have left North Korea more isolated than ever before.
