First Thing Today | March 25, 2024

Good morning!

Quiet grain trade to open the week... Corn and soybean futures swung to both sides of unchanged during the overnight session, while wheat favored the upside. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are 1 to 3 cents higher, SRW wheat is 4 to 6 cents higher, HRW wheat is 2 to 3 cents higher and spring wheat is steady to a penny higher. Front-month crude oil futures are about 40 cents higher and the U.S. dollar index is around 300 points higher.

U.S. wintry weather not as strong as previously thought... Total snow accumulations in the upper Midwest early this week have been slightly reduced from previous forecasts, according to World Weather Inc. The storm is expected to track farther to the south and be a little weaker than previously thought. Meanwhile, colder temperatures are advertised for the first week of April in the eastern U.S.

Drier weather for Argentina, central Brazil stays mostly dry... Eastern Argentina, Uruguay, Paraguay and southern Rio Grande do Sul, Brazil, will receive little to no precipitation this week, according to World Weather. Net drying is also expected in central Brazil from southern and western Mato Grosso do Sul and western and northern Parana. Brazil rainfall in Mato Grosso, Tocantins and Goias has been reduced slightly from that advertised Friday for the coming 10 days.

Russia’s ag watchdog may redistribute grain export quotas if firms fail standards... Russia’s agricultural watchdog proposed the redistribution of quotas among grain exporters in case of systematic failures on the part of exporters, such as Russia’s RIF trading house. Earlier this month, the watchdog said it had noted a large number of complaints about grain shipped by RIF not meeting international standards.

The week ahead in Washington... Washington will be quiet this week as the Senate and House are our for a two-week Easter recess. Following months of negotiations to fund the gov’t, President Joe Biden on Saturday signed a $1.2 trillion spending bill that will provide funding through the rest of the fiscal year, while also increasing defense spending and setting spending guidelines for several government agencies. The economic calendar for the week includes key indicators such as the personal consumption expenditures price index on Friday, which is the Fed’s preferred measure of inflation. The final estimate of fourth quarter U.S. GDP will be released on Thursday. It’s a heavy week for agricultural data, with USDA’s Prospective Plantings, Quarterly Grain Stocks and Quarterly Hogs & Pigs Reports all out on Thursday. Markets are closed for Good Friday, while government offices will be open on Friday.

Farm labor: An issue not only for the U.S., but now for Mexico... Mexico has is experiencing a diminishing farmworker population and its negative impact on agricultural industries, the Washington Post reports. Historically, Mexican workers crossed the border to work on American farms, but now Mexico faces a shortage of laborers due to various factors, including an aging workforce and increased opportunities elsewhere, including seasonal work visas in the United States. As a result, Mexican farmers are advocating for a guest-worker program to address labor shortages. The government plans to open job opportunities to non-Mexicans, potentially attracting migrants in search of better opportunities. Despite lower wages compared to the U.S., Mexican farms are improving working conditions and offering incentives to attract workers. However, recruiting foreigners to work in Mexican agriculture poses challenges, as seen in a pilot project where Central American workers struggled with farming and eventually left for the United States. In the long term, Mexico’s guest-worker programs may not immediately reduce migration to the U.S., but they could become more attractive if border crossing becomes more difficult, potentially shifting migration patterns. Farm labor issues in the U.S. were a major topic addressed to USDA Secretary Tom Vilsack last week during the House Ag Appropriations Subcommittee hearing. Growers and agribusiness officials talk about labor as much as anything else.

China and Japan defend currencies... China’s major state-owned banks stepped into the market to defend the yuan last Friday after it weakened past the psychologically important 7.2 per dollar level. The banks continued selling dollars for yuan in onshore markets on Monday to stabilize the Chinese currency. Japan also took steps to strengthen the yen. Japan’s top currency official issued strong warnings against speculative activities in the foreign exchange market, particularly as the yen approached intervention levels last seen in 2022.

Goldman: Commodities will benefit from rate cuts... Goldman Sachs forecasts commodities will see a boost from anticipated interest rate cuts in 2024, aiding industrial and consumer demand. Analysts predict a potential 15% return on raw materials throughout the year as borrowing costs decrease, manufacturing rebounds and geopolitical uncertainties linger. The bank specifically mentions copper, aluminum, gold and oil products as likely to experience price increases. However, Goldman Sachs emphasizes the importance of selective investment, cautioning that gains in commodities won’t be across the board.

IEA faces backlash... The International Energy Agency (IEA) faces pushback from Big Oil and Republican supporters in the U.S. Congress, with a group of lawmakers accusing the agency of adopting “misguided and troubling” positions on fossil fuels and straying from its core mission of promoting energy security. A report released by Carbon Tracker found the world’s biggest oil and gas companies still not aligned with the goals of the Paris Agreement on tackling climate change, despite corporate messaging on supporting a low-carbon future.

Pressure likely from Cattle on Feed Report... Last Friday’s Cattle on Feed Report showed the March 1 feedlot inventory up 1.3% from year-ago, as placements jumped 9.7% in March while marketings increase 3.4%. The placements figure will put pressure on deferred live cattle futures.

Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of February. The five-year average is a 12.9-million-lb. decline in beef stocks and a 29.7-million-lb. rise in pork stocks during the month.

Wholesale beef prices drop... Wholesale beef prices fell $3.01 for Choice and $2.26 for Select on Friday, while movement totaled only 85 loads. That could signal a potential short-term top following the run of strong price gains and movement as retailers geared up for the upcoming grilling season.

Cash hog index continues to firm, pork movement slows... The CME lean hog index is up a nickel to $83.59 as of March 21, extending the seasonal climb since the beginning of the year. The pork cutout value firmed $1.30 on Friday, though movement was just 232.1 loads and failed to clear 300.0 loads on any of the days last week, signaling slowed retailer demand.

Weekend demand news... Exporters reported no tenders or sales.

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

• 8:00 a.m. Food Price Outlook — ERS
• 10:00 a.m. Export Inspections — AMS
• 2:00 p.m. Oil Crops Yearbook — ERS
• 2:00 p.m. Cold Storage — NASS
• 2:00 p.m. Poultry Slaughter — NASS