First Thing Today | March 15, 2022
Wheat firmer, corn and soybeans weaker overnight... Wheat futures traded higher but have come well off their overnight highs this morning, while corn and soybeans faced followthrough selling. As of 6:30 a.m. CT, corn is trading 11 to 13 cents lower, soybeans are mostly 22 to 28 cents lower, SRW wheat is mostly 6 to 11 cents higher, HRW wheat is 2 to 8 cents higher and spring wheat is 10 to 18 cents higher. Front-month U.S. crude oil futures are more than $8 lower and the U.S. dollar index is down around 200 points this morning.
Russia/Ukraine update... Talks between Russian and Ukrainian officials will resume today via videoconference as Russia continues its assault on Ukrainian cities with artillery and missile fire. Discussions on Monday yielded no major outcomes. Russian forces widened their bombardment of Kyiv and other cities, and the U.S. warned China over its deepening alignment with an isolated Russia. António Guterres, the secretary general of the U.N., said Ukraine was “being decimated before the eyes of the world.” He warned of a calamitous cascade of world hunger and food inflation, given Ukraine’s role as one of the world’s major grain producers. The impact on civilians, Guterres said, was “reaching terrifying proportions.” Meanwhile, the leaders of three East European EU member states are making an unexpected trip to the Ukrainian capital this morning for talks with President Volodymyr Zelenskyy.
U.S./China talks regarding Russia... The first high-level talks between U.S. and China since Russia’s invasion of Ukraine were described as “substantial,” but no specific outcomes were announced. U.S. national security adviser Jake Sullivan and Chinese Communist Party Politburo member Yang Jiechi met for seven hours on Monday in Rome, including “substantial discussion” of Russia’s war against Ukraine. If China extends military or other aid to Russia in violation of U.S. and international sanctions, it will face unspecified “significant consequences,” White House press secretary Jen Psaki said. U.S. officials said Russia asked China for military equipment and economic aid, which Moscow and Beijing both denied.
More European sanctions on Russia... European Union member states have agreed on a fourth package of sanctions against Russia. Sanctions were set to include an import ban on Russian steel and iron, an export ban on luxury goods including cars worth more than 50,000 euros ($55,000), and a ban on investments in oil companies and the energy sector, according to diplomatic sources. Britain also said it would ban the export of luxury goods to Russia and impose a new 35% tariff on 900 million pounds ($1.2 billion) worth of Russian imports, including vodka, metals, fertilizers and other commodities.
NOPA crush expected to drop from January but be above year-ago... Members of the National Oilseed Processors Association (NOPA) are expected to report soybean crush totaled 165.0 million bu. in February, based on a Reuters survey. That would be down from 182.2 million bu. from January but up from 155.2 million bu. last year. The February record crush was 166.3 million bu. in 2020. Traders expect soyoil stocks to decline to 1.985 billion pounds.
Consultant trims Brazil soybean crop estimate... Crop Consultant Dr. Michael Cordonnier lowered his Brazilian soybean crop estimate by 1 MMT to 123 MMT. He left his other South American crop estimates unchanged. Cordonnier continues to peg the Brazilian corn crop at 112 MMT as he waits to see how weather the next three months develops. He continues to forecast Argentine production at 39 MMT for soybeans and 49 MMT for corn. He also left his Paraguay soybean crop estimate at 5 MMT.
Bayer threatens to halt crop supplies to Russia in 2023... Bayer has threatened to suspend crop supply sales to Russia next year unless the country stops its attacks on Ukraine. Bayer said it had already provided essential products to Russia for this year’s growing season to ease pressures on global food supply but would decide on 2023 crop supplies to the country depending on the situation in Ukraine. “We will closely monitor the political situation and decide about supplies for 2023 and beyond at a later stage, depending on Russia stopping its unprovoked attacks on Ukraine and returning to a path of international diplomacy and peace,” the company said in a statement on Monday.
Chinese industrial output, retail sales stronger than expected... Chinese industrial output rose 7.5% versus year-ago in the first two months of the year, higher than the 3.9% increase predicted by analysts in a Reuters poll. Chinese retail for the first two months of the year also beat expectations, gaining 6.7% in January and February as compared with expectations for a 3% rise. However, China is currently facing its worst Covid-19 outbreak since the height of the pandemic in 2020, with major cities including Shenzhen rushing to limit business activity, which is sparking more supply-chain concerns.
China keeps medium-term policy rates unchanged... The People’s Bank of China (PBOC) said it would keep the rate on 200 billion yuan ($31.44 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.85%. PBOC attributed the move to “maintaining banking system liquidity reasonably ample,” according to an online statement. Most economists expected PBOC to cut the MLF rate and now anticipate that move will happen in April.
Nickel trading will resume on the London Metal Exchange on Wednesday... Nickel trading will resume over a week after being suspended amid a historic short squeeze after the tycoon at the center of the crisis reached a deal with his banks. Xiang Guangda, whose large short position roiled the market last week, has secured a standstill agreement to avoid further margin calls, reducing the risk the squeeze is repeated when the market reopens.
Additional bird flu finds confirmed... USDA’s Animal and Plant Health Inspection Service (APHIS) has now confirmed a total of 34 cases of highly pathogenic avian influenza (HPAI), including additional cases in commercial poultry operations. That brings the case county in commercial flocks to 21. Cases have been confirmed in Cecil County, Maryland, in a flock of 664,061 commercial layer chickens; 36,000 turkeys in a flock in Charles Mix County, South Dakota; and a flock of 3 million commercial layer chickens in Jefferson County, Wisconsin. There was also another find a backyard mixed species (non-poultry) flock in Lincoln County, Maine. The additional confirmations have also resulted in more countries limiting imports of U.S. poultry.
USDA approves faster line speeds at three pork plants... USDA approved faster line speeds at Clemens Food Group in Hatfield, Pennsylvania; Quality Pork Processors in Austin, Minnesota; and Wholestone Farms Cooperative in Fremont, Nebraska, as part of a pilot program. Plants approved for the trial program can operate at faster speeds for up to a year and are supposed to collect data on how line speeds affect workers. Nine plants were eligible to apply for the trial program because they were previously able to accelerate processing under the Trump-era rule.
Beef prices firm, but movement light... Wholesale beef trade got off to a sluggish start to the week. Choice boxes firmed 80 cents and Select was 83 cents higher, but packers moved only 83 loads of product. Wholesale beef trade continues to signal retailers are hesitant buyers on days when packers raise prices.
CME lean hog index firms again... The CME lean hog index is up 7 cents today for the fourth consecutive daily gain. With yesterday’s mild price decline, April lean hog futures finished $1.37 above today’s cash index quote (as of March 11). While the seasonal tendency is for cash prices to soften during March, the modest gain in the face of a rising cash index should limit selling in the front-month contract.
Overnight demand news... South Korea tendered to buy up to 210,000 MT of corn to be sourced from the U.S., South America, South Africa or the Black Sea/eastern Europe. Japan is seeking to buy 104,483 MT of wheat in its weekly tender.
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
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: March 2022 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: March 2022 — ERS
