First Thing Today | May 3, 2022
Good morning!
Quiet, two-sided trade overnight... Corn futures are firmer, soybeans are weaker and wheat is mixed this morning following two-sided trade overnight. As of 6:30 a.m. CT, corn futures are trading 3 to 4 cents higher, soybeans are 3 to 5 cents lower, SRW wheat is 1 to 2 cents lower, HRW wheat is 3 to 4 cents higher and spring wheat is narrowly mixed. Front-month U.S. crude oil futures are around $1.35 lower and the U.S. dollar index is about 235 points lower this morning.
Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended May 1.
- Corn: 14% planted (33% five-year average), 3% emerged (6% average)
- Soybeans: 8% planted (13% average)
- Spring wheat: 19% planted (28% average), 5% emerged (7% average)
- Winter wheat: 23% headed (29% average), 27% rated good/excellent (27% last week)
- Cotton: 16% planted (15% average)
HRW CCI rating continues to decline... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 6.9 points to 253.9, which is 73.6 points below the five-year average for the beginning of May. The SRW crop inched 0.4 point higher to 351.0, thought’s still 8.8 points below the five-year average for the date. Click here for more details.
Consultant slashes Brazil corn crop estimate... The safrinha corn crop in central Brazil continues to be negatively impacted by the early onset of the annual dry season. Some of these areas have not received a significant rain for 30 to 50 days. Crop Consultant Dr. Michael Cordonnier estimates 35% to 50% of Brazil’s safrinha corn crop is facing some level of moisture stress. As a result, he slashed his Brazilian corn crop forecast by 5 MMT to 107 MMT. The cut assumes a 10% loss of production in Mato Grosso, Goias, Minas Gerais and the Federal District, which combined are projected to produce approximately 56.5 MMT of safrinha corn. Cordonnier says the corn in Parana, southern Mato Grosso do Sul and southern Sao Paulo is “generally doing fine except for recent storm damage in western Parana, but the production in these states will not be able to make for the losses in central Brazil.”
Thailand approves feedgrain imports... Thailand’s cabinet on Tuesday approved new measures to boost imports of animal feed for a three-month period to ease shortages caused by Russia’s invasion of Ukraine. As we reported in “Evening Report” on Monday, the country’s commerce ministry proposed up to 1.2 MMT of feedgrain imports, including corn, wheat and barley, for three months.
Ukraine expecting significant grain storage shortage.... Ukraine is forecast to have a significant shortage of grain storage facilities for this year’s crops due to a sharp decline in exports resulting from Russia’s invasion, analyst APK-Inform said. The firm said Ukraine’s exports could total only 45.5 MMT in 2021-22 after last year’s record harvest of 86 MMT and grain and oilseeds stocks might reach an all-time of 21.3 MMT. APK-Inform said Ukraine could have available storage capacity of only 16.3 MMT for this year’s harvest that could total 55.9 MMT of grains and oilseeds.
Euro zone producer prices surge... Euro zone producer prices jumped 5.3% from February for a 36.8% annualized surge in March. The mammoth rise was mostly due to soaring energy prices, but even excluding energy, factory-gate prices jumped 13.6% from year-ago.
10-year Treasury yields hit 3% for first time since 2018... Treasurys, a reference for borrowing costs on everything from mortgages to student loans, are responding to Fed plans to raise interest rates in an effort to rein in inflation. The Federal Reserve starts its two-day monetary policy meeting today and is widely expected to raise interest rates by 50 basis points on Wednesday. But it will be what Fed Chairman Jerome Powell says during his press conference that will garner the most attention. Most still expect this week’s rate boost to be followed in June with another half-point increase — and possibly more after that. But the watch is on to see if Powell provides new signals about how high officials think interest rates are likely to rise in the coming year or two. Meanwhile, the Reserve Bank of Australia raised its benchmark interest rate for the first time in more than a decade, acting to tame inflation that is threatening the country’s economy. Germany's 10-year bond also reached 1% for the first time since 2015, reflecting expectations of tightening monetary policy.
EU not fully on board with Russian energy ban... Hungary said it would not support an embargo on Russian oil and gas, and Slovakia said it would seek an exemption from any EU-wide oil ban. The comments came after the German finance minister said his country would be “able to bear” an embargo, paving the way for a ban on the import of oil from Russia which could come into effect by the end of the year.
Still little change in CFAP payouts... Data as of May 1 from USDA indicated little change in payments under the Coronavirus Food Assistance Program (CFAP) efforts. CFAP 2 payments totaled at $19.16 billion with original CFAP 2 payments at $14.33 billion and top-up payments at $4.83 billion. Total CFAP 1 payouts were at $11.81 billion, with original CFAP 1 payments at $10.62 billion and top-up payments at $1.19 billion. The figures have remained largely unchanged since the weekly updated issued for the period ending April 19.
Commercial flocks affected by HPAI reaches 164... USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed highly pathogenic avian influenza (HPAI) in 164 commercial flocks with the addition of flocks in Lancaster County, Pennsylvania (19,300 duck meat birds), Stearns County, Minnesota (10,000 turkey breeder hens) and Weld County, Colorado (1,100,000 table egg layers) listed as confirmed April 29. APHIS also reported the April 30 confirmation of HPAI in a commercial broiler breeder operation in Sequoyah County, Oklahoma involved 13,800 birds.
Wholesale beef prices firm, movement slows... Wholesale beef prices firmed $1.77 in Choice boxes and 26 cents for Select on Monday, though movement slowed to just 79 loads. After recently buying for what is likely to be upcoming beef features, Monday’s trade suggests retailers may be more selective buyers, fearing they will get caught with supplies if they pay too much. If that’s the case, packers will need to limit price gains in order to keep product moving through the pipeline.
May hogs extend discount to cash index... May lean hog futures ended Monday at $99.875, the first close below the $100.00 level since Jan. 31. At that price, the lead contract is $1.715 below today’s CME lean hog index quote (as of April 29), which is down 18 cents. The building discount in the lead contract suggests traders sense the four-day slide in the cash index will extend. June lean hog futures finished Monday just $3.385 above the cash index. Over the past five years, the cash index has firmed $8.77 from the beginning of May to mid-June.
Overnight demand news... South Korea tendered to buy 50,000 MT of U.S. milling 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
- No USDA reports scheduled
