First Thing Today | April 21, 2022

Good morning!

Corn and wheat weaker, soybeans mildly firmer this morning... Wheat futures extended Wednesday’s losses overnight. Corn and soybeans posted two-sided trade, with corn weaker and soybeans firmer early this morning. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents lower, soybeans are fractionally to 3 cents higher, winter wheat futures are mostly 6 to 9 cents lower and spring wheat is mostly 1 to 3 cents lower. Front-month U.S. crude oil futures are around $1 higher and the U.S. dollar index is about 200 points lower this morning.

Weekly export sales report out this morning... For the week ended April 14, traders expect: 

China slows bean buying due to poor crush margins... Chinese crushers have slowed their soybean purchases for summer delivery amid poor production margins. Traders told Reuters only 20% of China’s soybean needs for June-September, which are expected to be 7 MMT to 8 MMT per month, have been covered. But buying isn’t expected to pick up unless margins improve. Crush margins for U.S. and Brazilian soybeans delivered in June and July at current prices are negative, while margins for August arrivals are only mildly profitable. Demand for soymeal is weak as hog farmers and poultry producers are using alternatives for feed.

IMF: Prolonged China slowdown a risk to global economy... A prolonged slowdown in China would have substantial global impacts, IMF Managing Director Kristalina Georgieva said, though she noted Beijing has room to adjust policy to provide support. “Fortunately, China has policy space to provide macroeconomic policy support, including shifting the focus toward vulnerable households to strengthen consumption, which can also help support China’s climate goals by steering economic activity to lower-carbon sectors,” Georgieva added. “Stronger policy efforts in the property sector can also help secure a balanced recovery.” China’s commerce ministry said today it would roll out targeted measures to boost a recovery in consumption. Spending has been hit hard by lockdowns across the country that began last month to contain the spread of Covid.

China’s Xi Jinping blasts ‘cold war mentality’... Chinese President Xi Jinping said China will firmly oppose decoupling, while its economy can play a lead role in global recovery as the world stands at a crossroads between the coronavirus pandemic, trade conflicts and war in Ukraine. In a speech today, Xi called for stronger macro coordination between major economies to prevent “severe and negative” spillover effects from policy decisions and to help stabilize the global supply chain. He said China “offers powerful momentum” for recovery from the pandemic, while playing down concerns about the economic impact of Beijing’s hardline virus control measures. Xi also proposed a Chinese-led global security initiative based on the United Nations framework, renounced unilateral action and confrontation and promoted non-interference and respect for sovereignty and territorial integrity.

Ukraine planting update... Ukraine has planted 2.5 million hectares of spring-planted crops so far this year, 20% of expected area, according to the Ukrainian ag ministry. The country has warned of a potential decline of 20% in plantings this year due to the Russian invasion, and reports quoted ag ministry officials as saying the drop could be 30% to 40% in the northern areas of the country as mines will need to be removed. In areas that are temporarily occupied, a ministry official was quoted as saying plantings could fall by 60% to 70%.

Exchange raises Argentine crop estimates... The Rosario Grain Exchange raised its estimates of Argentina’s soybean and corn crops, citing better-than-expected bean yields and an upward adjustment in corn planted area. The exchange now forecasts the country’s soybean crop at 41.2 MMT, up 1.2 MMT from its previous estimate. The corn crop estimate was raised 1.5 MMT to 49.2 MMT.

Euro zone inflation jumps to another record... Euro zone consumer inflation rose a record 7.4% above year-ago in March amid a 44.4% surge in energy prices. Excluding energy and unprocessed food prices, consumer inflation hit a record 3.4% above year-ago. Traders are betting the European Central Bank will raise rates above zero for the first time since 2012. Money markets have priced in 75 basis points of interest-rate hikes by December.

Russia/Ukraine update... Top finance officials from Britain, the U.S. and Canada walked out of a meeting of finance officials from the world’s top 20 economies on Wednesday as Russian representatives spoke. U.S. Treasury Secretary Janet Yellen told attendees she strongly disapproved of a senior Russian official’s presence at the meeting before she walked out, two sources told Reuters. President Joe Biden this morning is “expected to provide an update on our efforts to support Ukraine and the assistance we are providing,” according to a source familiar with the planning.

Cash cattle trade shows more strength... There was additional cash cattle trade in the $140 to $141 range in the Southern Plains on Wednesday, while prices reached $147 live and $238 dressed in the northern market. As would be expected with prices up sharply again this week, feedlots moved a lot of cattle. Strong cash cattle trade the past two weeks suggests feedlots are more current than slaughter weights imply, especially in the northern market.

Cash hog index climbs again... The CME lean hog index is up another 43 cents today (as of April 19), marking the sixth consecutive daily gain. Even after sharp losses on Wednesday, June lean hog futures still finished nearly $18 above today’s cash index quote. Buying in summer-month hogs may be limited until the cash market shows stronger price gains.

Overnight demand news... Taiwan purchased 47,120 MT of U.S. milling wheat. Japan purchased 27,320 MT of Australian wheat from 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

• 7:30 a.m. Weekly Export Sales — FAS
• 7:30 a.m. Extended weather forecast — NOAA
• 2:00 p.m. Chickens and Eggs — NASS
• 2:00 p.m. Livestock Slaughter — NASS