First Thing Today | April 11, 2023

Good morning!

Varied price tone awaiting USDA’s reports... Soybean futures posted corrective gains overnight, while wheat pulled back from Monday’s gains and corn held near unchanged. As of 6:30 a.m. CT, corn futures are trading fractionally on either side of unchanged, soybeans are 4 to 8 cents higher and wheat futures are 2 to 5 cents lower. Front-month crude oil futures are posting modest losses, while the U.S. dollar index is trading just above unchanged.

April crop reports out this morning... Traders expect USDA to lower its ending stocks forecasts for corn and soybeans after March 1 stocks came in lower than anticipated, while wheat carryover is expected to increase slightly from last month. Traders expect ending stocks of 1.319 billion bu. for corn (down from 1.342 billion bu. in March), 198 million bu. for soybeans (down from 210 million bu.) and 574 million bu. for wheat (up from 568 million bu.). Traders expect USDA to make further cuts to its Argentine soybean and corn crop estimates, while the Brazilian production forecasts are anticipated to edge higher.

HRW CCI rating declines, SRW rating improves... 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 5.8 points to 251.2, led by a four-point drop in top producer Kansas. The SRW crop improved 5.1 points to 368.9. The HRW CCI rating remains historically low, while the SRW crop is rated stronger than average for early spring. Click here for more details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of April 9.

• Winter wheat: 27% good/excellent (28% last week); 7% headed (4% five-year average).
• Corn: 3% planted (2% average).
• Cotton: 6% planted (7% average).
• Spring wheat: 1% planted (4% average).

Consultant raises Brazilian crop estimates... Crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop estimate 2 MMT to 153 MMT, noting better-than-expected yields and increased acres in other areas of the country will more than compensate for losses in Rio Grande do Sul due to drought. Cordonnier raised his Brazilian corn production estimate 2 MMT to 123 MMT, citing beneficial weather to date for the safrinha corn. Cordonnier kept his Argentine crop estimates at 26 MMT for soybeans and 36 MMT for corn, as the weather “has turned the corner.”

Mexico creates working group to probe GMO corn impact on tortilla industry... Mexican authorities announced a working group will investigate the impact of genetically modified (GMO) corn imports on the country’s tortillas amid a trade dispute with the United States. Mexico’s health authority Cofepris, along with its scientific council Conacyt, announced the creation of the working group, saying it will have a role in assessing the risks associated with consumption of GMO corn. The U.S., which says Mexico’s move to restrict GMO corn imports lacks scientific backing, requested consultations under the U.S.-Mexico-Canada Agreement.

Kazakhstan bans truck imports of wheat from Russia... Kazakhstan banned imports of wheat from Russia by truck as a way to prevent contraband re-exports. Importing wheat from Russia and re-exporting it to Central Asia and Afghanistan allows illegal traders to dodge VAT and transit fee payments and hurts Kazakh farmers, authorities say. Kazakhstan’s ag ministry has cited estimates that “grey” imports of Russian wheat amount to 1.5 MMT to 2 MMT per year.

Aussie weather favorable for now, but El Niña looms... Australian wheat plantings are set for a strong start as better-than-expected rains in central and southern areas have improved soil moisture. Rains across New South Wales and Victoria states over the last two weeks have boosted soil moisture levels for planting, which lasts until May. But forecasts call for El Niño to develop, which typically brings dry weather across large parts of the country. The Australian Bureau of Meteorology says from July, all but one of the models indicate El Niño thresholds will be met or exceeded, with all models noting it will be established by August.

China’s consumer, producer inflation slows... China’s consumer inflation slowed to 0.7% above year-ago in March, the lowest figure since September 2021 as the costs of food and non-food goods dropped. Food inflation fell to a 10-month low (2.4% vs. 2.6% in February), due to a steeper drop in cost of fresh vegetables and despite a faster rise in pork prices. China’s producer prices slumped 2.5% annually in March. That was the sixth straight month of producer deflation and the steepest fall since June 2020 amid easing commodity prices. The inflation data raises expectations China’s central bank will increase stimulus to boost economic growth.

China’s new loans record-large in Q1... China’s banks extended 3.89 trillion yuan ($560 billion) in new loans in March, more than double the 1.81 trillion yuan in the previous month. That was also the largest amount of new bank loans for March since at least 2004. China’s new bank lending hit an all-time high in the first quarter of 2023, as policymakers pledged to step up support for the economy recently hit by weak exports and the property downturn.

Cash cattle post all-time high... Cash cattle averaged $173.10 last week, eclipsing the previous all-time high from 2014. Traders expect packers to pay higher prices for cash cattle again this week, as they have been able to keep margins in the black despite the surge in cash prices due to rising wholesale beef values. Traders remain cautious toward futures, with the lead April contract finishing Monday $1.725 below last week’s average cash price, though it appears just a matter of time before live cattle futures top their all-time high of $171.975 from 2014.

Cash hog index extends price drop... The CME lean hog index is down another 24 cents to $72.64 (as of April 7), extending the price slide to a 16^th straight day. The cash index is just 53 cents above the January low and appears headed below that level, though April lean hog futures finished Monday 73.5 cents above today’s cash quote, suggesting traders sense a low will be posted soon.

Overnight demand news... Taiwan tendered to buy 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa and 52,850 MT of U.S. milling wheat. Japan is seeking 78,548 MT of milling wheat in its weekly tender. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Algeria tendered to buy a nominal 50,000 MT of optional origin durum wheat.

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. Crop Production — NASS
• 11:00 a.m. WASDE — WOAB
• 11:15 a.m. Cotton: World Markets and Trade — FAS
• 11:15 a.m. Grains: World Markets and Trade — FAS
• 11:15 a.m. Oilseeds: World Markets and Trade — FAS
• 11:15 a.m. World Agricultural Production — FAS
• 2:00 p.m. Livestock and Poultry: World Markets and Trade — FAS