First Thing Today | February 23, 2023

Good morning!

Two-sided trade overnight... Corn, soybeans and wheat traded on both sides of unchanged while holding in narrow ranges overnight. As of 6:30 a.m. CT, corn futures are trading fractionally on either side of unchanged, soybeans are 2 cents lower to 1 cent higher, SRW and HRS wheat futures are narrowly mixed, while HRW wheat is around 3 cents lower. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is about 100 points lower this morning.

USDA’s initial 2023-24 projections... Based on the January WASDE Report, USDA projects the following:

Corn: Planted acreage of 91.0 million, with harvested acres of 83.1 million. A national average corn yield of 181.5 bu. per acre would produce a crop of 15.085 billion bushels. Total use is projected at 14.490 billion bu., with feed and residual use of 5.600 billion bu., food, seed & industrial use of 6.690 billion bu. (5.250 billion bu. for ethanol) and exports of 2.200 billion bushels. Carryover: 1.887 billion bushels (13.0% stocks:use). Price: $5.60.

Soybeans: Planted acreage of 87.5 million, with harvested acres at 86.7 million. A national average bean yield of 52.0 bu. per acre would result in a crop of 4.510 billion bushels. Total use is projected at 4.461 billion bu., including a record 2.310 billion bu. of crush and exports of 2.025 billion bushels. Carryover: 290 million bushels (6.5% stocks:use). Price: $12.90.

Wheat: Planted acreage of 49.5 million, with harvested acres at 38.4 million. A national average yield of 49.2 bu. per acre would produce a crop of 1.887 billion bushels. Total domestic use is projected at 1.142 billion bu., with exports forecast at 825 million bushels. Carryover: 608 million bushels (30.9% stocks:use). Price: $8.50.

Cotton: Planted acreage of 10.9 million, with harvested acres at 8.9 million and a national average yield of 852 lbs. per acre. That would produce a crop of 15.80 million bales. Total use is projected at 16.1 million bales, including exports of 13.8 million bales. Carryover: 4.0 million bales (24.8% stocks:use). Price: 80.0¢.

Cattle: U.S. beef production is projected at 26.5 billion lbs., down 6% from 2022. Exports are projected at 3.09 billion lbs., down 12.6% from last year. Cash price: $159.00, which would be a record and approximately $15.00 above last year.

Hogs: U.S. pork production is projected at 27.4 billion lbs., up 2% from last year. Exports are expected to inch up 0.2% from last year to 3.65 billion pounds. Cash price: $66.50, down $4.71 from last year.

Broilers: U.S. production is projected to be 46.7 billion lbs. with broiler meat exports seen at 7.32 billion pounds. Wholesale broiler price: $1.27 per lb., down 10% from last year.

Export sales pushed back to Friday... Due to Monday’s government holiday, USDA’s export sales data for the week ended Feb. 16 will be released on Friday morning.

Yellen: U.S. to resume discussions on economic issues with China at ‘appropriate time’... Treasury Secretary Janet Yellen said the U.S. would resume discussions with China on economic issues “at an appropriate time” but continued to warn Beijing of the consequences of violating U.S. sanctions on Russia. Ahead of a G20 meeting of financial leaders in Bengaluru, Yellen said communication between the United States and China was important for “the sake of the entire globe.” Tensions between the Washington and Beijing have heightened after the U.S. shot down a Chinese surveillance balloon and the U.S. warned China to not provide Russia with “lethal assistance” in its war with Ukraine.  

Xi to shake up China’s financial system... Chinese President Xi Jinping is preparing to shake up the leadership of the country's financial system, the Wall Street Journal (WSJ) reported. Xi will install key associates to run the central bank and revive a Communist Party body to tighten political control over financial affairs. Zhu Hexin was the leading candidate to succeed U.S.-educated economist Yi Gang as governor of the People's Bank Of China, WSJ reported. Meanwhile, the Central Commission for Discipline Inspection vowed to “seriously punish... corrupt elements” in “resource-rich, capital-intensive areas” including finance, state-owned enterprises and grain purchasing entities.

Euro zone January inflation a tad higher than initially indicated... Consumer price inflation in the euro zone eased to 8.6% in January from 9.2% a month earlier, coming in just above the 8.5% estimated earlier this month, when figures from Germany, the bloc's biggest economy, were not yet included. Core inflation, excluding volatile food and fuel products, rose to 5.3% from 5.2% the previous month and higher than the initial steady pace.

China continues wheat auctions... China will auction another 140,000 MT of state-owned wheat reserves on March 1.

Brazil discovers case of BSE... Brazil confirmed a case of bovine spongiform encephalitis (BSE) in a cow in the northern state of Para. Ag ministry officials say it appears to be an “atypical form” of the disease, but samples from the animal were sent to the World Health Organization for further testing. Brazil halted beef export to China, effective immediately. Brazil can ship beef to the U.S. as it is considered a country with negligible risk for BSE. But Brazil is affected with Foot and Mouth Disease (FMD) and the U.S. only allows imports of beef from the state of Santa Catarina, which is recognized as being FMD free. So, this BSE case in Para should not impact Brazilian beef shipments to the United States.

Choice beef continues to surge... Choice wholesale beef prices firmed another 71 cents on Wednesday to $287.81, though that was 81 cents off the morning high. Still, that marked the highest February price ever for Choice beef, with the next upside target being the January 2022 high at $293.50. Choice beef has now surged nearly $22 this month, building packer margins as they have increased cash bids.

Cash hog index picks up steam... The CME lean hog index is up 77 cents, the biggest daily gain during the current rally from the January low. After yesterday’s sharp losses, April lean hog futures still held a $9.02 premium to today’s cash quote (as of Feb. 21). The bigger-than-normal premium in the lead-month contract could limit support from the firming cash index.

Overnight demand news... Egypt purchased 240,000 MT of Russian wheat. Algeria purchased between 30,000 and 40,000 MT of corn from Argentina. Taiwan tendered to buy 48,975 MT of U.S. milling wheat. South Korea passed on a tender to buy up to 138,000 MT of optional origin corn. Jordan tendered to buy up to 120,000 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

• 8:00 a.m. Food Price Outlook — ERS
• 8:00 a.m. Outlook for U.S. Agricultural Trade: February 2023 — ERS
• 9:30 a.m. Weekly Ethanol Production — EIA
• 2:00 p.m. Livestock Slaughter — NASS