First Thing Today | April 12, 2022
Good morning!
Strong price gains overnight... Winter wheat futures found strong followthrough buying in leading overnight gains in the grain and soy complex. As of 6:30 a.m. CT, winter wheat futures are mostly 24 to 29 cents higher, spring wheat is 14 to 17 cents higher, corn is 7 to 9 cents higher and soybeans are 11 to 15 cents higher. Front-month U.S. crude oil futures are around $3.75 higher and the U.S. dollar index is more than 200 points higher this morning.
Biden to announce emergency summertime sales of E15... President Joe Biden today will announce summertime sales of E15 at a Poet ethanol facility in Menlo, Iowa. A senior official on Monday said the administration plans to use emergency authority to allow for the fuel to continue to be sold after the current June 1 cutoff. EPA will make the move official in a waiver closer to the beginning of June. The change, which would apply on a temporary basis over the summer months, would waive anti-pollution restrictions that effectively block warm-weather sales of E15 gasoline in areas where smog is a problem. Ethanol proponents have been imploring the administration to make the change permanent, after a successful legal challenge by oil refiners led to a court last year overturning an initial attempt are year-round E15 sales by the Trump administration. The shift could yield a modest effect on pump prices given that in areas where’s it already available, E15 sells at a 5- to 10-cent per gallon discount to regular gasoline, said Patrick DeHaan, head of petroleum analysis at retail tracker Gas Buddy. Meanwhile, a fact sheet listing the Biden administration’s fuel-related efforts also said EPA is proposing a change that would allow canola-based biofuels to qualify for credits under a federal program that compels refiners to blend plant-based alternatives into gasoline and diesel.
Winter wheat crop CCI ratings improve, but still well below average... 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 improved 5.2 points to 277.8 and the SRW crop rose 3.2 points to 345.3. At those levels, the CCI ratings are still 52.1 points below the five-year average for HRW and 11.2 points below for the SRW crop. Click here to view state-by-state details.
Stronger inflation data expected this morning... The U.S. consumer price index (CPI) is expected to have risen 1.2% in March after advancing 0.8% in February. In the 12 months through March, the CPI is likely to have surged 8.4% compared with a 7.9% rise in February. In the 12 months through March, core CPI (minus food and energy prices) is likely to have risen 6.6% following a 6.4% gain as of February. The White House on Monday already was blaming the expected further surge in inflation on “Putin’s price hike,” a reference to the increase in gas prices due to Russia’s war with Ukraine.
China port congestion worsens... Dotting the sea off Chinese ports are 477 bulk cargo ships waiting to deliver resources from metal ore to grain into the country. A shortage of port workers at Shanghai is slowing the delivery of documentation needed for ships to unload cargoes, according to ship owners and traders. Meanwhile, vessels carrying metals like copper and iron ore are left stranded offshore as trucks are unable to send goods from the port to processing mills.
Russia/Ukraine update... British Foreign Secretary Liz Truss said on Monday Britain was working with its allies to verify details of reports that Russian forces may have used chemical agents in an attack on the southeastern Ukrainian city of Mariupol. All options would be on the table in how the West responds to any use of chemical weapons in Ukraine by Russia, British armed forces minister James Heappey said. Western sanctions already in place at taking a big bite out of Russia’s economy, which is on track to contract by more than 10% this year, the biggest fall in GDP since the years following the 1991 fall of the Soviet Union, former finance minister Alexei Kudrin said. Russia is facing soaring inflation and capital flight while grappling with a possible debt default amid the crippling Western sanctions.
WTO lowers global trade growth forecast... The World Trade Organization (WTO) revised down its forecast for global trade growth this year to 3% from 4.7% due to the impact of the Russia/Ukraine war. “The economic reverberations of this conflict will extend far beyond Ukraine's borders. It’s now clear that the double whammy of the pandemic and the war has disrupted supply chains, increased inflationary pressures and lowered expectations for output and trade growth,” said WTO Director-General Ngozi Okonjo-Iweala. WTO says global trade growth in 2023 is expected to be 3.4%, noting its forecasts are less certain than usual due to uncertainty about the conflict.
French wheat acreage down nearly 4%... France’s ag ministry expects the country’s all-wheat planted area to fall 3.9% from year-ago to 4.79 million hectares. Winter wheat acreage at 4.77 million hectares would be down 4.0% from last year, while spring wheat acreage at 22,000 hectares would be down 0.2% from last year. The estimates were based on data as of April 1, before a cold snap that hit many parts of the country, the ministry said.
China to buy more pork for reserves... China will purchase 40,000 MT of pork for state-owned reserves on Thursday. This will be the fourth round of pork purchases in an attempt to support low domestic prices that we previously reported last Friday.
Generally steady cash cattle expectations... The average cash cattle price last week was $138.82, down 50 cents from the previous week. That’s the fifth consecutive week the cash market has held with a roughly $1 trading range. Most traders expect the cash market to remain flat this week, though some anticipate a mildly firmer tone, which would hold with the back-and-forth pattern.
Pork cutout firms, cash hog index falls again... The pork cutout value firmed $3.48 on Monday as all cuts except loins strengthened. The CME lean hog index is down another 43 cents today and below the $100 mark for the first time since March 9. Despite their discount to the cash index, buying in April lean hog futures is unlikely to surface unless the cash index turns higher.
Overnight demand news... South Korea purchased 207,000 MT of optional origin corn. Japan is seeking 114,645 MT of milling wheat from the U.S., Canada and Australia in its weekly tender. Egypt tendered for an unspecified amount of European origin 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 am Cotton and Wool Outlook: April 2022 — ERS
- 11:00 am Meat Price Spreads — ERS
- 11:00 am Oil Crops Outlook: April 2022 — ERS
- 2:00 pm Dairy Monthly Tables — ERS
- 2:00 pm Feed Outlook: April 2022 — ERS
- 2:00 pm Rice Outlook: April 2022 — ERS
- 2:00 pm Wheat Outlook: April 2022 — ERS
