First Thing Today | April 3, 2023
Good morning!
Bullish start to the week... Corn, soybeans and wheat posted active followthrough buying overnight on help from surging crude oil futures. As of 6:30 a.m. CT, corn futures are trading 5 to 6 cents higher, soybeans are 7 to 11 cents higher and wheat futures are 8 to 12 cents higher. Front-month crude oil futures are more than $4.50 higher an the U.S. dollar index is marginally lower.
Surprising OPEC+ oil production cut... OPEC+ oil cartel announced a surprise cut in production of more than 1 million barrels a day, again pitting Saudi Arabia against U.S. interests. The decision by OPEC+, which includes Russia, reneges on previous assurances that it would hold supply steady and poses new inflation risks for the global economy, with crude soaring on the news. The White House said the move was ill-advised. The Kremlin said it was in the interests of the world energy industry to support prices for oil and oil products.
Argentina to reintroduce ‘soy dollar’ policy today... Argentina’s government will announce details of a preferential exchange rate for ag exports today. The policy will be similar to the “soy dollar” plan used September and December of last year, though the actual exchange rate is not yet know – and this time it is expected to include other commodities besides soybeans.
Soy crush, corn-for-ethanol use expected to fall from January but top year-ago... USDA this afternoon is expected to report February soybean crush totaled 175.4 million bu., which would be down 8.2% from January but up 0.6% from last year. Corn-for-ethanol use is expected to total 406.4 million bu., which would be down 8.4% from January but 0.1% more than last year.
Anger is rising among farmers in eastern Europe... They say a glut of grain from Ukraine threatens their businesses, and it’s steadily eroding political goodwill. Poland and other neighboring states agreed to help get grain out of Ukraine and on to global markets after the Russian invasion blocked exports last year. The hoard of grain is becoming a political issue as protests spill into the streets, Bloomberg reports.
U.S. ethanol & Brazil... U.S. Trade Representative Chief Agriculture Negotiator Doug McKalip will travel to Brazil on Friday to meet with agriculture and environmental stakeholders. He will discuss renewable fuels policy and access to Brazil for U.S. ethanol.
China’s factory activity cools in March... China’s Caixin/S&P Global manufacturing purchasing managers index (PMI) fell to 50.0 in March from 51.6 the previous month. Both output and new orders rose at slower paces while foreign sales and employment fell.
China wheat auctions stay strong, rice demand limited... China sold 128,499 MT or 92.6% of state-owned wheat reserves put up for auction last week at an average price of 2,628 yuan ($381.58) per metric ton. The average sales price was down notably from 2,733 yuan per metric ton the previous week. China sold only 145,549 MMT (16.1%) of state-owned rice reserves put up for auction at an average sales price of 2,489 yuan ($361.16) per metric ton.
The week ahead in Washington... Congress is on break for a two-week Easter recess. House Speaker Kevin McCarthy (R-Calif.) is expected to meet this week with Taiwanese President Tsai Ing-wen in California. Beijing has said it will retaliate if McCarthy follows through with the meeting, but the California Republican doesn’t seem moved by the threat. Last Friday, House Minority Leader Hakeem Jeffries (D-N.Y.) met with Tsai in New York. Former President Donald Trump is expected to appear in court Tuesday for his arraignment following his indictment last week by a Manhattan grand jury on more than 30 counts related to business fraud. On the economic front, the March employment data will be released on Friday. For agriculture, today marks the return of weekly crop progress data, with the first national winter wheat crop ratings of the spring being the highlight. Grain and livestock markets are closed for Good Friday, but government offices are open.
White House nixes GOP plan to jump-start talks on debt ceiling... The White House continues to insist there will be no debt-limit negotiations with House Speaker Kevin McCarthy (R-Calif.), dismissing the latest Republican strategy to draw President Joe Biden to the table — a bill that would raise the cap but also include spending cuts. “We’ve been very, very clear about this, the debt limit should be dealt with without conditions, without negotiations,” White House Press Secretary Karine Jean-Pierre told reporters Friday when asked about the prospect of House legislation pairing a debt-limit hike with spending cuts and other Republican priorities.
Bidding open for $1 billion in rural energy grants... Farmers and rural businesses could start applying April 1 for $1 billion in renewable energy grants. Grants under the system, dubbed the Rural Energy for America Program, can be used by producers and small businesses to either install renewable energy systems or improve their energy efficiency. Federal officials said the grants will help mitigate climate change while cutting energy costs. The biggest share applicants can request to be covered by USDA is 50% of the total project cost.
Bullish cash cattle hopes, but... Cash cattle prices shot sharply higher last week as packers aggressively bid for supplies. Cash sources expect firmer prices again this week, though gains won’t rival those from last week. Packers have fresh contract supplies available with the flip of the calendar, which will help limit their need to be as aggressive with cash bids.
Cash hog drop continues... The CME lean hog index is down another 31 cents to $75.46 (as of March 30), extending the price slide to a 10th consecutive day. April lean hog futures finished Friday 21 cents below today’s cash quote, suggesting traders sense the cash slide will continue.
Weekend 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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Dairy Products — NASS
- 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS
- 3:00 p.m. Crop Progress Report — NASS
