First Thing Today | April 2, 2024

Good morning!

Quiet overnight grain trade... Corn, soybeans and wheat held in tight ranges during light, two-sided overnight trade. As of 6:30 a.m. CT, corn futures are trading steady to fractionally higher, soybeans are around a penny higher, SRW wheat is a penny lower, HRW wheat is 2 to 3 cents lower and HRS wheat is fractionally to 3 cents higher. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is modestly lower.

China asks traders to curb some corn imports... Chinese customs have asked some traders to limit deliveries of foreign corn into bonded areas, in a move aimed at easing domestic oversupply and supporting prices for farmers before the planting season, Bloomberg reported. The country has an official corn import quota of 7.2 MMT, which benefits from a tariff of just 1%. Above that, cargoes are subject to duties of 65%. However, corn brought into bonded areas can be blended with other ingredients and processed into animal feed, which is then imported at a lower duty. Local officials are asking traders and processors to keep arrivals below year-ago levels, sources told Bloomberg. Authorities stepped up checks on cargoes and tightened requirements for processors, according to one of the sources. Limiting deliveries of foreign corn would likely put pressure on global prices and could lead to washouts of some cargoes, the sources noted.

India asks traders to avoid buying new-crop wheat... India has asked global and domestic trade houses to avoid buying new-crop wheat from local farmers to help the government-backed Food Corporation of India (FCI) procure large quantities to shore up its depleting reserves, sources told Reuters. The government informally asked private traders to avoid buying wheat at least in April, the sources said, its first such guidance since 2007. Wheat procurement starts tapering off after mid-May. The Indian government has sold record quantities of wheat from state stockpiles to boost local supplies and tame prices, leading to a drawdown in reserves essential for the world’s biggest food welfare program. Despite falling inventories, New Delhi has resisted calls for wheat imports as overseas purchases tend to anger farmers who will be an influential voting segment in the April 19 elections.

HRW CCI ratings post big jump from last fall... USDA rated 56% of the winter wheat crop as “good” to “excellent,” the highest initial spring rating since 2019. When USDA’s initial weekly crop condition ratings of the spring are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 22.0 points from last fall to 345.4. That was 88.4 points above last year’s drought-hit crop. The SRW crop slipped 0.1 point to 371.5, though that was 7.7 points above last year on this date. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of March 31.

• Winter wheat: 56% good/excellent (50% at the end of November; 28% last year); 4% headed (2% five-year average).
• Corn: 2% planted (1% average).
• Spring wheat: 1% planted (1% average).
• Cotton: 3% planted (4% average).

Attaché lowers Brazilian corn crop forecast... The ag attaché in Brazil lowered its 2023-24 Brazilian corn production forecast to 122 MMT, 2 MMT less than USDA’s official figure. It cut Brazil’s 2023-24 corn export forecast to 45 MMT, 7 MMT less than USDA’s March outlook. For 2024-25, the attaché projects Brazil’s corn production will rise to 129 MMT and exports will rebound to 51 MMT.

Cordonnier’s South American crop estimates unchanged... South American crop consultant Dr. Michael Cordonnier left his Brazilian crop production forecasts at 145 MMT for soybeans and 112 MMT for corn. Cordonnier also left his Argentine crop estimates at 51 MMT for soybeans and 55 MMT for corn. His bias improved to neutral for both crops in Brazil and the Argentine soybean crop, while it’s neutral to slightly lower for Argentina’s corn crop.

First vessel navigates temporary channel into Port of Baltimore... The first vessel to navigate through a temporary channel near Sollers Point following the collapse of the Francis Scott Key Bridge was a tugboat pushing a fuel barge. This tugboat, named Crystal Coast, successfully moved the barge carrying jet fuel destined for the Dover Air Force Base. The salvage operation progressed despite adverse weather conditions, with crews working continuously to clear debris from the bridge. The temporary channel, restricted to salvage vessels, has a depth of 11 feet, while a deeper channel for larger vessels is under construction.

ERP payments slightly increase... Emergency Relief Program (ERP) Phase 2 payments rose to $885.17 million, up from $884 million the previous week. Total payments under the ERP, including both Phase 1 and Phase 2, remained largely unchanged at $8.64 billion as of March 31. Phase 1 payments account for $7.75 billion of the total, showing minimal change.

Euro zone factory downturn deepens in March... HCOB’s final euro zone manufacturing purchasing managers index (PMI) compiled by S&P Global dipped to 46.1 in March from February’s 46.5 reading, beating a preliminary estimate of 45.7. But the March figure was a three-month low and remained below the 50.0 mark denoting growth in activity for the 21st consecutive month. Business confidence rose to its highest level in nearly a year, but growth expectations remained relatively weak. Consumer expectations for euro zone inflation over the next 12 months decreased to 3.1% in February, the lowest since the war in Ukraine began. Expectations for inflation three years ahead remained unchanged at 2.5%.

USDA confirms more HPAI cases in dairy herds... USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in a dairy herd in New Mexico, as well as five additional dairy herds in Texas. To date, USDA has confirmed the detection of HPAI in dairy herds in Texas (7) Kansas (2), Michigan (1) and New Mexico (1). The presumptive positive test results for an Idaho herd are still pending.

Rough start to the week for cattle... Cattle futures faced heavy late-session selling on Monday, resulting in bearish reversals after reports of a human case of highly pathogenic avian influenza in a Texas person who had contact with infected cattle. While the Centers for Disease Control and Prevention said the risk to humans remains low, the news spooked traders. Fundamental pressure came from a $1.33 drop in the average cash price last week and heavy weakness in wholesale beef prices. Given the technical breakdown and fundamental pressure, cattle futures are expected to face followthrough selling. Key will be whether that leads to more active selling or buyers show up under the market.

Cash hog fundamentals strengthen... The CME lean hog index is up 18 cents to $84.78 as of March 29, marking a new high during the seasonal rally. The pork cutout value firmed $2.95 on Monday, fueled by an $11.85 jump in primal bellies. The cutout at $96.61 also reached its highest level during the seasonal advance and was the highest since the end of September last year.

Overnight demand news... Taiwan purchased 65,000 MT of corn expected to be sourced from Argentina. Japan is seeking 113,535 MT of milling wheat via its weekly tender.

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

• 2:00 p.m. Hatchery Production - Annual — NASS