First Thing Today | March 14, 2022

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Good morning!

Fill out our acreage survey… You should have received our spring acreage survey via email last Thursday. Please fill it out accurately with your current planting intentions for this year. We’ll share our acreage estimates based on survey results ahead of USDA’s Prospective Plantings Report on March 31.

Price pressure to start the week... Corn, soybeans and wheat are weaker this morning and trading near session lows. As of 6:30 a.m. CT, corn is trading 3 to 12 cents lower, soybeans are 3 to 8 cents lower, winter wheat futures are 22 to 25 cents lower and spring wheat is 19 to 21 cents lower. Soyoil futures are under heavy pressure, but soymeal is firmer. Front-month U.S. crude oil futures are around $6 lower, while the U.S. dollar index is down about 175 points this morning.

The week ahead in Washington... Much of the focus in Washington will remain on the Russia/Ukraine situation. The U.S. and China will hold the first high-level, in-person talks since Russia’s full invasion of Ukraine, as the Biden administration continues to try to enlist Beijing to exert influence on its neighbor to end the crisis. National Security Adviser Jake Sullivan will meet in Rome today with China’s top diplomat, Communist Party Politburo member Yang Jiechi. U.S. officials say Russia has asked China for military assistance for its war in Ukraine, a request if confirmed that suggests Russian President Vladimir Putin has faced more setbacks than he imagined in his invasion. On the economic front, the Fed on Wednesday is widely expected to raise interest rates for the first time since 2018. The U.S. producer price index for February will be released on Tuesday.

Russia/Ukraine update... Ukraine said it wants to discuss a ceasefire, immediate withdrawal of troops and security guarantees with Russia today after both sides reported progress during the weekend, even as fierce Russian bombardments continued. Top diplomats from the U.S. and Ukraine said more action was needed to stop Russian aggression. Russia has warned that it will fire on western armaments shipments to Kyiv, raising the risk of a direct military confrontation between Moscow and NATO.

Ukraine urges farmers to sow crops... Ukraine President Volodymyr Zelenskyy is urging farmers to sow as many fields as possible to protect the food supply. The country should organize a full-fledged sowing campaign in all of its territory “to the extent that’s possible,” Zelenskyy said in a video released Friday. One of Ukraine’s largest agricultural companies, UkrLandFarming, said several company managers had been killed in Sumy in northern Ukraine, and in Kyiv. UkrLandFarming has lost at least 120,000 hectares (297,000 acres) of land in the Kherson, Odesa and Mykolayiv regions to the Russian invasion, or about a third of its land portfolio. It has been forced to shut three egg farms including Europe’s largest, the Chornobaivka factory near Kherson, where 3.1 million laying hens are dying, the company said. IMC SA, another agricultural company, wants to keep its operations going, but it isn’t allowing workers into many fields because of worries about their safety, Chief Executive Officer Alex Lissitsa said Friday in an interview with Bloomberg. Lissitsa, a board member of the Ukrainian Agribusiness Club, said summer crops such as corn could be affected more severely, with only about half the normal area planted because of the fighting and severed logistics. “All depends on people and the situation, because this is about life.”

Russia resuming Black Sea wheat exports... Russia is gradually resuming wheat exports from its Black Sea ports while navigation in the Azov Sea remains restricted, export sources reported. SovEcon said Russia’s Black Sea terminals loaded 400,000 MT of wheat last week, and that vessels were going in and out of the ports there. Prices for Russian wheat remain extremely volatile, consultancy IKAR said, noting that for wheat with 12.5% protein content from the Black Sea ports was priced at $415 per metric ton free on board (FOB) on March 11.

Russian wheat export tax drops again... Russia’s wheat export tax for March 16-22 will be $86.30 per metric ton, based on an indicative price of $323.30 per metric ton. The wheat export tax has dropped nine straight weeks and is down from the peak rate of $98.20 per MT in mid-January, but is still 207% higher than the initial rate of $28.10 per MT at the beginning of June when Russia started using the sliding scale.

Argentina halts export registrations for soyoil, soymeal... Argentina said Sunday it has halted registration of export sales of soyoil and soymeal. USDA projects Argentina will account for 41% of global soymeal exports and 48% of world soyoil shipments in 2021-22. The local CIARA chamber of oilseed processors and exporters alleges the Argentine government closed export registration because it wants to raise tariffs on soy product exports “by two points.” The export halt should push more export demand to the U.S. and Brazil.

Spain to approve emergency U.S., Argentine corn buys... Spain is expected to approve emergency purchases of corn from the U.S. and Argentina to fill supply gaps left by the absence of shipments from Ukraine. On Friday, the European Commission authorized member states to lift some technical restrictions linked to the existing maximum pesticide residue limit for animal feed with “full guarantee and safety of the agri-food trade,” Spain’s ag minister said.

Algeria bans foodstuffs exports... Algeria has banned exporting foodstuffs it imports such as sugar, vegoil, pasta, semolina and wheat/wheat products, according to state news agency APS.

Iran talks on pause... Negotiations aimed at restoring Iran’s nuclear deal with world powers went on what its European hosts described as “a pause” on Friday, after Russia demanded relief from sanctions targeting Moscow over its war on Ukraine. Diplomats did not say when the months-long talks in Vienna might resume. The Wall Street Journal cited a senior U.S. official saying Moscow had a week to withdraw its demand for written guarantees exempting Russia from any Ukraine-related sanctions that would constrain Moscow’s future trade with Iran.

Active demand at China wheat auction... China sold all 525,869 MT of wheat from its auction of state reserves last week. The average selling price was 2,991 yuan ($470) per MT, down from 3,054 yuan ($480) per MT the previous week. China has sold nearly 5 MMT of state-owned wheat reserves since starting the auctions in October.

Average U.S. gas price up 22% in two weeks to record $4.43... The average U.S. price of regular-grade gasoline shot up a whopping 79 cents over the past two weeks to a record $4.43 per gallon. The average price of gasoline is $1.54 higher than it was a year ago. Each 10% increase in gas and oil prices means consumers will have to spend an additional $23 billion a year to keep up with earlier spending patterns, analysts at J.P. Morgan found. But the pandemic boosted Americans’ bank accounts, leaving them with an additional $2.5 trillion in savings to help cushion that blow.

Technical action key for cattle, hog futures... Cattle and hog futures firmed last Friday to score modest corrective gains for the week. Followthrough buying early this week would suggest the markets have put in short-term technical bottoms. But a drop below last week’s lows would entice more chart-based selling and suggest deeper price pullbacks are likely.

More HPAI cases confirmed... USDA confirmed highly pathogenic avian influenza (HPAI) in a commercial layer flock in Taylor County, Iowa, according to the Iowa Department of Agriculture and Land Stewardship (IDALS), though the confirmation has not yet been listed on the Animal and Plant Health Inspection Service (APHIS) website. The agency also confirmed HPAI in a backyard mixed species flock in Franklin County, Kansas, and a non-commercial backyard flock (non-poultry) in Mclean County, Illinois. The samples were confirmed at the APHIS National Veterinary Services Laboratories (NVSL) in Ames, Iowa. The cases bring total confirmed HPAI cases in the U.S. to 30, with 18 being in commercial operations and the rest in backyard or non-commercial flocks. 

Weekend demand news... Iraq tendered to buy 50,000 MT of optional origin wheat.

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

 

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