First Thing Today | April 8, 2024
Good morning!
Varied price action in grains overnight... Corn favored the downside in light trade overnight, while soybeans and wheat had a mixed tone. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are a penny lower to 1 cent higher, SRW wheat futures are mostly a penny lower, HRW wheat is 4 to 5 cents higher and HRS wheat is fractionally to a penny higher. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is modestly firmer.
China’s grain production increase faces bottleneck... China’s grain production increase faces a bottleneck, state media reported on Monday, without providing details. “Under the current situation where it is increasingly difficult to increase production, my country has launched a new round of action to increase grain production capacity,” state-run newspaper Economic Daily wrote.
Smaller Indian wheat crop expected... India is expected to produce 105 MMT of wheat this year, according to the country’s flour millers group, 7 MMMT (6.25%) lower that the Indian government estimates. That would be down from the 112.74 MMT the Indian government estimated last year, though private forecasters said production was at least 10% lower than the official forecast. State-run Food Corporation of India (FCI) says the government has procured 1 MMT of new-crop wheat as of April 7, up from 700,000 MT at this time last year. FCI is expected to buy 31 MMT to 32 MMT of wheat from farmers in 2024-25, up from 26.2 MMT in 2023-24.
Gold hits another record high overnight... Gold futures continued their string of recent highs overnight. Broker SP Angel said the rally has “dumfounded” most analysts, given the break from its correlation with U.S. Treasuries, which have sold off over the past month. Also, the U.S. dollar has been stronger and that’s usually bearish for gold and silver. “Central bank buying has been a sustained source of support for gold, with Bloomberg reporting China’s PBOC has added gold for the 17th month in a row,” said the broker, adding this has fueled speculation over a potential devaluation of the Chinese yuan, as well as geopolitical concerns over heightened aggression against Taiwan.
The week ahead in Washington... The Senate returns from its Easter recess today, while the House will be back in session on Tuesday. Unfinished business includes aid to Ukraine, the fate of House Speaker Mike Johnson (R-La.) if there’s a threat from GOP rebel Margorie Taylor Green (R-Ga.), a new farm bill and the April 19 deadline for reauthorizing the Foreign Intelligence Surveillance Act. Key economic data will be Wednesday’s release of the consumer price index for March and minutes from the Fed’s March 19-20 monetary policy meeting. The focus for agriculture will be Thursday’s USDA Supply & Demand Report, which will feature fine tuning of old-crop usage forecasts and any changes to global production.
Yellen: Will not rule out potential tariffs on China’s green exports... Treasury Secretary Janet Yellen in an interview with CNBC on Monday said the U.S. will not rule out tariffs on China’s green energy exports. “I wouldn’t rule anything out at this point,” Yellen said when asked about potential tariffs. Yellen, who is on a trip to China, warned Beijing that Washington will not accept new industries being decimated by Chinese imports. She also said areas where Washington has national security interests, the administration has shown it is ready to act, like export restrictions.
Euro zone investor sentiment hits two-year high... Investor morale in the euro zone improved for the sixth consecutive month in April to its highest level in more than two years. Sentix’s index for the euro zone rose to -5.9 in April from -10.5 in March, its highest level since February 2022. Sentix said that while expectation values for Germany had improved to their highest level since February 2022, Europe’s biggest economy “remains the relative problem child of the major industrialized nations.” The euro zone expectations index rose to 5.0 in April from -2.3 in March, the seventh consecutive month of increase and the highest value since February 2022. The index on the current situation in the euro zone increased to -16.3 in April from -18.5 in the previous month, the sixth straight monthly increase.
AABP renames cattle influenza BIAV... Because the emerging influenza infection in cattle is not the same as highly pathogenic avian influenza (HPAI), the American Association of Bovine Practitioners (AABP) will refer to it as Bovine Influenza A Virus (BIAV), which more accurately depicts it. That will now be how Pro Farmer references the virus.
CDC issues health alert for BIAV... The Centers for Disease Control and Prevention (CDC) on Friday issued a health alert to inform clinicians, state health departments and the public of a case of BIAV in a person who had contact with dairy cows infected with the virus. The human infection was reported on April 1. To prevent infection from the virus, the CDC recommends the use of personal protective equipment, testing, antiviral treatment, patient investigations and monitoring of persons exposed to sick or dead, wild and domesticated animals and livestock that may have been infected with the virus.
Bulls on the defensive in cattle market... Cattle futures finished poorly last Friday, posting a technical breakdown and ending virtually on their weekly lows. That sets the cattle market up for followthrough selling to open this week with risk of further active long liquidation. To stop the short-term price decline, there likely needs to be stabilization in the cash cattle and wholesale beef markets.
April hogs hold premium to rising cash index... The CME lean hog index is up another 43 cents to $86.31 as of April 4, continuing the seasonal rise since the beginning of this year. April lean hog futures finished Friday at a $3.015 premium to today’s cash quote. The contract expires on Friday and will be settled against the cash index next Tuesday. May hog futures, which will assume lead-month status, finished last Friday $11.24 above today’s cash quote, while the June contract had a $21.59 premium.
Weekend demand news... Iran purchased 100,000 MT of soymeal expected to be sourced from Argentina or Brazil but made no purchases of corn or feed barley.
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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Honey - Statistical Bulletin — NASS
- 3:00 p.m. Crop Progress — NASS
