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3 Big Things Today, January 5, 2022

Grains, Soybeans Drop Overnight; U.S. Wins Dairy Dispute With Canada.

1. Wheat, Corn, and Beans All Lower Overnight

Wheat futures were lower in overnight trading on technical selling after prices jumped yesterday.

Investors who were long the market, or bet on higher prices, may have liquidated their positions after wheat futures yesterday rose 12¢.

Corn and soybeans also were lower overnight after seeing gains on Tuesday.

Fundamentally, not much has changed in the past 12 hours.

Weather in South America is variable with light rains getting to some growing areas of Brazil while other parts of the country, the world’s largest exporter of soybeans, remain dry.

Rain this week fell in parts of Cordoba and La Pampa states, and some areas in central Brazil may see precipitation in the next 10 days that could improve soil moisture, Donald Keeney, an agricultural meteorologist with Maxar, said in a report.

In Argentina, however, rainfall in northern growing areas will remain too light to ease stress from dry weather, he said. Warm weather will add to crop stress.

In the U.S. dry weather in the Southern Plains continues to be a problem.

About 50% of Kansas was facing drought conditions as of December 28, up from 33% a week earlier and 15% three months earlier, according to data from the U.S. Drought Monitor.

Just over 90% of Oklahoma, the second-biggest producer of hard-red winter wheat in the U.S., was seeing drought, up from 79% the previous week and 73% three months ago, the monitor said.

Little or no rain has fallen in much of southwestern Kansas and the Oklahoma and Texas panhandles in the past 30 days, according to the National Weather Service's precipitation page.

Winter wheat in Kansas was rated 33% good or excellent as of Sunday, the Department of Agriculture said in a report.

That’s well below the 51% that had received top ratings in a Dec. 13 survey, which was the last time the state’s crop progress report was released, government data show. At the same time in 2021, 46% of the crop was rated good or excellent.

Wheat futures for March delivery dropped 7¼¢ to $7.62¾ a bushel overnight on the Chicago Board of Trade, while Kansas City futures plunged 10¼¢ to $7.93¾ a bushel.

Corn futures for March delivery fell 2½¢ to $6.07 a bushel.

Soybean futures for March delivery lost 1¼¢ to $13.88½ a bushel. Soymeal dropped $2.30 to $412.40 a short ton and soy oil rose 0.47¢ to 58.8¢ a pound.

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2. U.S. Wins Dairy Dispute With Canada

The U.S. won a dispute with Canada claiming its northern neighbor wasn’t allowing proper access to its dairy markets.

Canada was reserving most of the in-quota quantity of its dairy tariff-rate quotas for the exclusive use of Canadian processors, a violation of its obligations under the U.S.-Mexico-Canada Agreement (USMCA), U.S. Trade Representative Katherine Tai said in a statement.

“This historic win will help eliminate unjustified trade restrictions on American dairy products and will ensure that the U.S. dairy industry and its workers get the full benefit of the USMCA to market and sell U.S. products to Canadian consumers,” Tai said.

Under the agreement, a tariff-rate quota gives a preferential duty rate to an “in-quota” quantity of imports, then charges a different rate for anything over that amount.

Canada maintains tariff-rate quotas on 14 dairy items ranging from milk and cheese to whey powder and powdered buttermilk, the U.S. Trade Representative’s office said in the statement.

“In notices to importers that Canada published in June and October 2020 and May 2021 for dairy TRQs, Canada set aside and reserved a percentage of the quota for processors and for so-called ‘further processors,’ contrary to Canada’s USMCA commitments,” the USTR said. “As a result of this restriction, Canada has been undermining the value of its dairy TRQs for U.S. farmers and exporters since entry into force of the USMCA by limiting access to in-quota quantities negotiated under the agreement.”

Government officials in Canada, meanwhile, also claimed victory in the dispute, saying it endorsed supply management, a controversial policy that defines how dairy products are sold in the country, The Canada Press reported.

Canada has until Feb. 3 to comply or respond to the panel’s decision.


3. Blizzard Warnings In Effect For Parts of Dakotas, Minnesota

Blizzard warnings are still in effect in parts of the eastern Dakotas and western Minnesota as snow and wind continue in the area, according to the National Weather Service.

As much as 6 inches of snow fell in some parts of the region with another inch expected before it ends this morning.

Blowing snow will make travel dangerous today as winds are forecast to gust up to 40 mph, the NWS said. Wind chills will drop as low as -35°F.

Farther east in western Michigan, a winter storm warning is in effect until 7 a.m. Thursday, the agency said.

Up to 10 inches of snow is expected today along with wind gusts of up to 45 mph.

“Travel could become very difficult,” the NWS said. “Areas of blowing snow will significantly reduce visibility.”

In the Southern Plains, meanwhile, wind-chill advisories will take effect at 3 a.m. and last until noon tomorrow as values drop as low as -20°F., the agency said.

Winter weather also is forecast in western and central Nebraska into central Kansas. Much of Minnesota, Wisconsin, eastern Iowa, and northern Illinois today.

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