First Thing Today | July 13, 2022

Good morning!

Corn and wheat higher, beans mildly weaker this morning... Two-sided trade was seen in the grain and soy markets overnight, with corn and wheat firmer this morning while soybeans is modestly weaker. As of 6:30 a.m. CT, corn futures are trading 3 to 5 cents higher, soybeans are mostly 2 to 4 cents lower and wheat futures are 9 to 15 cents higher. Front-month U.S. crude oil futures are around 50 cents higher and the U.S. dollar index is just below unchanged this morning.

Talks continue on resuming Ukrainian grain exports... Officials from Russia, Ukraine and Turkey will hold talks today in Istanbul with United Nations officials on resuming Ukrainian grain exports via the Black Sea port of Odesa. Ukraine said a deal appeared very close as four-way talks resumed. Ukrainian Foreign Minister Dmytro Kuleba told Spanish newspaper El Pais, “We are two steps away from a deal with Russia. We are in the final phase and now everything depends on Russia.” Reuters quoted diplomats as saying the effort focuses on Ukrainian vessels escorting grain ships in and out of port while Russia would agree to a truce while shipments are made. Turkey would have responsibility for inspecting ships to ease Russian concerns they are not being used to smuggle weapons. Others think Russia could still drag the talks out.

China soybean imports slowed in June... China imported 8.3 MMT of soybeans in June, according to preliminary customs data, down 14.7% from May and 23% less than last year. don’t want to further build their inventories due to slackened demand from the country’s hog sector, which is saddled with poor production margins. Through the first half of 2022, Chinese soybean imports stood at 46.3 MMT, down 5.4% from the same period last year.

China’s exports jump, imports inch higher... China’s exports surged 17.9% in June, the fastest growth since January, as logistic issues eased following a relaxation of Covid-19 control measures in Shanghai and Beijing. June imports inched up just 1.0% from a year earlier, slowing from May's 4.1% gain, weighed down by the lockdown-induced slackening in commodity imports and subdued domestic consumption. China posted a trade surplus of $97.9 billion last month, up from $78.8 billion in May. The trade surplus with the U.S. widened to $41 billion in June, from $36.1 billion in May.

China finalizes quarantine paperwork for Brazilian corn... China will complete the signing of the quarantine agreement for imports of Brazilian corn and peanuts and soybeans from Malawi as part of its diversification of grain imports, said a spokesman for China’s customs authority. China finalized an agreement in May to allow imports of Brazilian corn but the official agreement wasn’t signed.

French wheat exports expected to reach three-year high... French soft wheat exports outside the European Union are expected to reach a three-year high of 10.3 MMT in 2022-23, according to the initial forecast from the country’s ag ministry. That would be up 17% from 2021-22 for which the forecast was lowered by 300,000 MT from last month – the fourth straight monthly reduction. The ag ministry expects France to ship 7 MMT of wheat within the EU, down 12% from 2021-22. France’s wheat stocks are forecast to fall nearly 30% in 2022-23 to 2.3 MMT.

IMF cuts U.S. GDP forecasts... The International Monetary Fund (IMF) on Tuesday again cut its economic growth forecast for the U.S. to 2.3% for this year from 2.9% in late June, with officials citing recent downward revisions to first quarter U.S. GDP and consumer spending growth. IMF included the new forecasts in the full report of its annual assessment of the U.S. economy, which highlighted the challenges of high inflation and the steep Federal Reserve interest rate hikes needed to control prices.

British GDP increases... Economic growth in Britain rebounded in May, after two consecutive months of decline. GDP increased by 0.5% over the previous month, higher than most forecasts. Growth was driven by increased construction activity and a boom in the health-services sector. Businesses reported higher fuel and electricity costs were forcing them to increase prices.

USDA releases info on 2023 expanded double crop insurance availabilities... USDA announced the counties initially determined to be eligible for expanded double crop insurance opportunities for 2023 to plant sorghum or soybeans after winter wheat. USDA’s Risk Management Agency (RMA) released the list of counties for the two crops, with a press release (link) noting at least 681 counties will have double crop coverage expanded to or streamlined for soybeans and maps (link) showing where the option for soybeans and sorghum will be available. For sorghum, at least 870 counties will have expanded or streamlined coverage. Via written agreements, RMA said there will be maximum flexibility for producers to get coverage, but not require the coverage of both the spring and winter crops as is the case in permanent double-crop counties. RMA will work with stakeholders to finalize details and requirements for getting insurance and will have all changes finalized prior to the Nov. 30 contract change date.

China meat imports inch higher... China imported 603,000 MT of meat in June, up 1.5% from May but down nearly 19% from last year. Through the first six months of this year, China imported 3.5 MMT of meat, down 31.9% from the same period last year, driven by a sharp reduction in arrivals of pork.

Big day of beef trade... Packers moved a strong 178 loads of beef on Tuesday amid mixed prices (Choice up 37 cents and Select down 83 cents). The stronger-than-expected beef movement so far this week helped support live cattle futures on Tuesday, giving traders hope of steady to possibly firmer cash cattle prices after weaker trade last week.

Cash hog fundamentals remain firm... The CME lean hog index is up another 79 cents to $112.56 (as of July 11), the fourth straight day of solid gains. The pork cutout also firmed $2.40 on Tuesday amid strong gains in hams and bellies. Strengthening cash fundamentals are the reason traders are maintaining a premium in July lean hog futures just days ahead of the contract’s expiration and settlement.

Overnight demand news... Taiwan purchased 44,725 MT of U.S. milling wheat. South Korea purchased 68,000 MT of corn expected to be sourced from South America. Japan received no offers in its tender to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.

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

• 9:30 a.m. Weekly Ethanol Production — EIA
• 11:00 a.m. Feed Grains Database — ERS
• 11:00 a.m. Meat Price Spreads — ERS
• 2:00 p.m. Dairy Monthly Tables — ERS
• 2:00 p.m. Season Average Price Forecasts — ERS
• 2:00 p.m. Wheat Data — ERS
• 2:00 p.m. Broiler Hatchery — NASS
• 2:00 p.m. Turkey Hatchery — NASS