First Thing Today | March 6, 2024
Good morning!
Please fill out our acreage survey... You should have received our annual spring acreage survey via e-mail. Please fill out the survey with your current planting intentions for this year. We’ll cover results and our acreage forecasts ahead of USDA’s March 28 Prospective Plantings Report.
Wheat weaker, corn and beans near unchanged overnight... Wheat futures faced followthrough selling during the overnight session, while corn and soybeans held near unchanged in quiet trade. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are narrowly mixed with a modest downside bias and wheat futures are mostly 5 to 8 cents lower. Front-month crude oil futures are around 65 cents higher and the U.S. dollar index is nearly 200 points lower this morning.
Argentina to see drier weather as El Nino fades... Rainfall in Argentina is set to become less frequent as the El Nino weather phenomenon subsides, giving way to a drier autumn and the possibility of a La Nina climate pattern, the Buenos Aires Grain Exchange said. El Nino is in its “dissipation stage,” which will “give way to the development of a new state of the climate system,” the exchange said in its monthly climate report. However, impacts from the transition may not happen until after this year’s soybean and corn crops are harvested.
China could import far less palm oil... Palm olein imports by China could plunge in 2024 as the most widely used edible oil loses pricing edge over rival soyoil. “If we assume the current palm oil/soyoil spread in both cash and futures forward market stays throughout the year, 2024 olein import could drop to 3.1 MMT from 4.2 MMT in 2023,” Ryan Chen, a director at Cargill Investments (China) Ltd, said at an industry conference in Kuala Lumpur. However, palm oil’s premium over soyoil and sunflower oil is expected to wear off by early May at the latest, as their prices are also expected to rise, industry analyst Thomas Mielke said. Oil World said global palm oil exports are likely to fall 2.5 MMT to 51 MMT in the 2024 crop year.
India’s parboiled rice exports slow on confusion over duty calculations... Exporters in India are signing few new contracts for exports of parboiled rice after customs officials changed the calculation method for the 20% export tax, resulting in a higher duty, four industry officials told Reuters. In August, India imposed a 20% duty on parboiled rice exports, following a ban on white rice exports to control domestic rice prices ahead of key state and national elections in 2024. Krishna Rao, president of the Rice Exporters Association told Reuters the new calculations on duty were causing confusion. “Previously, a 20% duty applied to the Free on Board (FOB) value. However, customs now require a 20% duty on the transactional value, leading to a higher cost for exporters,” he said, adding that exporters have requested clarification from the government. Still, exporters are shipping around 500,000 MT per month as prices jumped in competing countries such as Thailand, Vietnam, Pakistan and Myanmar.
Malaysia to monitor changes in EU curbs on palm biofuel after WTO ruling... Malaysia said it will closely monitor how the EU responds to a World Trade Organization (WTO) ruling that supported the bloc’s stance that palm oil-based biodiesel should not count as a renewable biofuel, but sought changes in how it implemented that decision. As we reported in “Evening Report,” a WTO panel rejected a Malaysian complaint against an EU decision that biodiesel made from palm oil should not count as a renewable biofuel. The EU will need to make adjustments, but need not withdraw its measures, following the WTO ruling. Malaysia will monitor any changes to the EU’s regulations to bring them into line with the WTO’s findings and pursue compliance proceedings if necessary.
Financial markets focused on Powell testimony... Federal Reserve Chair Jerome Powell begins two days of testimony to Congress, appearing before the House Financial Services Committee today. Traders and investors will closely scrutinize his comments for clues on when the Fed will start cutting interest rates later this year. We’ll have highlights of his comments in “Evening Report.”
Farm bill update... It appears the House will issue its version of a new farm bill after the Easter recess (Chairman’s Mark). That squares with prior signals that it would come following congressional completion of fiscal year 2024 spending measures. The timeline is murkier in the Senate, where positions by Ag panel Chair Debbie Stabenow (D-Mich.) and other Democrats make funding and policy compromises nearly impossible to bridge. It will be interesting to see if the House releases a budget score on its eventual proposals.
2017 Tax Act temporarily raises estate tax exemption, impacting farm estates... The 2017 Tax Cuts and Jobs Act (TCJA) introduced significant changes to Federal individual income and estate tax policies, including a temporary increase in the estate tax exemption amount from $5.49 million to $11.18 million in 2018. This increase is scheduled to revert to pre-TCJA levels, adjusted for inflation, by the end of 2025, lowering the exemption to $6.98 million per deceased person in 2026. The portability provision allows the surviving spouse to utilize any unused portion of the deceased spouse’s exemption. According to researchers at USDA’s Economic Research Service (ERS), the expiring increased exemption would reach $13.95 million per person at the time of expiration. Consequently, the percentage of farm operator estates subject to taxation is expected to rise from 0.3 to 1.0 in 2026, increasing the number of taxed estates from 120 to 424 out of an estimated 40,883 estates. Large farms with gross cash farm income between $1 million and $5 million would see the largest increase in the share of estates owing estate tax, rising from 2.8% to 7.3%. If the provision were to expire, total federal estate taxes for farm estates are projected to more than double to $1.2 billion.
China’s central bank governor says there’s room to cut banks’ reserve requirements... This is part of Beijing’s broader economic policy “adjustments” so the economy can hit its growth target of around 5% for the year, while adhering to a 3% fiscal deficit. Plans to issue “ultra-long” special bonds for major projects will also help meet that target. Pan Gongsheng, governor of the People’s Bank of China, made these comments on Wednesday as part of a joint press conference with other key leaders of the country’s economy and financial sector on the sidelines of this year’s annual parliamentary meetings.
Beef prices drop but movement jumps... Wholesale beef prices fell on Tuesday, with Choice down $1.51 and Select 30 cents lower, though movement improved to 137 loads. The strong pickup in load count on the weaker prices signals there’s solid retailer demand under the market. But Tuesday’s activity could also signal wholesale prices have reached a short-term top.
Cash hogs continue to rise, pork cutout drops... The CME lean hog index is up another 46 cents to $80.87 as of March 4. The cash index is now nearly $2.00 above last year at this time. The pork cutout value fell $1.39 on Tuesday, pressured by a $10.71 drop in primal belly prices. At $91.43, the pork cutout is $5.86 above last year at this time.
Overnight demand news... South Korea purchased 133,000 MT of corn – 65,000 MT to be sourced from the U.S., South America or South Africa and 68,000 MT to be sourced from South America or South Africa. Algeria purchased between 870,000 and 900,000 MT of optional origin milling wheat, with large volumes expected to be from the Black Sea region. Japan tendered to buy 60,000 MT of feed wheat and 20,000 MT of feed barley.
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
- 9:30 a.m. Weekly ethanol production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. United States and Canadian Cattle — NASS
- 2:00 p.m. United States and Canadian Hogs — NASS
