First Thing Today | March 18, 2024
Good morning!
Corn and wheat firmer, beans weaker overnight... Corn and wheat futures posted mild gains amid corrective buying overnight, while soybeans weakened following earlier strength. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are 7 to 8 cents lower, SRW wheat is 6 to 7 cents higher, HRW wheat is 4 to 5 cents higher and HRS wheat is 3 to 4 cents higher. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is mildly weaker.
Cold U.S. temps early this week, mixed bag for South America... Frost and freezes are expected in most areas from the Midwest to the interior Gulf Coast states and Southeast Tuesday morning. Some damage to wheat is expected, although permanent losses to wheat production should be highly localized, according to World Weather Inc. The forecaster notes South American crop moisture stress will be greatest in southern Bolivia, Paraguay, southwestern Brazil (Mato Grosso do Sul, western Parana and immediate neighboring areas) as well as far northern Argentina. Partial relief is expected in these areas over the next 10 days to two weeks, but some of the moisture deficit will remain. Far southern Brazil, eastern Argentina and Uruguay will continue wet during the first half of this week, with some localized flooding possible.
Ukraine corn planting to fall 4.5%... Ukraine’s corn plantings this year are expected to fall 4.5% to 3.863 million hectares, according to the first forecast from the ag ministry. It says farmers could also decrease plantings of spring wheat and sunflowers but could increase area sown to spring barley and soybeans. The corn sowing outlook is better than expected in February when a survey compiled by the ag ministry showed an expected decrease of 9%. Ukraine used to be the world’s largest producer and exporter of sunflower oil, however, a decrease in sunoil prices could cause producers to cut the area sown for sunflower to 5.292 million hectares from 5.307 million last year, the data showed.
Indonesia to pause corn imports... Indonesia will pause corn imports as domestic output has started to rise with the beginning of what authorities expect to be a bumper harvest, which is already helping stabilize prices, officials said. Indonesia estimates its corn production will rise 10.3% to 5.34 MMT. Food procurement firm Bulog had been allocated a corn import quota of 500,000 MT this year on top of the 500,000 MT allotted for the last three months of 2023, some of which is set to arrive this year. But authorities want to prioritize purchases from local farmers, National Food Agency (NFA) deputy chief Andriko Noto Susanto told a government meeting.
The week ahead in Washington... Congress faces a midnight deadline on March 22 for a second package of fiscal year (FY) 2024 budget bills. Lawmakers drafted a full-year FY 2024 Homeland Security appropriations bill after last-minute negotiations, prompted by White House intervention. A full-year FY 2024 Homeland bill, expected to exceed the current year’s funding level, provides a platform for bipartisan negotiations, potentially incorporating additional funding for border and immigration-related accounts within nondefense limits through measures like rescissions and emergency spending designations. A House Ag panel will hold a hearing on Wednesday on “The Danger China Poses to American Agriculture. USDA Secretary Tom Vilsack testifies Thursday before the House Ag Appropriations Subcommittee on the FY 2025 budget requests for the department. The economic focus this week will be the Fed’s two-day monetary policy meeting, which concludes on Wednesday. The Fed will leave interest rates unchanged but focus will be on any clues in the economic projections and Chair Jerome Powell’s press conference as to when it could start easing policy. Key agricultural data will be Friday’s Cattle on Feed Report from USDA.
De-dollarization at a glance... Since 2001, which marked the start of an era in which the U.S. government sharply expanded the use of economic sanctions, the U.S. dollar’s share of global foreign exchange reserves held by central banks dropped from 73% to 59%, according to the International Monetary Fund. Gulf nations are starting to settle oil trades in the Chinese yuan, and other commodity producers are considering similar shifts. Still, the U.S. dollar is on one side of 90% of currency transactions worldwide, and two-thirds of international debt is denominated in dollars. Global commodity markets are dominated by the dollar. Those who think the dollar will be challenged in the years ahead usually cite these reasons: The rise in U.S. government debt (every 100 days the debt grows by $1 trillion), the dysfunctionality of policymaking in Washington and the weaponization of the dollar through the aggressive use of financial sanctions.
China’s upbeat industrial output, retail sales tempered by frail property sector... China’s industrial production expanded 7.0% from year-ago in January-February, the fastest expansion in industrial output in almost two years, boosted by robust activity in manufacturing (7.7% vs. 7.1% in December) and utilities (7.9% vs. 7.3%). China’s retail sales increased by 5.5% from year-ago in January-February, the 13th straight month of growth in retail trade. But a weak property sector remains a concern, as property investment in China fell 9.0% versus last year in the first two months of 2024. Property sales by floor area logged a 20.5% slide.
Euro zone inflation falls to three-month low, trade strengthens... Consumer inflation in the euro zone rose 2.6% from year-ago in February, in line with the flash estimate and the lowest rate in three months. The core rate, excluding food and energy prices, was also confirmed at 3.1%, its lowest point since March 2022. Meanwhile, the euro zone achieved a trade surplus of 11.4 billion euros in January, a significant turnaround from a deficit of 32.6 billion euros recorded last year. Exports increased 1.3% annually to 225.9 billion euros, while imports fell 16.1% to 214.5 billion euros.
Putin wins landslide Russian election... President Vladimir Putin won a landslide victory in Russia’s election on Sunday, winning 87.8% of the vote, the highest ever result in the country’s post-Soviet era. Putin, 71, is set to embark on a new six-year term that will see him overtake Josef Stalin and become Russia’s longest-serving leader for more than 200 years if he completes it.
North Dakota pipeline regulators to discuss Summit Carbon Solutions project... North Dakota pipeline regulators will convene on Monday to determine a schedule for hearings regarding the Summit Carbon Solutions pipeline project, according to North Dakota Monitor. The agenda also includes a request to reconsider a previous decision on pipeline zoning ordinances. Summit Carbon Solutions seeks a permit for a pipeline to transport carbon emissions from ethanol plants in five states to North Dakota for underground storage in Mercer and Oliver counties. The company has reapplied after the Public Service Commission (PSC) denied its initial application last year. Changes to the route, including a wider berth around Bismarck, have been made to address the concerns of the commission. Summit claims the pipeline will reduce greenhouse gas emissions, benefit ethanol plants and support farmers. However, it faces resistance from landowners and county governments, with Emmons and Burleigh counties passing ordinances with stricter restrictions. The PSC had previously sided with Summit on the issue of zoning laws but is now considering a reconsideration request from Burleigh County.
China’s pork imports slump to start 2024... China imported 160,000 MT of pork during the first two months of this year, down 56.7% from the same period last year. The sharp drop in imports comes as China’s pork production reached the highest level since 2014 last year.
Cash cattle, wholesale beef strengthen... Cash cattle prices firmed last week, potentially challenging the record high from mid-2023. Wholesale beef prices also firmed, with Choice up $1.12 and Select 71 cents higher on Friday. Choice beef is at the highest price since September 2023, while Select reached the highest level since June of last year.
Cash hog index, pork cutout continue seasonal climbs... The CME lean hog index is up 15 cents to $82.34 as of March 14. After strong gains on Friday, April lean hog futures held a $4.585 premium to today’s cash quote, suggesting traders expect seasonal strength to continue over the next month. The pork cutout value firmed 22 cents on Friday to $93.47 as strong gains in butts and loins offset declines in other cuts.
Weekend demand news... South Korea purchased 125,000 MT of feed wheat – 65,000 MT to be sourced from the U.S. and 60,000 MT to be sourced from optional origins. Separately, South Korea purchased between 60,000 and 65,000 MT of optional origin feed wheat. Algeria tendered to buy a nominal 50,000 MT of soft milling wheat. Egypt tendered to buy 50,000 MT of optional origin raw cane sugar.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
- 10:00 a.m. Export Inspections — AMS
