First Thing Today | April 21, 2023

Good morning!

Corn and beans weaker, wheat mostly firmer overnight... Corn and soybean futures extended this week’s losses during overnight trade, while wheat traded mostly firmer on mild corrective buying. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 7 to 12 cents lower, SRW wheat is 3 to 4 cents higher, HRW wheat is around a penny higher and HRS wheat is narrowly mixed. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is trading near unchanged.

Romania will not ban Ukraine grain imports as it awaits EU actions... Romania will not unilaterally ban the import of Ukrainian grain and will wait for the European Commission to enforce measures to help its farmers, Agriculture Minister Petre Daea said. Romania and Ukraine will consult weekly on expected grain volumes, seeking to limit imports, Daea said after meeting with Ukraine’s Ag Minister Mykola Solsky in Bucharest.

Hungary’s feed makers oppose ban on Ukraine imports... The Hungarian Grain and Feed Association said it opposed the government’s ban on grain and oilseed imports from Ukraine, saying the restrictions “will cause significant difficulties” to feed makers and industrial users in Hungary. According to the association, the ban means they will lose access to the “closest and therefore most economical source of raw material” for their industry.

Chinese imports from U.S. jump for soybeans, slump for corn... China imported 4.83 MMT of soybeans from the U.S. during March, up 43.3% from last year. That was 71.5% of China’s total soybean imports for the month, while Brazil shipped it only 1.67 MMT due to harvest delays. China’s corn imports from the U.S. totaled 494,903 MT last month, down 52% from March 2022.

Behind-closed-doors farm bill debate returns to planted vs. base acres for program payments... It looks like corn and soybean growers, or their groups, want to move back to payments based on planted and not base acres in the farm bill. That would be a stealth way of getting more payments, but impact other commodities and raise big red flags relative to well expected WTO challenges. Any such move would resurrect ideas that U.S. farm program payments distort plantings for some crops, an argument that led to the switch to base acres. It would boost Title 1 forecast payments in the coming farm bill debate, at least for some crops.

West Coast dockworkers, firms have tentative pact on some issues... The labor union representing 22,000 West Coast dockworkers in contract-renewal talks said it has reached a tentative agreement with their employers on “certain key issues.” Negotiations will continue until they reach a definitive pact.

California boosts water allocations to 100%... For the first time since 2006, California officials have increased allocations from the vital State Water Project to 100% of requested supplies, as reservoirs across the state are nearing capacity with an epic snowmelt forecast for the coming weeks. After an unusually wet winter pulled much of the state out of a punishing years-long drought, the U.S. Bureau of Reclamation also announced an increase to 100% of requested water allocations for almost all farms, homes and industries served by the federal Central Valley Project, which provides critical irrigation and water to the San Joaquin Valley, San Francisco Bay Area and Central Valley.

Blackstone president warns market is overestimating chance of Fed rate cuts... Blackstone president Jonathan Gray said that while the Fed would probably hold off from further interest rate rises because of cooler inflation, financial markets have overpriced the odds of the U.S. central bank reducing the cost of borrowing. “The Fed is likely to pause or maybe go 25 basis points higher from here, but I think they’re unlikely to pivot as quickly as the market is expecting,” he told the Financial Times. He added that the Fed would “hold rates at an elevated level for an extended period of time” to stamp out remaining inflationary pressures.

Japanese inflation rate edges down to six-month low... The annual inflation rate in Japan inched down to 3.2% in March from 3.3% in the previous month. It was the lowest level since last September. But the cost of food advanced the most since September 1980 (7.8% vs. 7.5% in February).

Services drive euro zone PMI growth... The euro zone’s flash composite purchasing managers index (PMI) came in at 54.4 in March, which was slightly above market expectations. However, the manufacturing PMI came in at only 45.5, which was well below expectations, while the services PMI was 56.6.

Cattle on Feed Report to show continued contraction of feedlot supplies... USDA is expected to show feedlot supplies contracted versus year-ago for a seventh straight month in this afternoon’s Cattle on Feed Report. Traders expect the April 1 feedlot inventory to be down 5.0% from year-ago to 11.5 million head, the lowest for that date since 2017. March placements are expected to have dropped 5.2%, with marketings down 0.9%.

Cash cattle trade steady/weaker... The fall in cattle futures this week pulled cash prices down. Despite being extremely current, feedlots moved cattle at steady to $2 lower prices compared with last week, suggesting the bulk of the cattle traded were hedged. Some feedlots may hold out to see if they can get firmer prices following this afternoon’s Cattle on Feed Report.

Cash hog index posts new low for the year... The modest uptick in the CME lean hog index earlier this week was nothing more than a one-day tease. The cash index is down 16 cents to $71.41 (as of April 19), marking a new low for the year. Traders have aggressively removed premium from May hog futures and summer-month contracts this week amid the persistently weak cash index.

Overnight demand news... South Korea purchased 137,000 MT of optional origin corn.

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

• 2:00 p.m. Cattle on Feed — NASS
• 2:00 p.m. Peanut Prices — NASS
• 2:30 p.m. Commitments of Traders   CFTC