First Thing Today | July 19, 2023
Good morning!
Active followthrough buying overnight... Corn, soybeans and wheat sharply extended Tuesday’s gains during the overnight session amid concerns with U.S. weather and Black Sea grain supplies. As of 6:30 a.m. CT, corn futures are trading 15 to 16 cents higher, soybeans are 15 to 18 cents higher, winter wheat futures are 15 to 22 cents higher and spring wheat is 10 to 12 cents higher. Front-month crude oil futures are tethered near unchanged and the U.S. dollar index is around 350 points higher.
Russia again attacks Odesa... Russia launched an extensive air attack on the Ukrainian port city of Odesa for a second night in row. Ukrainian Ag Minister Mykola Solsky said a “considerable” amount of grain export infrastructure at a Chornomorsk port had been damaged by the attack. Ukrainian presidential adviser Mykhailo Podolyak said Russia was deliberately targeting grain terminals and port infrastructure. “The main objective is to destroy the possibility of shipping Ukrainian grain,” he tweeted.
Russia lays out parameters for restarting Black Sea grain deal... Russia said the United Nations had three months to implement the terms of a memorandum that would facilitate Russian agricultural exports if it wanted Moscow to resume talks about allowing safe Ukrainian grain exports to restart. Russian Foreign Ministry spokeswoman Maria Zakharova said the onus was now on the United Nations. “The Russia/United Nations memorandum itself states, and I'll quote...that the agreement will be in force for three years, and in case one of the parties intends to terminate it (either Russia or the UN), it must give three months’ notice. We have given notice,” Zakharova told Radio Sputnik on Wednesday. “Accordingly, the UN still has three months to achieve concrete results. Therefore, people should not run to the microphones at the UN Secretariat, but use these three months to achieve concrete results. If there are concrete results, we will return to the discussion of this (wider) issue.”
Neighboring countries ask for extension of Ukrainian grain import ban... Five Central European countries will jointly ask the European Union on Wednesday to extend a ban on Ukrainian grain imports beyond a deadline that expires on Sept. 15 to avoid major market disruption, Hungary’s ag minister told Reuters. Poland, Romania, Bulgaria, Hungary and Slovakia will ask for the import ban to be extended on Ukrainian wheat, maize, rapeseed and sunflower seeds. However, he said they would also discuss an option where countries could individually ask the EU to add products to the ban list.
Strike back on at Canadian ports... The International Longshore and Warehouse Union (ILWU) Canada rejected a preliminary agreement with the BC Maritime Employers Association (BCMEA) that was announced last week. The union leadership believes the proposed deal does not sufficiently safeguard their members’ jobs currently and in the future. Consequently, ILWU Canada resumed their strike. In response to the resumed strike, Canadian Labor Minister Seamus O’Regan and Transport Minister Omar Alghabra issued a joint statement expressing the government’s intention to consider all available options to address the situation.
Court upholds RFS compliance deadline regs... The D.C. Circuit Court of Appeals upheld the regulation regarding compliance and reporting deadlines for Renewable Fuel Standard (RFS) on Tuesday. It rejected the plea of two refineries, Wynnewood Refining Company and Coffeyville Resources Refining & Marketing, disputing the validity of the “extension rule” issued in February 2022. According to the contested rule, reporting requirements for RFS years 2020-2022 were supposedly unlawfully condensed. However, the court ruled EPA isn’t legally bound to grant a minimum of 13 months’ compliance lead time nor ensure compliance intervals of at least 12 months when it delays issuing renewable fuel standards, according to the Clean Air Act.
More signs of Chinese broadening economic pressure... China’s fiscal revenue growth slowed in June, signaling broadening economic pressures. Last month, fiscal revenue rose 5.6% from a year earlier, slowing sharply from a 32.7% jump in May, according to Reuters calculations based on finance ministry data. Income from land sales, the biggest source of funds that local governments raise directly, shrank 24.26% annually in June, steeper than the 13% drop the previous month. Fiscal revenues grew 13.3% in the first six months of 2023 from a year earlier, slower than a 14.9% rise in the first five months, finance ministry noted.
China will use its own carbon-reduction plan... Chinese President Xi Jinping announced China will take its own approach to decrease carbon emissions rather than following the strategies of other countries. His remarks were made during a recent national conference on environmental protection and were highlighted by state broadcaster CCTV on Tuesday. Xi assured the country’s unwavering commitment to its dual-carbon goal: peaking its carbon emissions by 2030 and achieving carbon neutrality by 2060. However, he emphasized the methodology, pace and intensity of the efforts toward these goals will be determined independently by China, and they will not be influenced by external parties. This comes in the wake of a meeting between China’s Premier Li Qiang and U.S. climate envoy John Kerry, marking the most high-level discussions held during Kerry’s visit to Beijing this week.
Euro zone inflation eases in June... Consumer inflation in the euro zone slowed to 5.5% from year-ago last month, down from a 6.1% rise the previous month. Core inflation, which excludes prices of energy and unprocessed food, eased to 6.8% versus 6.9% a month earlier. But an even narrower measure, which also excludes alcohol and tobacco products, rose to 5.5% from 5.3% in May.
British consumer inflation cools more than expected... United Kingdom consumer inflation slowed to 7.9% in June from 8.7% in May, the slowest rate in more than a year. Core inflation, which excludes food, energy, alcohol and tobacco prices, dropped to 6.9% from a three-decade high of 7.1% in May.
China to start selling cotton reserves... China will auction an unspecified amount of cotton from state reserves by the end of this month, according to the China Cotton Reserves Management Company. These will be the first sales of state-owned cotton this year. The base price of listed reserve cotton is determined by the spot price index of both the domestic market and the international market with a weight of 50% each.
Beef margins drop further... Choice boxed beef prices fell $2.10 on Tuesday, which will drop packer cutting margins even deeper into the red. While packers have slowed slaughter runs, tight market-ready supplies will make it difficult for packers to lower cash cattle prices.
Cash hog index showing no signs of topping... The CME lean hog index is up another 93 cents, reaching the highest level since the first week of September last year. At $102.53 (as of July 17), the index is up $31.35 from the April low but still more than $13.00 below last year at this time and nearly $20.00 below the August 2022 peak.
Overnight demand news... Algeria purchased an unspecified amount of corn expected to be sourced from Argentina or Brazil from a tender to buy up to 240,000 MT.
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
- 2:00 p.m. Agricultural Chemical Usage - Fruits — NASS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Catfish Production — NASS
