First Thing Today | May 17, 2022

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Good morning!

Wheat leads overnight price pullback... Wheat futures gapped higher overnight but reversed lower and are under heavy pressure this morning. Corn and soybeans also traded lower. As of 6:30 a.m. CT, SRW wheat futures are trading 22 to 27 cents lower, HRW wheat is 30 to 34 cents lower, HRS wheat is 16 to 19 cents lower, corn is 5 to 7 cents lower and soybeans are around 3 cents lower. Front-month crude oil futures are 90 cents higher and the U.S. dollar index is more than 700 points lower.

India eases wheat export restrictions a little... India will allow overseas wheat shipments awaiting customs clearance, also wheat exports to Egypt, the government announced today. “It has been decided that wherever wheat consignments have been handed over to Customs for examination and have been registered into their (Customs) systems,” either on May 13, 2022, or earlier, would be allowed to be shipped out, the government said. Initially, the government said it would only allow exports backed by letters of credit, or payment guarantees, issued before May 13.

U.S. hopes to convince India to ‘reconsider’ its wheat export ban... Speaking at a press briefing in New York on Global Food security, U.S. Ambassador to the UN Linda Thomas-Greenfield said: “We have seen the report of India’s decision. We’re encouraging countries not to restrict exports because we think any restrictions on exports will exacerbate the food shortages.” The U.S., which is the president of the U.N. Security Council for this month, will host an event on food security this week, in which India will participate. Thomas-Greenfield said the U.S. hopes that India would reconsider its decision after hearing the concerns being raised by other countries.

Ukraine limits corn deliveries to Port of Reni, signs deal for more grain movement through Poland... Ukrainian national railway company Ukrzaliznytsia will restrict corn transportation to the Danube port of Reni from May 18 for an indefinite period, APK-Inform agriculture consultancy said. It gave no reason for the decision, but it previously said that similar restrictions were imposed due to congestion of rail cars near the crossing points. Meanwhile, Poland will simplify inspections controls and add inspectors in an effort to boost the volume of Ukrainian grain exports through its country. “The measures envisaged... will significantly simplify the border crossing of our grain goods and increase export volumes,” Ukraine’s agriculture minister said.

Efforts are underway to get some cargo ships moving again through the Black Sea... United Nations Secretary-General António Guterres is pursuing a high-stakes deal with Russia, Turkey and other nations to open up Ukrainian food exports to world markets, the Wall Street Journal reports. The effort is aimed at staving off a potential global food shortage, and would have Moscow permit some Ukrainian grain shipments to get past its shipping blockade in exchange for moves to ease restrictions on Russian and Belarusian exports of potash fertilizer. As one of the largest grain exporters, Ukraine exported 41.5 MMT of corn and wheat in 2020-21, and more than 95% was shipped through the Black Sea. Russia and Belarus are key suppliers of potash. Belarusian potash is currently banned from world markets under Western sanctions.

Vilsack more worried about this year’s grain crop in Ukraine than exports of last year’s crop... During a call to reporters from Poland following a meeting of G7 ministers in Stuttgart, Germany, USDA Secretary Tom Vilsack detailed 80% of last year’s Ukrainian crop had already been shipped before Russia began blocking Black Sea ports. While the remaining grain needs to be moved out of the country, a bigger problem will be if there is not adequate storage space or shipping opportunities for this year’s crop. Despite concerns about whether Ukrainian farmers can plant and harvest their crops, Vilsack said officials anticipate the Ukrainian crop will be 50% to 60% of normal. Vilsack noted Ukrainian railroad tracks are different from those of neighboring countries and grain must be unloaded and reloaded for it to move. “Whether they get it out is anybody’s guess, but there is going to be a heck of an effort to get it out,” he added. Ukraine has asked the G7 group of wealthier countries for equipment related to shipping, including weighing devices, and Vilsack said USDA will look into its own resources and ask universities and the private sector about the availability of equipment they may be replacing.

Groups publish reports on high commodity prices... USDA’s s Foreign Agricultural Service has published a report (link) on the impact of the Ukraine war and other issues on global commodity prices. Meanwhile, the Agricultural Market Information System (AMIS), an organization run by the United Nations Food and Agriculture Organization and nine other international organizations, published (link) a summary of major market developments and the policy and other market drivers behind them.

HRW, SRW crops head in opposite directions... 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 6.5 points to 252.7, the lowest rating of the year and 73.8 points below the five-year average. The SRW crop improved 10.8 points to 357.1, its highest rating this spring, though that’s still 1.2 points below average for this date. Click here for more details.

Tunisia to restart phosphate exports... Tunisia expects to export more than 300,000 MT of phosphate this year due to a sharp increase in global demand and is looking to export at least 600,000 MT next year, a senior official of the state phosphate company told Reuters. This will be the first time the country has exported phosphate in 11 years amid demand from France, Pakistan, Brazil, Indonesia and Turkey.

Gas prices reach another record high... Gas prices hit a record high Monday for the fourth week in a row, with the national average reaching $4.48 per gallon, according to AAA. The national average gas price jumped 40 cents over the past month and $1.43 from year ago. Only three states (Georgia, Kansas and Oklahoma) have gas prices below $4 per gallon, while California and Hawaii have the highest prices at $5.98 and $5.31 per gallon, respectively.

Canadian publishes new dairy TRQ policies in reaction to USMCA complaint... Mary Ng, the Canadian minister of international trade, export promotion, small business and economic development, said the U.S.-Mexico-Canada Agreement (USMCA) dispute settlement panel’s report “ruled in favor of Canada in a majority of the claims,” and the new policies address “the sole finding” that Canada’s practice of reserving TRQ pools exclusively for the use of dairy processors is inconsistent with the agreement. “The new policies end the use of processor-specific TRQ pools,” Ng said. She added that Canada “has the full discretion to administer its TRQs under CUSMA [the Canadian acronym for USMCA] in a manner that supports Canada’s supply management system for dairy… We will always stand up for its dairy industry, farmers and workers and the communities they support, and at a time when global food security is under threat, it is even more important that we strengthen and maintain a strong and vibrant domestic dairy industry,” Ng added. Vilsack said the announcement was “disappointing” and “inadequate.” The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) called on the U.S. government to levy retaliatory tariffs on Canada. Vilsack said “the first step was to convey the level of dissatisfaction… I am hopeful that the nature of my conversation with the Canadian minister underscores the initial level of disappointment,” Vilsack said, adding that he believes Canadian ag minister Marie-Claude Bibeau “is capable of reading between the lines about what’s next.”

Euro zone Q1 GDP revised up... Euro zone economic growth was stronger than previously expected in the first quarter, revised data showed. Euro zone GDP rose 0.3% from the previous quarter during the first three months of this year and was up 5.1% annually. Those figures are up from the previously estimated growth of 0.2% and 5.0%, respectively.

China pledges more support for manufacturers, small firms... China’s state planner will strengthen support for manufacturers, the service sector and small firms, it said on Tuesday, as strict Covid-19 curbs reduce economic activity. The National Development Reform Commission says China’s economy “faces increasing downward pressure,” necessitating the need for more targeted support.

Big beef gains, limited movement... Monday’s activity in wholesale beef trade continued to show retailers are selective buyers at current price levels. While wholesale prices firmed $1.36 for Choice and $1.77 for Select, movement totaled only 95 loads. Given near-record retail beef prices, retailers are seemingly not wanting to get caught with too much inventory.

Summer hogs back at premiums to cash index... The CME lean hog index is down 42 cents to $100.07 today (as of May 13). After strong price gains the past two sessions, summer-month hog futures are trading at premiums to the cash index again. But traders may wait on the cash index to firm before building too much premium back into summer hog futures.

Overnight demand news... Exporters reported no tenders or sales.

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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