First Thing Today | March 27, 2024

Good morning!

Followthrough selling in grains overnight... Corn, soybeans and wheat extended Tuesday’s losses during the overnight session. As of 6:30 a.m. CT, corn futures are trading 4 to 5 cents lower, soybeans are 5 to 6 cents lower, SRW wheat is 1 to 2 cents lower, HRW wheat is 3 to 5 cents lower and HRS wheat is steady to a penny lower. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is trading just below unchanged.

Dollar/yen exchange rate hits 34-year high... The Japanese yen dropped to its lowest level against the U.S. dollar since 1990, below the area that triggered intervention by Japanese authorities in 2022. The dollar has jumped almost 20% against the yen since the beginning of last year. Japan’s finance minister issued his strongest warning to date and said authorities could take “decisive steps” — a phrase previously used in 2022 just before Japan stepped in to sell dollars on the open market.

Thai rice exports may top target... Thailand could export 8 MMT of rice this year, above the original 7.5 MMT target, the government said. The country shipped about 2.5 MMT of rice in the first quarter of this year, up 21% from the same period last year.

Indonesia’s rice surplus narrowing... Indonesia’s domestic rice supply-demand gap is seen at a surplus of 1.7 MMT in the first half of 2024, narrowing from a 3.36 MMT surplus last year, an ag ministry official said. Total rice output between January and June is seen at 17.09 MMT, more than the 15.39 MMT total demand predicted for the period.

China’s industrial profits rise... China’s industrial profits rose 10.2% from year-ago to 914.06 billion yuan during the first two months of 2024. That followed a 2.3% decline in 2023, suggesting the economic turnaround in China is gaining traction. Profits for state-owned companies increased 0.5% while those in the private sector jumped 12.7%.

Euro zone economic sentiment improves... Economic sentiment in the euro zone rose to a three-month high of 96.3 in March. The gauge measuring confidence among manufacturers reached the highest level since September 2023, while consumer confidence jumped to the highest since February 2022.

Update on HPAI in dairy cattle... Following are the latest updates on the dairy cattle in Texas and Kansas infected with highly pathogenic avian influenza (HPAI):

• USDA has identified cows infected by HPAI in four dairy herds in Kansas and Texas, and tests of other herds are pending. Dairy cows in New Mexico have also exhibited symptoms of the illness.
• The locations of the infected herds in southwest Kansas and the panhandle of Texas are in the Central Flyway — a major migratory route that goes west of Iowa, through Nebraska and South Dakota.
• The dairy cattle affected were older animals and typically comprised about 10% of the total herd, USDA reported. The infected cows have generally recovered from the illness, rather than dying. Milk from sick animals was discarded, and the most-affected herds produced about 40% less milk for about a week.
• Initial analysis by a USDA lab did not detect a genetic change in the virus to make it easily transmissible between mammals, which means the infected cows are unlikely to infect other cows or humans.
• A suspected source of infection is feed that gets contaminated by wild birds. Infected birds can pillage feed that is out in the open and defecate on it in the process.
• The disease can infect mammals, too. USDA has a list of more than 200 individual mammals that were infected with HPAI in the past two years in the United States. The list includes fox, opossum, squirrels, dolphins and grizzly bears. Last week, Minnesota announced HPAI had killed at least one young goat at a farm where poultry had been infected in February. It was the first known infection of U.S. livestock by the virus.

China’s hog herd still too big despite reductions... China’s hog herd will remain in surplus this year, despite new government targets to tame oversupply. Earlier this month, Beijing adjusted the national target for normal retention of breeding sows to 39 million head from 41 million and issued new regulations to control the country’s pig production capacity. But increasingly productive sows and a reluctance in hog farms to destock will keep herd size at high levels and prices low. Shanghai JC Intelligence Co. said the sow herd needs to decline to about 35 million head. It forecasts China’s 2024 pig production at 717 million head, down 10 million head (1.4%) from last year.

Argentina’s February beef export surge to 57-year high... Argentina exported 82,548 MT of beef in February, the biggest monthly total since 1967. During the first two months of this year, Argentine beef shipments reached a record 160,478 MT, with more than three-quarters of the total going to China.

Signs point to lower cash cattle trade... Heavy selling in live cattle futures the first two days this week suggest cash cattle will decline, potentially sharply, from their record high of $189.56 last week. So far, trade has been limited around the $186.00 level in the northern market.

Cash hog fundamentals still seasonally strong... After a one-day decline, the CME lean hog index is up 22 cents to $83.69 as of March 25. The pork cutout value slipped 41 cents on Tuesday to $95.33, though the previous day’s price was the highest since last October.

Overnight demand news... South Korea purchased 65,000 MT of corn to be sourced from the U.S. or South America and tendered to buy up to another 70,000 MT of corn to be sourced from South America or South Africa. Indonesia purchased around 300,000 MT of rice – 117,000 MT from Thailand, 108,000 MT from Vietnam and the rest from Pakistan and Myanmar.

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

• 9:30 a.m. Weekly Ethanol Production — EIA
• 2:00 p.m. Broiler Hatchery — NASS
• 2:00 p.m. Peanut Stocks and Processing — NASS