First Thing Today | June 1, 2022

Good morning!

Wheat and beans bounce, corn struggles to find buying... Two-sided trade was seen overnight, with wheat and soybeans firmer amid corrective buying this morning, while corn is trading just below unchanged. As of 6:30 a.m. CT, SRW wheat futures are trading mostly 1 to 3 cents higher, HRW wheat is 5 to 7 cents higher, HRS wheat is mostly 6 to 8 cents higher, corn futures are 1 to 2 cents lower and soybeans are 2 to 6 cents higher. Front-month U.S. crude oil futures are around $1.50 higher an the U.S. dollar index is about 275 points higher this morning.

Pope: Don’t use wheat as ‘weapon of war’... Pope Francis appealed to authorities on Wednesday to lift a block on exports of wheat from Ukraine, saying it could not be used as a “weapon of war.” He said, “The blocking of exports of wheat from Ukraine is very worrying because the lives of millions of people depend on it, especially in poorer countries. I make a heartfelt appeal so that every effort is made to resolve this problem, to guarantee the universal right to nutrition. Please! Do not use wheat, a basic foodstuff, as a weapon of war.” The pope has often condemned Russia’s invasion, but this was the first time he spoke in detail of the global food crisis it has brought. Ursula von der Leyen, the president of the European Commission, said the developing global food crisis was “only the fault of Russia.” Italy’s Prime Minister Mario Draghi said that if the West were to “lose the war on food security,” African countries “will feel betrayed.” That, in turn, he added, could have “strategic consequences that are very serious.”

Russia will provide world with food and fertilizer... Russia’s Deputy Foreign Minister Sergei Ryabkov said Moscow will find ways to supply markets with Russian grain and fertilizers despite Western sanctions, RIA news agency reported. Meanwhile, Russia’s foreign minister will visit Turkey next week to discuss possibly allowing Ukrainian grain to be shipped from ports.

Biden reverses course, says U.S. will send rockets to Ukraine... President Joe Biden announced in an op-ed Tuesday his administration will send advanced missile systems to Ukraine — reversing course from a day earlier when he said the U.S. would not deliver the rockets to the war-torn country. “We have moved quickly to send Ukraine a significant amount of weaponry and ammunition so it can fight on the battlefield and be in the strongest possible position at the negotiating table,” Biden wrote in a New York Times op-ed. “That’s why I’ve decided that we will provide the Ukrainians with more advanced rocket systems and munitions that will enable them to more precisely strike key targets on the battlefield in Ukraine.” Biden’s reversal came after several officials criticized his refusal to send Ukraine missiles as the country continues to fight off Russia’s brutal invasion that began on Feb. 24.

Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended May 29.

• Corn: 86% planted (87% five-year average), 61% emerged (68% average)
• Soybeans: 66% planted (67% average), 39% emerged (43% average)
• Spring wheat: 73% planted (92% average), 42% emerged (69% average)
• Winter wheat: 72% headed (76% average), 29% rated good/excellent (28% last week)
• Cotton: 68% planted (64% average), 7% squaring (7% average); 44% rated good/excellent (43% last year)

Limited change in winter wheat CCI ratings as the growing season winds down... 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 1.9 points to 256.9, though that was still 72.5 points below the five-year average for the end of May. The SRW crop slipped 0.4 point to 358.5, though the CCI rating was still 2.2 points above average. Click here for more details.

April soy crush, corn-for-ethanol data out later this morning... Traders expect USDA to report soybean crush totaled 180.5 million bu. in April, which would be down 6.4% from March but up 6.3% from last year, and the second highest tally for the month behind 2020. Corn-for-ethanol use is expected to total 427.4 million bu., which would be down 6.0% from March but up 4.9% versus April 2021.

Biden will let Fed fight inflation... Biden used a rare meeting with Federal Reserve Chair Jerome Powell to declare that he’s respecting the central bank’s independence — while simultaneously shifting responsibility for taming decades-high inflation ahead of the November midterms. Biden seized on the Oval Office session to argue that while fighting price increases is his top priority, that work was primarily the purview of the U.S. central bank. Meanwhile, Treasury Secretary Janet Yellen gave her most direct admission yet that she made an incorrect call last year in predicting that elevated inflation wouldn’t pose a continuing problem. “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that at the time I didn’t fully understand,” Yellen said in an interview Tuesday on CNN.

White House considering efforts to mitigate inflation, including easing tariffs... White House Council of Economic Advisers Chair Cecilia Rouse told Bloomberg TV, “Easing tariffs can potentially ease inflation, a least the level of inflation, at least by a few basis points, if not more.” Meanwhile, the Treasury Department’s No. 2 official highlighted the importance of U.S. tariffs on Chinese goods as a tool to aid American jobs and competitiveness, amid a debate over scaling them back to quell inflation.

China’s factory activity shrank less in May, but sector still fragile... China’s Caixin/Markit manufacturing purchasing managers index (PMI) rose to 48.1 in May from 46.0 the previous month, though that still marked the second sharpest contraction in factory activity since February 2020. A sub-index for new orders fell for the third consecutive month in May but at a slower pace. The gauge for new export orders also shrank less but remained in contraction for the 10th straight month.

WOTUS update... The EPA Science Advisory Board is poised to affirm the scientific underpinnings of the agency’s “significant nexus” test for determining what streams and wetlands are protected under the Clean Water Act ahead of a U.S. Supreme Court case expected to question the standard. The board met Tuesday to discuss the science behind EPA’s draft rule for waters of the U.S. (WOTUS) that would ensure navigable streams and their tributaries are protected from the environmental consequences of development that might pollute those waters.

Cash cattle trade starts at lower prices... Light cash cattle trade was seen around $135 in the Southern Plains Tuesday afternoon, down around $2 from last week’s trade in the region. The northern market was quiet, though initial trade in the Southern Plains suggests prices will be weaker. However, we anticipate the northern market will continue to pull up the average cash price for the week.

Strong start for wholesale meat trade... Wholesale beef prices posted strong gains of $2.12 in Choice and $2.15 in Select on Tuesday, while packers moved 144 loads of product. The pork cutout value firmed $1.55 yesterday amid movement of 342.2 loads. The initial day of wholesale meat trade coming out of the holiday weekend suggests Memorial Day meat clearance was strong, though it’s difficult to base too much off one day of trade.

Overnight demand news... Egypt tendered for an unspecified amount of optional origin milling wheat; results of the tender will be known later this morning.

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

• 8:00 a.m. Food Expenditure Series — ERS
• 2:00 p.m. Broiler Hatchery — NASS
• 2:00 p.m. Cotton System Consumption and Stocks — NASS
• 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
• 2:00 p.m. Grain Crushings and Co-Products Production — NASS