First Thing Today | March 14, 2024

Good morning!

Soybeans firmer, corn and wheat weaker overnight... Soybeans extended their recent corrective gains during the overnight session, while wheat traded lower and corn favored the downside in two-sided trade. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are mostly 2 to 4 cents higher, winter wheat markets are 7 to 8 cents lower and spring wheat is 1 to 3 cents lower. Front-month crude oil futures are around 60 cents higher and the U.S. dollar index is trading just above unchanged.

Weekly Export Sales Report out this morning... For the week ended March 7, traders expect:

Exchange inches up Argentina’s soybean crop estimate... The Rosario Grain Exchange increased its Argentine soybean production forecast by 500,000 MT to 50 MMT after recent beneficial rains. It maintained its estimate of Argentina’s corn crop at 57 MMT but warned of fields being impacted by spiroplasma (corn stunt disease).

China cancels, postpones Aussie wheat buys, too... Chinese importers have cancelled or postponed about 1 MMT of Australian wheat cargoes, trade sources with direct knowledge of the deals told Reuters. Some of that total was washed out, while other cargoes were delayed from first quarter shipment to delivery later this year. USDA reported daily sales cancellations of U.S. SRW wheat by China totaling 504,000 MT between late last week and Monday. French traders cautioned there were no clear signs of French wheat being cancelled, though they said it was possible Chinese buyers might wash out some cargoes given lower prices than when they were purchased.

IKAR expects bigger Russian grain crop this year... Russian ag consultancy IKAR expects Russia’s 2024 grain crop to total 147 MMT, including 93 MMT of wheat, Russian news agency Interfax reported. In 2023-24, Russia produced 144 MMT of grain, including 91.6 MMT of wheat. Despite the expected increase in production, IKAR reportedly forecasts Russian grain exports will fall to 50 MMT in 2024-25 from 67 MMT estimated for the current marketing year.

Strategie Grains cuts EU wheat, barley crop forecasts... Strategie Grains cut its 2024 EU wheat and barley crop forecasts due mainly to impacts from excessively wet weather. The France-based consultancy now expects EU soft wheat production to total 121.6 MMT, down 1 MMT from its prior forecast. That would be down 3.3% from last year. The EU barley crop forecast was cut 1.3 MMT to 51.8 MMT, though that would still be up 9% from last year. Strategie Grains noted, “Many concerns exist around potential harvest levels for 2024-25 in the EU27. We apply further downward revisions to soft wheat acreage in France, Germany, and Poland (as well as the UK). Furthermore, yield outlooks are far from spectacular at present. Barley is also struggling, with spring sowing delayed by rains in France.”

DOJ also probing ADM’s ethanol trading... The Department of Justice (DOJ) is investigating Archer-Daniels-Midland’s ethanol trading operation as part of a broader probe of the company’s accounting practices, three people with knowledge of the situation told Reuters. The U.S. Attorney’s Office for the Southern District of New York is probing whether ADM improperly accounted for hedges in its ethanol trading unit, the three sources said. ADM this week confirmed reports DOJ is investigating accounting practices related to its nutrition unit and that current and former employees had received grand jury subpoenas relating to that probe.

China unveils plan to boost economic growth through equipment renewal... China unveiled a plan to stimulate economic growth by encouraging consumers and businesses to replace old equipment and goods, a key component of its goal for a 5% economic growth rate this year. The State Council announced that projects focused on equipment renewal would receive support from the central government budget, besides tax incentives and targeted lending from banks. This aims to boost spending on equipment across various sectors, including industry, agriculture, transport, education and healthcare, by at least 25% by 2027 compared to last year. However, China’s 2024 growth target faces challenges due to weak domestic demand caused by a housing slump and low confidence among businesses and consumers. These factors are also contributing to deflationary pressures, which are raising concerns about China’s export competitiveness.

IEA now predicts global oil supply deficit... The International Energy Agency (IEA) predicts global oil markets will experience a supply deficit throughout 2024, contrary to the surplus previously anticipated. This shift is attributed to the likelihood of OPEC+ continuing its output cuts in the latter half of the year. Supplies from the Americas, particularly the U.S., Brazil, Canada and Guyana, are expected to increase, potentially leading to a surplus in global markets if not for the OPEC+ production cuts. IEA revised its forecasts for world oil demand growth in 2024, attributing the adjustment to a stronger outlook for the U.S. and an increased need for ship fuel due to vessels taking longer routes to avoid Houthi attacks in the Red Sea. Consequently, the amount of oil stored aboard ships has surged to nearly 1.9 billion barrels, the second-highest level since the peak of the Covid-19 pandemic. Global oil demand is projected to reach a record average of 103.2 million barrels per day in 2024. The agency anticipates a sharp deceleration in consumption growth compared to last year, attributing it to the post-pandemic rebound reaching its peak and the ongoing shift away from fossil fuels. China’s economic expansion is expected to slow significantly.

‘Beef rice’ the next challenge for beef... South Korean researchers have grown beef cells in rice grains in what they say is a major step towards achieving a sustainable, affordable and environmentally friendly source of protein that could replace farmed cattle for meat. “Beef rice” uses grain particles as the base for cultivating animal muscle and fat cells. In the research, rice grains were treated with enzymes to create an optimal environment for cell growth, then infused with bovine cells that are cultivated to achieve the final hybrid product, which resembles a pinkish grain of rice.

Packers continue to slow cattle slaughter... Estimated week-to-date cattle slaughter totaled 351,000 head through Wednesday, 11,000 head below week-ago and 23,151 head behind last year’s pace. Slaughter will be down notably from last week’s light 583,000 head tally. Given their struggles with tight market-ready supplies and negative margins, packers continue to drag their feet on cash negotiations, while feedlots are positioned to wait on steady/firmer bids.

Cash hog index continues seasonal climb... The CME lean hog index is up another 41 cents to $82.02 as of March 12, extending the seasonal price climb. April lean hog futures finished Wednesday at a $2.855 premium to today’s cash quote. That’s slightly less than the five-year average advance of $3.75 from now until April 16, when the contract is cash settled against the index.

Overnight demand news... Japan purchased 114,305 MT of milling wheat, including 60,895 MT U.S., 25,400 MT Canadian and 28,010 MT Australian. South Korea tendered to buy 100,800 MT of rice, with 77,700 MT to be sourced from the U.S., 22,000 MT from China and 1.1 MT from Vietnam.

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
• 2:00 p.m. Livestock, Dairy, and Poultry Outlook: March 2024 — ERS
• 2:00 p.m. Sugar and Sweeteners Outlook: March 2024 — ERS