First Thing Today | February 6, 2024
Good morning!
Grains mostly firmer this morning... Corn, soybeans and wheat traded in narrow ranges in two-sided price action overnight but have adopted a mostly firmer tone this morning. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are mostly 2 to 4 cents higher, SRW and HRS wheat futures are fractionally to a penny higher while HRW wheat is fractionally lower. Front-month crude oil futures are modestly firmer and the U.S. dollar index is around 100 points higher.
Cordonnier leaves Brazil, Argentina crop estimates unchanged... South American crop consultant Dr. Michael Cordonnier left his Brazilian crop estimates at 149 MMT for soybeans and 115 MMT for corn, noting a “mixed bag” of weather and ahead of production updates from Conab and USDA on Thursday. Cordonnier also left his Argentine crop estimates at 52 MMT for soybeans and 56 MMT for corn, noting forecast rains for later this week and next week will be critical for maintaining yield potential after recent stress from heat and dryness. He raised his Paraguay soybean crop forecast 500,000 MT to 10.5 MMT. Cordonnier forecasts total South American soybean production will rise 18.8 MMT (9.4%) for soybeans and 900,000 MT (0.5%) for corn.
China’s 2024 rural policy prioritizes development for economic growth and rural job creation... The 2024 No. 1 Document, which outlines the annual rural policy guidance in China, has placed a strong emphasis on rural development to drive economic growth. Trivium China says this marks a shift from previous years, which primarily focused on food security. The document calls for implementing lessons from a village renovation effort launched by Chinese President Xi Jinping 20 years ago and dedicates three-quarters of its tasks to rural job creation, industrial development, infrastructure construction and governance. It also specifies funding sources for rural development, including protecting rural-related fiscal funds in government budgets, supporting local government special-purpose bonds for rural projects and providing support for banks and insurers involved in rural initiatives. Bottom line: Beijing sees rural development as crucial for growing rural industry and improving the livelihoods of the nearly 480 million people still living in rural areas in China. Trivium China says this will likely lead to increased investment in such initiatives throughout the year.
Chinese stock market leaps on support hopes... China’s battered stock market jumped the most in years amid signals authorities are strengthening their resolve to support markets. The Shanghai Composite index jumped 3.2%, its biggest daily gain since March 2022. The blue-chip CSI 300 climbed 3.5% for its largest one-day rise since November 2022, the small cap index notched its biggest rise since 2008 and the yuan firmed on Tuesday. Bloomberg News reported President Xi Jinping will discuss the struggling stock market with financial regulators. Chinese regulators also announced further curbs on short selling and state investors said they were expanding their reviews of investments in exchange-traded funds.
U.S. Treasury team heads to China to talk subsidies, economic policies... The Biden administration has sent five senior U.S. Treasury officials to Beijing this week for economic talks that will include China’s “non-market” policies that are adding excess industrial capacity, a Treasury official said. The delegation, led by Treasury Undersecretary for International Affairs Jay Shambaugh, planned to hold frank conversations as part of the U.S-China Economic Working Group about Beijing subsidies the U.S. says encourage overproduction of goods, potentially flooding global markets. Affected industries include electric vehicles. The group will discuss the U.S. and Chinese economic outlooks, investment screening regimes for national security in both countries, and opportunities to cooperate on climate change and debt relief to poor countries, the official said.
Rep. Smith seeks USITC global rice market review... Lawmakers need updated review and analysis of the global rice market so they can implement policies to best ensure U.S. producers can compete, House Ways and Means Committee Chairman Jason Smith (R-Mo.) said. He penned a letter to the U.S. International Trade Commission (USITC) Chairman David Johnson on the matter.
Euro zone consumer inflation expectations decline further... Consumer expectations for euro zone inflation over the next 12 months declined for a third consecutive month to 3.2% in December, the lowest since February 2022, the ECB Consumer Expectations Survey showed. In contrast, inflation expectations for the three years ahead increased slightly to 2.5%.
Rest in Peace, Bill Northey... Bill Northey, former USDA Undersecretary for Farm Production and Conservation and Iowa Secretary of Agriculture, passed away. Bill was a long-time friend of Pro Farmer and a true champion for agriculture in Iowa and across the country.
Beef packer margins sharply negative... Cash cattle prices rose for a third straight week and have gained $4.33 during the span. Wholesale beef prices firmed 40 cents for Choice and 30 cents for Select on Monday. But over the past two weeks, wholesale beef prices have weakened, with Choice down $8.18. That has dropped packer cutting margins deep into the red, which may limit their pursuit of cash cattle as they try to manage supplies after a couple weeks of strong purchases.
Traders narrow hog premiums... The CME lean hog index is up another 44 cents to $73.56 as of Feb. 2. Since the beginning of the year, the cash index has risen $8.51. After Monday’s sharp losses, the premium in February hogs dropped to 84 cents, while it was down to $8.64 for April hogs.
Overnight demand news... Japan is seeking 136,321 MT of milling wheat in its weekly tender. Tunisia tendered to buy 100,000 MT of durum 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 reports scheduled.
