First Thing Today | March 15, 2024
Good morning!
Light grain trade overnight... Corn, soybean and wheat futures held in relatively tight ranges during light, two-sided trade overnight. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are 6 to 8 cents lower, SRW wheat is mostly 2 cents higher, HRW wheat is narrowly mixed and HRS wheat is 1 to 4 cents higher. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is trading just above unchanged.
Record Feb. NOPA crush expected... Analysts expect the National Oilseed Processors Association (NOPA) to report its members crushed 178.1 million bu. of soybeans during February. That would be down 4.2% from January but up 7.6% from last year and a record for the month, easily topping the current high of 166.3 million bu. in 2020. Soyoil stocks at the end of February are expected to total 1.591 billion lbs., which would be up 5.6% from January but down 12.1% from last year.
Attaché trims Argentine soybean crop estimate... The U.S. ag attaché in Argentina lowered its forecast for the country’s soybean crop to 49.5 MMT, down 500,000 MT from USDA’s official forecast, as “a hot and dry spell hit the region in January and early February stressing the crop in a crucial growth stage.”
Another setback for year-round E15... Legislation allowing year-round sales of E15 is facing obstacles in the Senate, according to Senator Deb Fischer (R-Neb.), the bill’s author. Despite support from agriculture and petroleum oil companies, the measure is stuck in the Senate Environment and Public Works Committee, chaired by Senator Tom Carper (D-Del.). In remarks to Bloomberg, Fischer expressed hope that Carper, who is not seeking re-election, will eventually support the bill. The Biden administration reportedly backs this legislative solution. Some independent refiners oppose E15 legislation and seek broader changes to the nation’s renewable fuels mandate, which Carper has shown sympathy towards.
French wheat conditions decline... France’s ag ministry rated 66% of the country’s wheat crop as good or excellent as of March 11, down two percentage points from the previous week. That’s the lowest rating for this date since 2020.
Farm safety net election ends today... Growers have until today (March 15) to make an election between ARC and PLC on a crop-by-crop and farm-by-farm basis and to enroll their farm(s) for the 2024 crop year. If you are unable to make it to your local Farm Service Agency (FSA) by the close of business today, call the office to inquire about the possibility of getting on a register to preserve the option of signing up at a later date. Under the 2018 Farm Bill, the election and enrollment are an annual decision. As a result, even if you haven’t participated in recent years, you should be able to sign up for 2024 if you wish – assuming there aren’t other factors impacting your eligibility.
Houthis set conditions for ending Red Sea attacks... Despite foreign naval presence and strikes on Houthi targets, attacks have persisted, disrupting shipping lanes in the Red Sea. Houthis rebels set the following three conditions for haling their attacks in the Red Sea region:
- The end of the Israel/Hamas war in Gaza.
- Israel lifting its siege on Gaza.
- Israel allowing humanitarian aid into the Gaza Strip.
Of note: The leader of Yemen’s Houthi rebels said they will expand their anti-ship attacks to Israel-linked ships in the Indian Ocean using the Cape of Good Hope route. He said the Houthis carried out three attacks in the Indian Ocean this week.
Sevens Report: Why inflation data was worse than the market reaction... This week’s economic data suggested stagflation and reduced expectations for a June interest rate cut by the Fed. However, the market’s bullish sentiment on stable growth, falling inflation, imminent Fed rate cuts and enthusiasm for artificial intelligence (AI) remained largely intact. Despite the market’s resilience, the Sevens Report says recent economic reports have hinted at a potential slowdown in economic momentum and persistent price pressures, challenging the bullish narrative. While these reports haven’t triggered significant declines, they highlight a shift in market fundamentals, the service notes. Continued AI enthusiasm and solid economic data have helped offset these concerns, but if evidence mounts that inflation isn’t slowing, growth is moderating or the Fed won’t cut rates in June, relying solely on AI enthusiasm to support the market may not suffice, the market consultant believes. Although market positives still outweigh negatives for now, Sevens Report says investors should remain vigilant as further disappointing data or Fed statements could amplify concerns and prompt a reassessment of market sentiment.
China keeps key rate unchanged, withdraws funds from banking system... The People’s Bank of China (PBOC) kept the rate on 387 billion yuan ($53.80 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50%. With 481 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 94 billion yuan fund withdrawal from the banking system – the first cash withdrawal through the liquidity instrument since November 2022. PBOC said the loan operation fully met market demand and its stance of keeping banking system liquidity reasonably ample has not changed, the central bank-backed Financial News reported. “The central bank has no intention of actively draining cash,” the official newspaper said, citing experts.
China’s new bank loans decline in February... Chinese banks extended 1.45 trillion yuan ($201.5 billion) in new yuan loans in February, down from a record 4.92 trillion yuan in January and below expectations for 1.50 trillion yuan. Outstanding yuan loans grew 10.1% in February from a year earlier compared with 10.4% growth in January. Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 9.0% in February from a year earlier and from 9.5% in January. In February, TSF fell to 1.56 trillion yuan from 6.5 trillion yuan in January.
Cash cattle strengthen despite futures plunge... Cattle futures posted sharp losses and bearish reversals on Thursday. Despite the futures action, cash cattle trade developed at higher prices late in the day. Based on some of the unconfirmed reports of cash trade, the average price could challenge or exceed the all-time high posted in June 2023.
Cash hog fundamentals remain strong... The CME lean hog index rose another 17 cents to $82.19 as of March 13. The index has rallied $17.14 from the seasonal low and stands $2.30 above year-ago. The pork cutout value firmed $1.29 on Thursday to $93.25, which was $4.88 above last year.
Overnight demand news... Taiwan purchased 97,950 MT of U.S. milling wheat. South Korea purchased 65,000 MT of optional origin feed wheat, excluding Russia, Pakistan, India, Denmark and Argentina.
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
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 2:00 p.m. County Est. - Barley, Oats, & Wheat - 2018-2022 Rev. — NASS
- 2:00 p.m. Honey — NASS
- 2:00 p.m. Hop Stocks — NASS
- 2:00 p.m. Peanut Prices — NASS
