First Thing Today | June 12, 2023
Good morning!
Corn and beans higher, wheat mostly firmer to open the week... Corn futures posted double-digit gains overnight amid increased weather/crop concerns. Soybeans also traded higher, while wheat has turned mostly firmer. As of 6:30 a.m. CT, corn futures are trading 12 to 13 cents higher, soybeans are 3 to 10 cents higher, SRW wheat is 2 to 3 cents higher, HRW wheat is narrowly mixed and HRS wheat is mostly 3 cents higher. Front-month crude oil futures are more than $1.50 lower and the U.S. dollar index is down around 125 points this morning.
Limited rainfall, mild temps this week... Rains will be lighter than normal across the Corn Belt during the next 10 days, though mild temps will help limit crop stress. World Weather Inc. says ridge building is expected over the Plains and western Corn Belt during the second week of the outlook, which would warm up temps and keep rainfall limited.
Russia remains dissatisfied with Black Sea grain deal... Russia is still not satisfied with how a Black Sea grain deal is being implemented, Deputy Foreign Minister Sergei Vershinin said on Saturday after meeting senior United Nations trade officials a day earlier, TASS news agency reported. Vershinin said, “Barriers to our exports remain.” Russia has threatened to walk away from the deal on July 17 if demands are not met, including the resumption of the transit of ammonia from Russia via Ukrainian territory to Pivdennyi port in Odesa, from where it is exported.
Firm cuts EU + UK wheat production forecast... Grain trade association Coceral lowered its forecast of this year’s soft wheat production in the European Union and Britain by 2.1 MMT to 142.4 MMT due to dry weather in northern Europe and Spain. It trimmed its estimate for the 2023 rapeseed production in the EU and Britain, now seen at 21.0 MMT against 21.1 million in March, and said a further forecast reduction was “very likely” if dryness persisted in the northern half of the EU.
The week ahead in Washington... Appropriations work resumes in Congress, with a focus on the National Defense Authorization Act and the potential markups of the fiscal year (FY) 2024 appropriations for Agriculture and FDA. Agriculture issues being discussed include USDA rural development efforts, farm bill research titles and competition in the U.S. meat processing industry. The economic focus will be the Fed’s two-day monetary policy meeting on Tuesday and Wednesday after which it will decide whether to again raise interest rates or pause. Consumer inflation data will be released Tuesday, with producer price data out on Wednesday. Key data for agriculture will be this afternoon’s update on crop condition ratings from USDA.
Ag aid flexibility... A modified version of HR 662 would authorize USDA to use fiscal 2023 disaster relief funds for making block grants to states and territories to address crop losses. The fiscal 2023 spending package included over $3.7 billion in disaster aid for 2022 crop losses. While USDA was previously allowed to distribute aid through block grants for losses experienced between 2017 and 2021 due to extreme weather and natural disasters, this authority was omitted for addressing losses in 2022. Rep. Scott Franklin (R-Fla.), the sponsor of the bill, has said this bill will allow USDA to expedite relief payments for agricultural producers. The modified bill would also classify the funding as an emergency requirement under the Statutory Pay-As-You-Go Act, exempting it from the law that typically requires offsets for new mandatory spending or revenue loss.
Cuba helps China spy on United States... The White House confirmed the presence of Chinese spy facilities in Cuba, with origins dating back to the Trump administration. U.S. intelligence shows China has had long-standing facilities in Cuba, which were expanded in 2019. The White House initially denied a Wall Street Journal reports about a secret agreement between China and Cuba to establish a spy facility on the island. China said reports of it spying on the U.S. from Cuba were false.
Palm oil falls near two-year low... Malaysian palm oil futures fell to below MYR 3,320 per metric ton, approaching the two-and-a-half-year low of MYR 3,200 touched on May 31 amid evidence of lower demand and strong supply. Early cargo surveyors showed that exports of Malaysian palm oil products fell 16.7% to 17.6% from the previous month in the first 10 days of June. The developments were affected by stronger competition from the world’s top producer, Indonesia, as oversupply in its domestic market spurred higher exports. In the meantime, data from the Malaysian Palm Oil Board showed inventories were at 1.67 MMT at the end of May, 12.6% higher than the previous month to mark the first buildup in four months.
Covid aid stolen or wasted... More than $400 billion in pandemic relief funds may have been stolen or improperly distributed in what would be the greatest grift in U.S. history, an Associated Press analysis finds. Says AP: “Criminals and gangs grabbed the money. But so did a U.S. soldier in Georgia, the pastors of a defunct church in Texas, a former state lawmaker in Missouri and a roofing contractor in Montana.” The analysis found that fraudsters potentially stole more than $280 billion in Covid-19 relief funding; another $123 billion was wasted or misspent. Combined, the loss represents 10% of the $4.2 trillion the U.S. government has so far disbursed in Covid relief aid. That number is certain to grow as investigators dig deeper into thousands of potential schemes.
Tensions between employers and unions continue at ports along the U.S. West Coast... The Pacific Maritime Association (PMA) blames the International Longshore and Warehouse Union (ILWU) for shutting down the port of Seattle on Saturday, an accusation ILWU President Willie Adams denies. Ports of Long Beach and Los Angeles experienced increased productivity during the weekend, which the Marine Exchange of Southern California attributes to container carriers adjusting vessel speeds. The U.S. Chamber of Commerce has urged President Joe Biden to appoint an independent mediator to address the ongoing labor dispute, as disruptions could impact the peak shipping season. An agreement in the labor dispute is particularly important for seasonal consumer products like back-to-school items.
Bullish cash cattle expectations, but cautious attitudes... Traders come into the week with expectations the cash cattle market will continue to strengthen after another round of record prices last week. Despite record cash prices, nearby futures continue to trade at hefty discounts, signaling traders’ overall cautious stance, which is likely to continue.
Summer-month hogs maintain premiums to cash index... The CME lean hog index is up another 48 cents (as of June 8), extending its seasonal rally. June hog futures, which expire Wednesday and are cash settled on Friday, finished last Friday at a $3.595 premium to the cash index. July hog futures held a $5.345 premium to today’s cash quote.
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
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 3:00 p.m. Crop Progress — NASS
