First Thing Today | April 16, 2024

Good morning!

Choppy grain trade overnight... Corn, soybeans and wheat traded on both sides of unchanged overnight. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are fractionally lower, winter wheat markets are 1 to 2 cents lower and spring wheat is 4 to 7 cents higher. Front-month crude oil futures are modestly lower, while the U.S. dollar index is trading just above unchanged.

HRW CCI rating posts notable decline but fully offset by SRW improvement... USDA rated 55% of the winter wheat crop as “good” to “excellent,” down one percentage point from the previous week. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped 8.3 points to 337.0, led by a nearly six-point drop in top producer Kansas. The SRW crop improved 8.3 points to 382.1, led by a nearly four-point increase in top producer Illinois. Click here for details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of April 14:

• Winter wheat: 55% good/excellent (56% last week); 11% headed (7% five-year average).
• Corn: 6% planted (5% average).
• Soybeans: 3% planted (1% average).
• Spring wheat: 7% planted (6% average).
• Cotton: 8% planted (8% average).

Cordonnier cuts Argentine corn crop, raises Brazil soybean production... South American crop consultant Dr. Michael Cordonnier cut his Argentine corn production forecast by 3 MMT to 50 MMT, noting impacts from corn stunt disease. He left his Argentine soybean crop peg at 51 MMT. Cordonnier raised his Brazilian soybean crop estimate 2 MMT to 147 MMT, due to the crop in Rio Grande do Sul finishing much better than anticipated. He kept his Brazilian corn crop forecast at 112 MMT.

Ukraine grain production to fall about 10%... Ukraine’s grain production is expected to fall to about 52 MMT this year, down 6 MMT (10.3%) from year-ago, due mostly to reduced plantings, according to the first official forecast from the ag ministry. The ministry expects the country to produce 27 MMT of corn, 19 MMT of wheat and 5 MMT of barley. Oilseed production is forecast at 12.5 MMT for sunseeds, 5.2 MMT for soybeans and 4 MMT for rapeseed. USDA’s ag attaché in Ukraine expects production of 26.6 MMT for corn, 21.1 MMT for wheat, 6.6 MMT for barley and 260,000 MT for rye.

France slightly raises wheat plantings estimate but still well below average... France’s ag ministry raised its winter wheat plantings forecast by 10,000 hectares to 4.37 million hectares. Total wheat area, including spring wheat, is forecast at 4.39 million hectares, which would be down 7.7% from last year and 7.4% below the five-year average.

Tai set to address trade policies with China... U.S. Trade Representative Katherine Tai will address trade policies related to China during her testimony before the House Ways and Means Committee. Tai will emphasize the administration’s strategic review of trade policies toward China, particularly examining the effectiveness of existing Section 301 tariffs implemented during the Trump era. Tai is also reviewing a request from U.S. labor groups to initiate a Section 301 investigation into China’s shipbuilding sector, indicative of broader concerns about Beijing’s trade practices and their impact on American industries. A significant part of her testimony will highlight vulnerabilities in U.S. supply chains due to dependencies on China, which pose risks to American workers and businesses. Lawmakers are expected to question Tai about shifts in digital trade policies at the World Trade Organization (WTO), reflecting evolving priorities under the Biden administration. House Ways and Means Committee Chair Jason Smith (R-Mo.) released on Op-Ed via Agri-Pulse, which outlines what he said is a “failure to advocate for American agriculture on the world stage.” Smith also accuses the administration of avoiding formal trade agreements that could reduce tariffs and instead opting for less formal, unenforceable trade engagements. Bottom line: Tai’s testimony is expected to address both the strategic direction of U.S. trade policy, particularly with China and respond to congressional criticisms regarding the administration’s approach to international trade and its impact on various American sectors.

China’s Q1 GDP stronger than expected but other data not as favorable... China’s economy grew 5.3% annually in the first quarter of 2024, above expectations and the 5.2% expansion during the final quarter of last year. That was the strongest GDP since the second quarter of last year, boosted by continued support measures from Beijing and spending related to the Lunar New Year festival. However, China’s industrial production grew 4.5% during March while retail sales rose 3.1% last month, both below expectations and down notably from the first two months of the year.

China urges financial institutions to boost credit for advanced manufacturing... China is urging banks and financial institutions to increase credit support to the advanced manufacturing sector as part of efforts to become a powerhouse in goods from electric vehicles and wind turbines to aerospace components and semiconductors. Banks should promote more credit resources to help develop the manufacturing industry and continue to increase the proportion of medium and long-term loans in the sector, according to a statement jointly released by the financial regulator, the ministry of industry and information technology, and the state planer. The measures aim to “better help to build a manufacturing powerhouse and promote new-type industrialization.”

China’s Q1 pork production declines... China produced 15.83 MMT of pork during the first quarter of 2024, down 0.4% from the same period last year. That was the first annual decline in quarterly production since the second quarter of 2020. China slaughtered 194.6 million hogs during the first three months of the year, down 2.2% from last year. China’s hog herd declined 5.2% from last year to 408.5 million head at the end of March, while the sow herd fell 6.9% to 40.42 million head.

Cash cattle continue recent retreat... Cash cattle prices averaged $183.84 last week, down $1.89 from the previous week. After posting an all-time high the week ended March 22, cash cattle prices have fallen for three straight weeks, with a $5.72 decline during that period. Given the rise in slaughter weights and slowdown in operating hours, strong gains in cattle futures and wholesale beef prices are likely needed to halt the slide in cash cattle prices.

Seasonal climb continues for cash hogs, pork cutout... The CME lean hog index is up another 17 cents to $90.73 as of April 12, though the pace of gain slowed notably from recent days. The pork cutout value firmed $2.40 on Monday to $103.60, fueled mostly by a $19.29 jump in primal bellies. Both the cash index and the pork cutout are at their highest levels since last August.

Overnight demand news... Japan is seeking 94,612 MT of milling wheat in its weekly tender. Egypt tendered to buy an unspecified amount of wheat from multiple origins and 50,000 MT of optional origin raw cane sugar.

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