First Thing Today | March 7, 2024

Good morning!

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Grains solidly higher overnight... Corn futures built on Wednesday’s gains overnight, while soybeans and wheat also firmed amid corrective buying. As of 6:30 a.m. CT, corn futures are trading 6 to 8 cents higher, soybeans are mostly 7 to 11 cents higher, SRW wheat is around 6 cents higher, HRW wheat is 9 to 11 cents higher and HRS wheat is 10 to 11 cents higher. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is about 200 points lower.

Weekly Export Sales Report out this morning... For the week ended Feb. 29, traders expect:

China January-February soybean imports fall to five-year low... China imported 13.04 MMT of soybeans during the first two months of 2024, down 8.8% from the same period last year and the lowest for the period since 2019. China customs also reported revised soybean imports for the first two months of 2023 of 14.3 MMT, down from the initially reported 16.17 MMT. Poor crush margins, the Chinese Lunar New Year and slow customs clearance slowed soybean imports to start 2024, according to Shanghai JC Intelligence Co.

China’s trade growth beats expectations... China’s exports surged 7.1% from year-ago during the first two months of 2024 to $528.01 billion, easily beating forecasts for a 1.9% increase and signaling global trade is recovering. China’s imports rose 3.5% to $402.85 billion, beating forecasts for a 1.5% increase, due to improved domestic demand. That resulted in a trade surplus of $125.16 billion for January and February combined. The trade surplus with the U.S. was $47.29 billion, as exports rose 5% while imports declined 9.7%.

China criticizes U.S. for ‘bewildering’ trade curbs... China’s Foreign Minister Wang Yi strongly criticized the U.S. for imposing what he calls “bewildering” trade curbs on China, warning that these actions will ultimately harm America itself. Wang’s remarks come as the Biden administration seeks to restrict China’s access to advanced technology, citing national security concerns. Despite some improvements in tensions between the U.S. and China since a summit between Presidents Xi Jinping and Joe Biden, Wang claims the U.S. has not fulfilled all promises made during that meeting. He also highlighted ongoing issues such as disagreements over Russia’s war in Ukraine and China’s territorial claims over Taiwan. Wang asserts that blocking China from accessing artificial intelligence could have significant consequences and pledged to submit a proposal for international cooperation in this area to the United Nations.

Mexico waiting on U.S. proof of GM corn safety... Mexico is waiting for the U.S. to prove imported genetically modified (GM) corn is safe for Mexicans, said Deputy Agriculture Secretary Victor Suarez, as a dispute between the two countries plays out under the U.S.-Mexico-Canada Agreement (USMCA). In a written submission to a USMCA panel, Mexico argued that science proves GM corn and the herbicide glyphosate are harmful to human health and its native varieties, and that its decree to ban GM corn for human consumption is within its right. The submission was dated January 2024 but was shared publicly on Tuesday by the nonprofit Institute for Agriculture and Trade Policy. The U.S. “argues that the decisions in Mexico are not based on science and that their decisions are,” Suarez told Reuters. “But we still haven’t seen the science of the United States or the companies. We are looking forward to that study with great pleasure.” As we reported last week, we expect this issue to go away after Mexico’s elections in June when President Andrés Manuel López Obrador is replaced by a new president.

Houthi Red Sea attack kills three... A Houthi missile attack killed three seafarers on a Red Sea merchant ship on Wednesday, U.S. Central Command (CENTCOM) said, the first fatalities reported since the Iran-aligned Yemeni group began its strikes in the waterway. CENTCOM said the Houthi strike also injured at least four crew members and caused “significant damage” to the ship. Houthis claimed responsibility for the attack, which set the Greek-owned, Barbados-flagged ship True Confidence ablaze around 50 nautical miles off the coast of Yemen’s port of Aden. Two of the victims were identified as Filipino seafarers by the Philippines ministry for migrant workers.

Vietnam rice exports to fall sharply... Vietnam’s rice exports are estimated at 6.5 MMT to 7.0 MMT this year, down from last year’s record of 8.1 MMT, according to Vietnam Food Association. Exports through mid-February rose 14.4% from last year to 663,000 MT. Vietnam said earlier it would gradually cut its overall export volumes to focus on higher quality, higher-priced rice, while also adapting to climate change and ensuring domestic food security.

Gov’t funding bill passes House... The government-funding package, consisting of six bills, passed the House with a vote of 339-85. This $485 billion package funds the departments of Agriculture, Justice, Transportation, Housing and Urban Development, Veterans Affairs, Energy and Commerce. House Speaker Mike Johnson (R-La.) secured a majority of his GOP majority – 132 votes, but it was the Democrats who really helped clear the bill. Just two Democrats voted against the bill and 207 voted for it. This package includes a total of 6,628 earmarks amounting to $12.7 billion. The earmarks cover various projects such as dam construction, bridge rehabilitation and providing safety equipment for local police departments. Some 42 House members who voted against the bill, including 40 Republicans and 2 Democrats, are set to benefit from earmarked funds totaling $946.5 million, according to a Bloomberg assessment. The Senate will consider the package today and is expected to pass it. The rest of the government funding bills must be passed by midnight on March 22.

China’s meat imports decline to start 2024... China imported 1.101 MMT of meat during the first two months of 2024, down 197,000 MT (15.2%) from the same period last year. China does not break down meat imports by category in the preliminary data, though pork accounts for the bulk of incoming shipments.

Packers continue to slow cattle slaughter... Estimated slaughter averaged less than 121,000 head per day through the first three days this week, totaling just 362,000 head. That’s down 10,000 head from last week and 13,614 head from year-ago. Cash sources expect this week’s slaughter to decline around 30,000 head from last year as packers continue to closely manage inventories given negative margins and tight market-ready supplies.

April hogs continue to whittle away at premium to cash index... April lean hog futures closed lower for a third straight day on Wednesday, ending at $85.00. The CME lean hog index is up another 44 cents to $81.31. The premium in April hogs declined to $3.69, which suggests traders now expect a less-than-average increase in the cash index from now until mid-April.

Overnight demand news... South Korea purchased 66,000 MT of corn expected to be sourced from South American or South Africa. Taiwan tendered to buy 56,400 MT of U.S. milling wheat. Egypt tendered to buy an unspecified amount of wheat from multiple origins.

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

• 7:30 a.m. Weekly Export Sales — FAS