First Thing Today | February 17, 2022

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Good morning!

Followthrough strength in soybeans, soymeal... Buyer interest built throughout the overnight session in the soybean and soymeal markets and futures are trading near session highs this morning. As of 6:30 a.m. CT, soybeans are trading 7 to 13 cents higher, soymeal is more than $5 higher, soyoil and corn are narrowly mixed, winter wheat futures are 2 to 3 cents higher in most contracts and spring wheat is mostly 1 to 3 cents lower. Front-month crude oil futures are down around $1.75 and the U.S. dollar index is modestly higher this morning.

Satellites show continued Russian buildup... A new military pontoon bridge has been established over the Pripyat River in Belarus, less than four miles from the Ukraine border, Maxar Technologies found. Satellite images this week continue to show heightened military activity in Belarus, Crimea and western Russia, Maxar said. The Biden administration last night said it believes Russia’s claims of withdrawing troops from near Ukraine are “false.” Moscow has in fact increased its presence on the border “by as many as 7,000 troops” in recent days, a senior administration official said.

Weekly Export Sales Report out this morning… For the week ended Feb. 10, traders expect:

 

2021-22

(in MT)

2021-22

last week

2022-23

(in MT)

2022-23

last week

Corn

500,000-1,000,000

589,080

0-250,000

0

Wheat

75,000-500,000

84,767

0-150,000

48,416

Soybeans

750,000-1,800,000

1,596,208

800,000-1,500,000

894,616

Soymeal

150,000-500,000

241,413

0-50,000

(2,181)

Soyoil

0-60,000

2,873

0-10,000

(156)

Vilsack wants DOJ to investigate input prices... USDA Secretary Tom Vilsack wants the Department of Justice (DOJ) to ensure seed companies and other input suppliers are not using their market power and current conditions to raise prices unfairly. “It’s important for us to ask questions about whether all of these increases, every penny of these increases, is justified based on disruptions, based on supply, based on the normal economics,” Vilsack said during an appearance at the National Association of State Departments of Agriculture’s (NASDA) 2022 Winter Policy Conference. He told the nation’s state agriculture commissioners on Wednesday that if input companies cannot justify current pricing, “then shame on anybody who’s trying to take advantage of this circumstance.” Vilsack acknowledged the volume of challenges weighing on the ag sector, mentioning supply chains, animal disease threats and rising input costs, but stressed his confidence in the “capacity of American agriculture” to overcome them. Vilsack said higher input costs are tightly linked to broader pandemic-driven supply chain woes, with heavy demand running up against scarce supplies. “A lot of these factors are things that the department of Agriculture, whether at the state level or at the federal level, is not in a position to provide much assistance,” he said. However, he said USDA’s other moves aimed at creating and expanding market opportunities for farmers and ranchers through climate-smart ag and new export markets can support higher commodity prices and help producers “withstand some of these shocking [input] prices that they're currently facing.” Vilsack’s comments come as DOJ and the FBI today are scheduled to announce a new initiative to look at finding companies that are exploiting supply chain disruptions in the U.S. to make increased profits, violating U.S. antitrust laws. The U.S. has also formed a working group on supply chain collusion with countries like the U.K., Australia, New Zealand and Canada to share intelligence and root out global efforts on that front.

Vilsack discusses climate initiatives and early adopters... At the NASDA meeting, Indiana Ag Department Director Bruce Kettler asked Vilsack how USDA will make good on its commitment to ensure early adopters of climate-smart ag practices are compensated. Vilsack noted USDA’s $1 billion Partnerships for Climate-Smart Commodities initiative — aimed at pilot programs to promote the use of climate-smart ag practices — seeks to include all producers, even those who have already invested in new practices. “I think early adopters can fit themselves nicely into those pilots,” Vilsack remarked, adding the experience they bring to the table will be valuable as USDA seeks to define a standard for climate-smart commodities.  Right now, “those early adopters are not getting credit because nobody’s keeping score,” he remarked. “This program allows us to keep score and allows us to tell the world what agriculture is doing.”

IMF backs ECB’s stance on inflation, monetary policy... The European Central Bank has been right to maintain its easy money policy as inflation is set to fall after “transient boosts” from supply snags that may extend into next year, the International Monetary Fund (IMF) said. "We expect inflation to fall slightly below the European Central Bank’s target once the pandemic fades," read a blog post signed by managing director Kristalina Georgieva and two other officials. “The ECB has appropriately decided to maintain an accommodative monetary stance until its medium-term inflation target is met while preserving its flexibility to adjust course if high underlying inflation proves more durable than expected.” ECB President Christine Lagarde was previously the head of IMF.

Supply-chain woes are siphoning sales away from big food companies... Sales at major food makers are rising, the Wall Street Journal reports, but executives say they are still coping with production strains that leave room for competitors to gain ground. Kraft Heinz says it couldn’t make enough Lunchables or Philadelphia cream cheese to meet demand in recent months and faced a shortage of packaging materials in the fourth quarter. Kellogg lost ground in U.S. grocery stores after a strike among factory workers and a fire slammed its production capabilities last year. Their troubles show that U.S. logistics networks remain strained even as broader bottlenecks show signs of easing, and that supply chains have become central to battles over market share. NielsenIQ says U.S. consumer packaged-goods companies lost some $82 billion in sales last year because items were out of stock, according to trade publication Supply Chain Dive.

IEA: OPEC+ must fix its million-barrel supply gap... The International Energy Agency (IEA) urged OPEC and its allies to address a widening shortfall in their oil production. While fuel consumption is bouncing back from the pandemic, the 23-nation alliance led by Saudi Arabia and Russia is struggling to restore output it halted. Members need to fix the issue as the supply gap versus their target spirals toward 1 million barrels a day, IEA Executive Director Fatih Birol told a conference in Riyadh via video-link.

GOP confronts Democrats on Natural Gas export plea... Limiting U.S. natural gas exports to help American consumers with rising energy prices won’t work and only will increase the country’s dependence on foreign oil and gas, a group of House Republicans wrote in a letter to Energy Secretary Jennifer Granholm. Republicans, led by Natural Resources ranking member Bruce Westerman (R-Ark.), blasted a Feb. 2 letter from nine Senate Democrats and one Independent asking Granholm to consider halting permits for U.S. liquefied natural gas facilities until the department conducts a review of such exports and their impact on domestic energy prices. The scrutiny of the administration’s energy policies continued Wednesday on the Senate floor. “Energy prices are up overall about 30 cents on the dollar since Joe Biden took over,” said Sen. John Barrasso (R-Wyo.), the top Republican on the Energy and Natural Resources Committee. “This isn’t a coincidence. This is a direct result of the anti-American energy policies of this president and the Democrats in this body and administration.”

Wholesale beef prices continue to drop... Choice boxed beef prices dropped 75 cents on Wednesday and are down nearly $24 over the past three weeks. While wholesale beef prices are falling, cash cattle prices have strengthened around $5 during the same span. That has tightened packer margins, though they remain solidly in the black.

Cash hog index continues to firm... The CME lean hog index is up another $1.51 today and has surged $21.50 since the beginning of the year. The index maintained a roughly $10 to $12 premium over year-ago through January, but that has extended to nearly $17, as slaughter data signals hog supplies are down even more than USDA’s market hog inventories suggested in the December Hogs & Pigs Report.

Overnight demand news... Japan purchased 54,692 MT of U.S. milling wheat in its weekly tender. Algeria bought at least 120,000 MT of optional origin milling wheat. The Philippines purchased 45,000 MT of Australian feed wheat. Egypt tendered for an unspecified amount of wheat from multiple origins, with results of the snap tendered expected later this morning.

Today’s reports

 

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