First Thing Today | March 1, 2024
Good morning!
Beans rebound, corn and wheat weaker overnight... Soybean futures posted corrective gains overnight, while the corn and wheat markets favored the downside in light trade. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are 4 to 5 cents higher, winter wheat markets are 4 to 5 cents lower and spring wheat is steady to fractionally lower. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is down around 100 points.
Biden administration to miss March 1 SAF deadline... The Biden administration is going to miss its self-imposed March 1 deadline to update a key government tool used for calculating greenhouse gases from transportation and energy industries, causing ethanol producers to wait longer to determine their eligibility for sustainable aviation fuel (SAF) tax credits. Reuters reporter Jarrett Renshaw on Thursday afternoon tweeted, “Biden administration promised March 1 release but not coming, sources tell me. There was a principals’ meeting today at the White House to resolve outstanding issues on the SAF credit model (GREET). A delay means those issues remain unresolved.” The update to the U.S. Energy Department’s GREET model is crucial as it will determine whether U.S. corn ethanol and other materials used in sustainable aviation fuel production qualify for the federal tax credits.
Senate clears stopgap spending measure to avert gov’t shutdown... The Senate voted 77-13 Thursday night to approve a short-term stopgap spending bill to extend government funding until March 8 for 20% of agencies, including USDA, and March 22 for the rest. The House and Senate must pass six spending bills next week (including USDA funding) to avoid a partial shutdown on March 8 at midnight.
Weather likely impacted soy crush, ethanol production in January... USDA is expected to report January soybean crush totaled 196.3 million bu., according to a Bloomberg survey. That would be down 3.9% from the all-time record in December but 2.7% above January 2023. Corn-for-ethanol production is expected to total 445.9 million bu., down 7.4% from December but up 1.1% from last year.
Spring crop insurance prices set... The average closing levels for December corn futures, November soybeans and September HRS futures during February set the spring crop insurance prices for those crops. The spring crop insurance price is $4.66 for corn (down $1.25 or 21.2% from last year), $11.55 for soybeans (down $2.21 or 16.1%) and $6.84 for spring wheat (down $2.03 or 22.9%).
EPA removes existing natural gas plants from proposed carbon rule... EPA said it will exclude existing natural gas power plants from its proposed carbon regulations it plans to finalize in April, narrowing the scope of the initial proposal that would have required stringent controls on those facilities. EPA said it still plans to finalize standards this spring to cut carbon dioxide emissions from existing coal and new gas-fired power plants, but will re-propose wider-scale regulations targeting the entire fleet of gas plants at a later date. Last May, EPA proposed a set of standards that would push power companies to install carbon capture equipment that can siphon CO2 from a plant’s smokestack before it reaches the atmosphere or use super-low-emissions hydrogen as a fuel. The standards covered both existing and new gas-fired power plants.
EPA to establish new rural affairs office... EPA today is expected to announce it is establishing a new office to expand engagement opportunities with agricultural and rural communities. The agency will announce the Office of Agriculture and Rural Affairs to improve environmental stewardship and economic opportunity for America’s farmers and ranchers, as well as strengthen the vitality of small towns and rural communities. EPA Administrator Michael Regan and USDA Secretary Tom Vilsack are both at Commodity Classic in Houston where this announcement will likely be made, perhaps to soothe the lack of details regarding SAF credits.
India’s rice output to drop, wheat crop expected to rise... India’s rice production is set to fall for the first time in eight years because of below-average rainfall, while wheat production is expected rise 1.3% from a year ago, the government said. India’s ag ministry said 2023-24 rice production is expected to fall to 123.8 MMT, while wheat production could rise to 112 MMT from 110.6 MMT last year.
France’s wheat crop ratings decline... As of Feb. 26, France’s ag ministry rated the country’s soft wheat crop as 68% good or excellent, down one point from the previous week and well below last year’s 95% rating at this time. The rating was the lowest for this time of year since 2020.
China’s factory sector shows mixed results... China’s official manufacturing purchasing managers index (PMI), which gauges large and state-owned factories, fell to 49.1 in February from 49.2 in January, with a sizeable drop in the output component. It was the fifth straight month of contraction in factory activity amid impacts from the week-long Lunar New Year break as most factories were closed or slowed their operations. The Caixin/S&P Global manufacturing PMI inched up to 50.9 in February from 50.8 in January. That was fourth straight month of growth in smaller and privately owned factories and the strongest reading since last August as output rose the most since May 2023, new order growth accelerated and foreign sales expanded at the strongest pace in a year. China’s trade faces a complex, severe and uncertain external environment, the country’s commerce ministry said. It vowed to help companies explore markets to get orders and to expand imports to ensure domestic demand.
Japan unexpectedly slips into recession... Japan unexpectedly slipped into a recession at the end of last year, losing its title as the world's third-biggest economy to Germany and raising doubts about when the central bank would begin to exit its decade-long ultra-loose monetary policy. Japan’s GDP fell an annualized 0.4% in the fourth quarter of last year after a 3.3% slump in the previous quarter.
Euro zone inflation drops less than expected... Consumer inflation across the 20-nation euro zone fell to an annualized 2.6% in February from 2.8% a month earlier, shy of expectations for a decline to 2.5%. Core inflation, minus food and energy prices, declined to 3.1% from 3.3% the previous month, topping expectations for a drop to 2.9%.
DMC payments for January triggered... Dairy Margin Coverage (DMC) payments for January will be triggered due to the national average margin reaching $8.48 per hundredweight (cwt.). Farmers with coverage levels at $8.50, $9.00 and $9.50 will receive payments, which will be processed after March 4. The payments will amount to 2 cents per cwt. for the $8.50 coverage level, 52 cents per cwt. for $9.00 coverage and $1.02 per cwt. for $9.50 coverage. DMC payments will be sequestered by 5.7% — the sequestration reduction is fully automated; therefore, no action is required by County Offices except to verify it has been properly applied. USDA has opened signup for the 2024 DMC program, which was reauthorized by the extension of the 2018 Farm Bill. Those enrolling will automatically be eligible for the January payments.
China lowers sow retention target... China’s ag ministry adjusted the national target for normal retention of breeding sows to 39 million from 41 million head. It also adjusted the lower limit for normal fluctuations in the stock of breeding sows to 92% from 95% of the normal retention level.
Cash cattle start trading at steady prices... Light cash cattle trade occurred Thursday in the Southern Plains and the northern market at generally steady prices with week-ago. However, many feedlots continued to pass on those bids, despite pressure on live cattle futures Thursday, in hopes of securing higher prices.
Cash hog index inches higher, pork cutout slips... The CME lean hog index firmed another 24 cents to $80.15 as of Feb. 28. Aside from three days of strong gains last week, the seasonal climb in the cash index since the beginning of the year has been methodical. The pork cutout value slipped 12 cents on Thursday to $90.22. While prices have declined this week, the cutout remains above $90.00, a level that was acting as a price ceiling prior to last week.
Overnight demand news... Taiwan purchased 65,000 MT of corn expected to be sourced from the United States.
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
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Cotton System Consumption and Stocks Annual — NASS
- 2:00 p.m. Fats and Oils: Oilseed Crushings - Annual — NASS
- 2:00 p.m. Fats and Oils: Oilseed Crushings — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC
