First Thing Today | February 15, 2024

Good morning!

Followthrough selling overnight... Corn, soybeans and wheat extended Wednesday’s losses during the overnight session. As of 6:30 a.m. CT, corn futures are trading steady to fractionally lower, soybeans are 1 to 3 cents lower and wheat futures are 2 to 5 cents lower. Front-month crude oil futures are around 60 cents lower and the U.S. dollar index is down about 180 points.

USDA’s initial look at 2024-25... 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 181.0 bu. per acre would produce a crop of 15.040 billion bushels. Total use is projected at 14.705 billion bu., with feed and residual use of 5.750 billion bu., food, seed & industrial use of 6.805 billion bu. (5.400 billion bu. for ethanol) and exports of 2.150 billion bushels. Carryover: 2.532 billion bushels (17.2% stocks:use). Price: $4.40.

Soybeans: Planted acreage of 87.5 million, with harvested acres at 86.6 million. A national average bean yield of 52.0 bu. per acre would result in a crop of 4.505 billion bushels. Total use is projected at 4.400 billion bu., including 2.400 billion bu. of crush and exports of 1.875 billion bushels. Carryover: 435 million bushels (9.9% stocks:use). Price: $11.20

Wheat: Planted acreage of 47.0 million, with harvested acres at 38.4 million. A national average yield of 49.5 bu. per acre would produce a crop of 1.900 billion bushels. Total domestic use is projected at 1.134 billion bu., with exports forecast at 775 million bushels. Carryover: 769 million bushels (40.3% stocks:use). Price: $6.00.

Cotton: Planted acreage of 11.0 million, with harvested acres at 9.29 million and a national average yield of 827 lbs. per acre. That would produce a crop of 16.0 million bales. Total use is projected at 15.5 million bales, including exports of 13.8 million bales. Carryover: 3.5 million bales (22.6% stocks:use). Price: 80.0¢.

Cattle: U.S. beef production is projected at 26.19 billion lbs., down 3% from 2023. Exports are projected to 2.785 billion lbs., down 8.3% from last year. Cash price: $180.00, which would be a record and up $4.46 from last year.

Hogs: U.S. pork production is projected at 27.88 billion lbs., up about 2% from last year. Exports are expected to rise 3.8% to 7.080 billion pounds. Cash price: $60.00, up $1.41 from last year.

Broilers: U.S. production is projected to be a record 46.8 billion lbs., up just under 1% from last year. Broiler meat exports projected at 7.22 billion lbs., down fractionally from 2023. Wholesale broiler price: $1.27 per lb., up 2.4% from last year and a record.

Dairy: Milk cow numbers are seen lower in 2024, with milk production projected at 228.2 billion lbs., up 0.7% as production per cow is seen rising 0.9%. Exports are projected to rise 10% with a 1% increase in domestic use on a fat basis while use on a skim-solids basis is seen declining 1% but remaining above the five-year average. The all-milk price is projected to be $20.95 per cwt., up from $20.48 in 2023.

Weekly Export Sales Report out this morning... For the week ended Feb. 8, traders expect:

Record January NOPA crush expected... Analysts expect the National Oilseed Processors Association (NOPA) to report its members crushed 189.9 million bu. of soybeans in January. If realized, that would be down 2.8% from the all-time record in December but up 6.1% from year-ago and the largest ever tally for the month. Soyoil stocks at the end of January are expected to total 1.409 billion pounds.  

EPA to allow farmers to use some existing dicamba supplies... EPA announced its decision to allow farmers to use some existing stocks of dicamba products. This decision follows a Feb. 6 court ruling in the U.S. District Court of Arizona that invalidated registrations for the dicamba products XtendiMax, Engenia and Tavium. EPA’s Existing Stocks Order permits limited sale and distribution of dicamba products that were already in the possession of growers or in the channels of trade prior to Feb. 6. “Existing stocks” are defined as products that were packaged, labeled, and released for shipment before this date. Products are considered released for shipment when they are packaged and labeled for sale or distribution or stored in areas designated for shipment. Any remaining products can only be moved for disposal or export. The order specifically authorizes the sale and distribution of existing stocks that are already in the possession of individuals other than the registrant, providing clarity on the handling of these products following the court ruling.

Euro zone GDP forecast cut... The euro zone economy will grow slower than expected this year after price growth eroded purchasing power and high interest rates curbed credit, but inflation in 2024 will also be slower than expected, the European Commission said. The commission forecasts GDP in the 20 countries sharing the euro currency would increase only 0.8% this year rather than the 1.2% growth it expected last November, though it would still be up from a 0.5% rise in 2023. In 2025, economic growth should accelerate to 1.5%, slightly reducing its earlier 1.6% forecast. Because economic activity will be slower, also consumer inflation in 2024 is likely to slow down more than previously forecast – to 2.7%, rather than only to 3.2% seen in November, from 5.4% in 2023. In 2025 inflation will decelerate further to 2.2%, the commission said.

Japan slips into recession... In the fourth quarter of 2023, Japan’s GDP contracted 0.4%, following a 3.3% decline in the third quarter. As a result, Japan’s nominal GDP now stands at $4.21 trillion, pushing it behind Germany, which has now become the world’s third-largest economy with a nominal GDP of $4.46 trillion. The recession in Japan was driven by weakened private consumption and capital expenditures, both of which declined for the third consecutive quarter. This downturn raises concerns about the Bank of Japan’s (BOJ) ability to transition away from its accommodative monetary policy, which it has been preparing to do. Despite these challenges, some analysts point to a tight labor market and continued strong corporate spending as factors that may prompt BOJ to ease its ultra-loose monetary policy.

IEA: Oil demand losing momentum... The International Energy Agency (IEA) trimmed its 2024 growth forecast to 1.22 million barrels per day (bpd) from 1.24 million bpd, due in part to a sharp slowdown in Chinese consumption. IEA estimated global oil supply will grow 1.7 million bpd this year, up from its previous forecast of 1.5 million bpd. IEA now expects supply to grow to a record high of about 103.8 million bpd, almost entirely driven by producers outside OPEC+, including the U.S., Brazil and Guyana. Given the robust outlook for supply outside OPEC+, IEA expects a slight build in inventories in the first quarter. OPEC, meanwhile, expects oil use to keep rising for the next two decades. Monthly reports this week from the two forecasters underlined their starkly different estimates for 2024 oil demand.

Vilsack: U.S. ‘18 months or so’ away from finding bird flu vaccine... U.S. veterinarians are “18 months or so” away from identifying a vaccine for the current strain of highly pathogenic avian influenza (HPAI) and USDA is developing a process to distribute it, Ag Secretary Tom Vilsack told a House Ag Committee hearing. USDA plans to discuss poultry vaccinations with trading partners, amid concerns that other countries could restrict imports of vaccinated U.S. poultry, Vilsack said. The U.S. does not allow poultry imports from countries affected by HPAI or from flocks vaccinated against the disease. France’s decision last year to vaccinate ducks against HPAI prompted import restrictions.

Cash cattle trade lower... Cash cattle started trading at mostly $2.00 lower prices in the Southern Plains Wednesday afternoon. The initial sales in reaction to sharp losses in futures suggest additional cash cattle trade will occur at lower prices this week, breaking the four-week string of strong gains.

Traders build premium in April hogs... The CME lean hog index is up 48 cents to $74.60 as of Feb. 13, extending the seasonal price rebound. After surging on Wednesday, April hogs took over lead-month status at nearly a $10.00 premium to today’s cash quote, which is about the average seasonal gain in the cash index from now until mid-April.

Overnight demand news... South Korea purchased 68,000 MT of corn to be sourced from South America or South Africa. Japan purchased 115,035 MT of milling wheat in its weekly tender, including 54,695 MT U.S., 30,190 MT Canadian and 30,150 MT Australian. Egypt tendered to buy an unspecified amount of wheat from various countries.

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

• USDA Ag Outlook Forum
• 7:30 a.m. Weekly Export Sales — FAS
• 11:00 a.m. Monthly Soybean Crush — NOPA
• 2:00 p.m. Tree Nuts: World Markets and Trade — FAS