First Thing Today | March 19, 2024

Good morning!

Quiet overnight grain trade... Corn, soybeans and wheat held in tight ranges during quiet, two-sided overnight trade. As of 6:30 a.m. CT, corn futures are trading mostly a penny higher, soybeans are fractionally to 1 cent higher and wheat futures are narrowly mixed. Front-month crude oil futures are near unchanged, while the U.S. dollar index is around 500 points higher.

Cordonnier raises Argentine crop estimates, Brazil unchanged... South American crop consultant Dr. Michael Cordonnier raised his Argentine soybean and corn crop estimates 1 MMT to each to 51 MMT and 55 MMT, respectively. For soybeans, Cordonnier noted recent rains and improved crop condition ratings for his increase. For corn, he cited early yields and benign weather. In Brazil, Cordonnier left his crop forecasts at 145 MMT for soybeans and 112 MMT for corn, while maintaining a neutral-to-lower bias toward both.

FT: EU to impose tariffs on Russian grain imports... The European Union is preparing to levy tariffs on grain imports from Russia and Belarus to placate farmers and some member states, the Financial Times (FT) reported citing people familiar with the plans. Reuters reported the tariffs would apply to only grains to be used in the EU and not on grains transported through the bloc to other countries so as not to undermine food security elsewhere. The European Commission is expected to impose a duty of 95 euros ($103.26) per metric tons on cereal grains from Russia and Belarus, FT said, adding that tariffs of 50% would also be placed on oilseeds and derived products. An EU official told Reuters those figures were “about right,” though they were still being finalized. Russia said the time frame of tariffs and other details needed to be clear before Russia would make a decision on its response.

El Niño near its end... The Australian Bureau of Meteorology says atmospheric indicators are consistent with a decaying El Niño and climate conditions will be neutral. The bureau noted four out of seven climate models indicating the central Pacific is likely to return to neutral El Niño–Southern Oscillation (ENSO) levels by the end of April and all models indicating neutral in May. The bureau warned, “while three out of seven international models are predicting a La Niña by late winter (northern hemisphere summer), El Niño and La Niña predictions made in early autumn tend to have lower accuracy than predictions made at other times of the year. This means that current forecasts of the ENSO state beyond May should be used with caution.” Last week the U.S. Climate Prediction Center said there are 83% odds of ENSO-neutral conditions in the April-June period, with 62% chances of La Niña developing during June to August.

China expands list of GM soybean, corn approvals... China’s ag ministry approved 27 genetically modified (GM) corn seed varieties and three GM soybean varieties, as it aims to increase the development and planting of higher-yielding crops. The approvals include seed varieties owned by Dabeinong and China National Seed Group, a unit of Syngenta Group. The list of approved varieties is open for public comment until April 17, according to the ministry notice. Once approved, “the actual planting area should also comply with the relevant arrangements for the national biological breeding industrialization,” according to the notice.

Senate GOP to release farm bill plan shortly after House Republicans... Politico reports Senate Republicans are planning to release a farm bill plan in the coming weeks once House Republicans have done the same. The report said House Ag Committee Chair Glenn “GT” Thompson (R-Pa.) is aiming to drop a Chairman’s Mark possibly yet this month or in April, but a markup of that package is still a moving target. Prior reports had Thompson releasing a Chairman’s Mark shortly after lawmakers return from their Easter recess. Then attention will turn to the full House for floor time to consider the measure.

China plans to increase efforts to attract foreign investments... China state council announced a plan to attract foreign investment, including expanding market access and relaxing the rules for overseas investors. China will expand the scope of foreign financial institutions’ participation in the domestic bond market and carry out pilot projects to relax requirements for foreign investment access in certain fields, including tech innovation, the plan issued by the cabinet showed. It will also expand access for foreign financial institutions to the banking and insurance sector.

Japan raises interest rates for first time in 17 years... As we alerted in “Evening Report” on Monday, the Bank of Japan (BOJ) made a historic shift in monetary policy. BOJ raised its key short-term interest rate to a range of 0% to 0.1% from -0.1% previously, halting eight years of negative interest rates. This was the first interest rate hike for Japan since 2007. BOJ also terminated yield curve control for 10-year government bonds and discontinued the purchases of exchange traded funds and Japan real estate investment trusts. Further, BOJ will slowly reduce the pace of corporate bond buying before fully stopping it in about a year. Still, the bank added that in case of a rapid rise in long-term rates, it would make nimble responses, such as increasing the amount of government bond purchases.

Cash cattle nearing record high... Cash cattle averaged $187.47 last week, up $2.35 from the previous week and the second highest ever behind $188.75 for the week ended June 9, 2023. While packers purchased a strong 83,000 head last week, including 16,000 head “with time,” most cash sources expect steady/firmer prices again this week. But with USDA’s Cattle on Feed Report out Friday afternoon, cash negotiations will be slow to develop and active trade isn’t likely until late in the week.

Cash hogs rise, pork cutout slips... The CME lean hog index is up another 20 cents to $82.54 as of March 15. While the daily gains in the cash index haven’t been strong, the seasonal increase has remained persistent. The pork cutout value slipped 31 cents on Monday as wholesale prices failed to sustain strong morning gains, pressured mostly by a $2.43 drop in primal hams.

Overnight demand news... Japan is seeking 119,345 MT of milling wheat via its weekly tender. Indonesia tendered to buy 300,000 MT of rice from unspecified 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

• 11:00 a.m. Fruit and Tree Nuts Data — ERS
• 11:00 a.m. Vegetables and Pulses Data — ERS