First Thing Today | May 10, 2022

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Good morning!

Corrective buying in grains overnight... Corn, soybean and SRW wheat futures recouped a portion of Monday’s losses overnight. HRW and HRS futures strengthened more than they lost yesterday. As of 6:30 a.m. CT, corn futures are trading around 4 cents higher, soybeans are 5 to 9 cents higher, winter wheat futures are 9 to 10 cents higher and spring wheat is mostly 12 cents higher. Front-month U.S. crude oil futures are around $1.50 lower and the U.S. dollar index is near unchanged this morning.

Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended May 8.

  • Corn: 22% planted (50% five-year average), 5% emerged (15% average)
  • Soybeans: 12% planted (24% average), 3% emerged (4% average)
  • Spring wheat: 27% planted (47% average), 9% emerged (15% average)
  • Winter wheat: 33% headed (40% average), 29% rated good/excellent (27% last week)
  • Cotton: 24% planted (24% average)

Consultant cuts U.S. corn yield projection amid delayed plantings... Crop Consultant Dr. Michael Cordonnier cut his U.S. corn yield projection by 1.5 bu. to 177 bu. per acre given the much-slower-than-average planting pace so far. He notes corn yield potential declines about 0.3% for each day planting is delayed in early May and that increases to about 1% per day at the end of the month. For Iowa and Illinois, yield potential for corn planted on May 15 is generally about 95%; around 92% of normal on May 20. But weather during pollination is the most important factor for final yields. Because a lot of corn is going to be planted in a tight window after the delays, pollination will be tightly clustered. Cordonnier notes, “Pollinating in a tight window could be beneficial or detrimental depending on weather.” He also cut his planted acreage estimate by 500,000 acres to 90.0 million acres. He maintained his soybean acreage and yield projections at 91.0 million acres and 51.5 bu. per acre, respectively.

Vilsack: Working with Congress on other ways to boost plantings... USDA Secretary Tom Vilsack is working with lawmakers to include funding in a coming bill that would offset the penalty for planting a crop after a prevent-plant claim. USDA also could extend final planting dates to let farmers into fields without crop insurance penalty for each late day. Farmers normally receive only 35% of their prevented-plant indemnity if they plant a crop on the same land that year. Vilsack told Agri-Pulse USDA also is mulling some administrative changes, including expanding the number of counties where double cropping is insurable and allowing landowners with expiring Conservation Reserve Program (CRP) contracts to start preparing the acreage for planting before Sept. 30. Farmers can start prepping CRP land before contract maturity Sept. 30, but under current rules, they lose rent starting the date they begin land preparation and such activity can’t start before July 1 or the nesting season which can vary by location. USDA also is looking at making winter wheat plantings eligible for conservation programs where farmers are supposed to plant a dedicated cover crop. Vilsack appears this morning before the Senate Ag Appropriations Subcommittee at which he will face questions on this and other topics. The final plan will likely change but it is clear the Biden administration wants some changes to boost plantings for 2023 crops.

HRW CCI rating improves, but still far below average... 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 improved 5.4 points to 259.2, though that’s still 69.4 points below the five-year average for this date. The SRW crop slipped 4.7 points over the past week to 346.3, which is 13.0 points below the five-year average. Click here for details.

China to crack down on destruction of wheat crop... China’s provincial authorities have been asked by the ag ministry to investigate suspected illegal destruction of wheat fields for construction projects, and cases of the crop being cut prematurely for feed. Beijing has made food security a top priority and spent 5 billion yuan ($744 million) to stabilize the crop after a poor start last fall.

Malaysia may cut palm oil export tax... Malaysia’s ag ministry has proposed cutting the export tax on palm oil by as much as half to help fill a global edible oil shortage and grow market share of the world’s second-largest palm oil producer. Malaysia could temporarily cut the tax to 4% to 6% from the current 8%, with a decision possible as early as June. Buyers in India, Iran and Bangladesh are proposing to barter agriculture products like rice, wheat, fruits and potatoes for Malaysian palm oil. Malaysia will also slow the implementation of its B30 biodiesel mandate, which requires a portion of the nation’s biodiesel to be mixed with 30% of palm oil, to prioritize supplies to global and domestic food industries.

Fed highlights risk of high inflation, sharp rise in interest rates... Elevated and persistent inflation, coupled with a sharp rise in interest rates, are among the greatest near-term risks to the U.S. economic system, the Federal Reserve said in its latest Financial Stability Report. The report also warned a prolonged conflict in Russia could have adverse consequences to U.S. financial markets, particularly through exposures to tumult in commodities markets.

Longer-term inflation expectations ticked higher in April... That’s according to a survey released by the New York Fed, challenging the central bank’s efforts to relieve price pressures. Respondents see inflation rising by 3.9% three years from now, up from a 3.7% rise they predicted in the March survey.

The Biden-Harris inflation plan: ‘Lowering costs and lowering the deficit’... President Joe Biden is set to talk about inflation today, and the White House has a two-page memo about how the administration proposes to tackle rising costs. One of the points deals with the ag sector: “Lowering Food Prices by Helping American Farmers Grow More, and Compete More Effectively: Calling for resources to help American farmers boost domestic food production in order to avert a potential global food crisis created by Russia’s unprovoked invasion of Ukraine; taking actions to crack down on illegal price fixing and enforce the antitrust laws in the meat and poultry processing sector; investing federal resources to create more competition in meat-processing; and providing over one billion dollars in relief to small businesses and agricultural workers hurt by Covid-19.” On Wednesday, the day the latest Consumer Price Index is released, Biden will travel with Vilsack to visit a farm in Kankakee, Illinois.

Lawmakers could vote this evening on nearly $40 billion in aid for Ukraine... House Dems are moving ahead with a nearly $40 billion Ukraine funding bill as soon as this evening, without including Covid funding. The latest measure totals $39.8 billion, more than the $33 billion requested by Biden. It would include $3.4 billion more than requested for military aid and $3.4 billion more for humanitarian aid. Biden said it’s fine to send him separate Ukraine and Covid funding bills, after originally calling on lawmakers to pass them simultaneously. Congressional leaders told him a combined funding package “would slow down action on the urgently needed Ukrainian aid,” Biden said in a statement. “We cannot afford delay in this vital war effort. Hence, I am prepared to accept that these two measures move separately, so that the Ukrainian aid bill can get to my desk right away.” Biden called on lawmakers to send the Ukraine bill to his desk in “the next few days.”

Strong day for Choice beef... Choice boxed beef prices firmed $3.85 on Monday, while Select dropped $1.93. Packers moved 131 loads on the day, including nearly half being Choice. That may suggest retailers are finishing their purchases for beef features during the upcoming grilling season, which unofficially kicks of Memorial Day weekend at the end of the month.

String of losses for cash hog index ends... The CME lean hog index is up 18 cents today (as of May 6), ending an eight-day slide. To halt the sharp selloff in hog futures, however, the cash index likely needs to show some sustained strength that would signal a seasonal firming has begun.

Overnight demand news... South Korea purchased 65,000 MT of corn – likely to be sourced from South America. Japan is seeking 196,560 MT of wheat from the U.S., Canada and Australia in its weekly tender. Bangladesh tendered to buy 50,000 MT of optional origin 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
 

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