First Thing Today | March 5, 2024
Good morning!
Grains weaker overnight... Corn, soybean and wheat futures pulled back from Monday’s price gains during the overnight session. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 4 to 6 cents lower, winter wheat markets are mostly 5 to 7 cents lower and spring wheat is around a penny lower. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is trading just above unchanged.
Cordonnier leaves South American crop estimates unchanged... South American crop consultant Dr. Michael Cordonnier maintained his neutral/lower bias toward Brazil’s crops but kept his production estimates at 145 MMT for soybeans and 112 MMT for corn. Cordonnier kept his Argentine crop estimates at 50 MMT for soybeans and 54 MMT for corn, with a neutral bias toward both.
China raises budget for grain stockpiles, farmer support... China will sharply expand its budget to stockpile grains and edible oils this year and increase support and policies to boost agricultural production, aimed to improve food security. China will spend 140.63 billion yuan ($19.54 billion) on stockpiling grains, edible oils and “other materials” this year, up 8.1% from a year ago. China also allocated 54.5 billion yuan ($7.57 billion) in subsidies for agricultural insurance premiums, up 18.7% from a year ago. The finance ministry will also increase the minimum purchase price of wheat and expand insurance coverage for rice, wheat and corn nationwide. China’s state planner targeted grain output of more than 650 MMT this year. Beijing will also stabilize meat and dairy production capacity.
Australia expects bigger 2024-25 wheat crop as weather improves... Recent rains and the fading El Niño are expected to boost Australia’s wheat production to 28.4 MMT in 2024-25 from 26 MMT this year, the country’s ag ministry said. The ministry expects barley production to rise 800,000 MT to 11.6 MMT and canola output to increase 400,000 MT to 6.1 MMT. Total winter crop production should rise 9% to 51 MMT in 2024-25, the ministry estimates. Area planted to winter crops is expected to increase in 2024-25, particularly in Queensland and New South Wales, which were dry for much of 2023, while grain exports in 2024-25 season should also be above the long-term average.
Indonesia expects to import more wheat this year... Indonesia will likely import larger volumes of wheat, driven by higher demand for flour and animal feed, a senior industry official said. Last year, the country imported 10.87 MMT of wheat. Indonesia’s flour consumption is expected to increase 5%, while reduced corn output last year will increase feed wheat needs.
Malaysian exchange to launch soyoil futures... Malaysia’s commodity exchange will launch a soyoil futures contract on March 18 to help arbitrage between soybean and palm oil contracts. The exchange will use the settlement price of the soyoil futures contract on China’s Dalian Commodity Exchange as the basis for calculating the settlement price for its new U.S. dollar-denominated soyoil futures.
China again targets economic growth of around 5%... China will target economic growth of about 5% this year, the same as 2023, as it works to transform its development model, curb industrial overcapacity, defuse property sector risks and cut wasteful spending by local governments, Premier Li Qiang said. Li acknowledged potential difficulty in meeting the target, with China issuing special bonds for the fourth time in 25 years to tackle challenges. Li also flagged higher defense spending, while hardening the rhetoric on Taiwan. China will boost its defense spending by 7.2% this year. China also dropped the mention of “peaceful reunification” with Taiwan. The percentage rise in military spending has consistently outpaced the annual domestic economic growth target over the past decade, ballooning to 1.67 trillion yuan ($230 billion) this year from 720 billion yuan in 2013.
China’s EV market in spotlight during annual parliamentary meetings... Chinese electric vehicle (EV) makers made a strong showing at the start of the country’s annual National People’s Congress (NPC) meeting on Tuesday, bolstered by official recognition of their growing clout on the world stage as they asked for more regulatory support to become global brands. Premier Li Qiang, in his work report to the week-long NPC meeting outlining key government goals, touted progress in the EV sector. “China accounted for over 60% of global electric vehicle output and sales,” the report said, praising “the 30% increase in exports of the ‘new trio,’ – electric vehicles, lithium-ion batteries and photovoltaic products.” Pledging to “consolidate and enhance our leading position in industries such as intelligent connected new-energy vehicles,” China said it would boost domestic spending on EVs via trade-in programs and the revision of local policies that restrict the purchase of cars. These commitments show China’s continued support for its prized EV sector. But the government, which extended a tax exemption for the purchase of new EVs through the end of next year, did not announce new subsidies.
Euro zone business activity stabilizes, but still weak... The HCOB euro zone composite purchasing managers index (PMI) compiled by S&P Global rose to 49.2 in February, up from a preliminary estimate of 48.9 and surpassing January’s 47.9. The PMI was the highest in eight months, with service sector activity showing growth for the first time since July of last year. However, manufacturing output continued to contract. Euro zone producer prices fell 8.6% annually in January, marking a moderation from a revised 10.7% drop recorded in December.
Nearby gold futures hit record high... Nearby Comex gold futures surged to a record high overnight. Gold is getting a boost from ideas the major central banks this year will ease their monetary policies, which would in turn stimulate better demand for metals.
Biden to announce new competition rules... President Joe Biden will hold a meeting this afternoon of his Competition Council to announce “new actions to lower costs for hardworking families by fighting corporate rip-offs.” USDA announced the finalization of a new rule called “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act,” aimed at promoting fair competition and preventing discrimination, retaliation, and deception in contract farming. The rule, effective May 6, is part of Biden’s efforts to promote competition in various sectors of the economy, and includes agriculture, establishes clearer standards to govern livestock and poultry markets. It aims to address issues faced by producers and growers due to market consolidation over the past three decades, providing them with better access to economic opportunities.
Today is Super Tuesday... Super Tuesday, a crucial event in the 2024 election cycle, will provide answers to key questions for voters nationwide. Taking place in 15 states and one territory, it encompasses presidential primaries, congressional contests and notably, the first gubernatorial primary in North Carolina, a swing state with high stakes.
Beef packer margins improving... Choice boxed beef prices rose another $1.02 on Monday, though Select dropped 57 cents. While last week’s average cash cattle price firmed 35 cents, gains in wholesale beef prices outpaced the cash market. Packer cutting margins remain in the red, but are notably better than recent weeks.
Cash hog index climbing slowly... The CME lean hog index is up another 15 cents to $80.41 as of March 1. While the seasonal rally continues, it has slowed, which caused traders to narrow the premium futures hold to the cash index. As of Monday’s close, April hogs held a $5.865 premium to today’s cash quote, slightly less than the five-year average cash gain of $6.30 from now until mid-April.
Overnight demand news... China purchased at least 65,000 MT of Ukrainian corn. Jordan purchased 60,000 MT of optional origin hard milling wheat. South Korea purchased around 120,000 MT of optional origin feed wheat. Egypt tendered to buy 50,000 MT of optional origin raw cane sugar. Turkey tendered to sell 150,000 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
- 2:00 p.m. Chicken and Eggs - Statistical Bulletin — NASS
