First Thing Today | June 7, 2022

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Good morning!

Wheat retreats a little overnight... The wheat market gave back a small portion of Monday’s strong gains overnight, while corn and soybeans traded mixed. As of 6:30 a.m. CT, winter wheat futures are trading mostly 6 to 9 cents lower, spring wheat is 2 to 4 cents lower, while corn and soybeans are narrowly mixed. Front-month U.S. crude oil futures are around 40 cents lower and the U.S. dollar index is around 250 points higher this morning.

Russia says two Ukrainian ports ready to ship grain... Russia’s defense minister said the Ukrainian ports of Berdyansk and Mariupol have been de-mined and are ready to resume grain shipments. A spokesperson for the Kremlin said, “[President Vladimir] Putin has said: Ukraine must demine the approaches to its ports. This will allow ships, once checked by our military, to enter the ports, load grain and with our help, proceed to international waters.” The minister also said Russian armed forces had created the “necessary preconditions for the full resumption of railway traffic between Russia, the Donbas, Ukraine and Crimea” and had started delivery of cargo to the Ukrainian cities of Mariupol, Berdyansk and Kherson on 1,200 km (750 miles) of reopened railway tracks. Meanwhile, Turkish President Recep Tayyip Erdogan offered military help to clear mines off the coast of Odesa and escort grain ships but Ukraine has yet to endorse the plan, worried that removing defenses could leave the vital port open to Russian attack, Bloomberg reported.

Ukraine grain exports capped at 2 MMT per month if ports remain blocked... Ukraine will only be able to export a maximum 2 MMT of grains a month if Russia refuses to lift its blockade of the country’s Black Sea ports, according Taras Vysotskyi, the country’s first deputy minister of ag. “I think we reached the limit. The biggest amount we can export is about 2 MMT a month,” Vysotskyi, speaking via video link, told participants at an International Grains Council (IGC) conference in London. He said even if Russia’s port blockade is lifted it would take about six months to demine the waters around its Black Sea ports.

Above-average initial corn CCI rating... When USDA’s initial weekly condition ratings of the spring are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop starts the growing season 0.8 point above last year at this time, though 5.4 points below the initial 2021 rating that came a week earlier. The initial corn CCI rating is 6.5 points above the five-year average for the first week of June. Click here for details.

Crop progress & Condition Report highlights… Following are highlights from USDA’s crop progress and condition update for the week ended June 5.

  • Corn: 94% planted (92% five-year average), 78% emerged (81% average), 73% rated good/excellent (72% last year)
  • Soybeans: 78% planted (79% average), 56% emerged (59% average)
  • Spring wheat: 82% planted (97% average), 55% emerged (83% average)
  • Winter wheat: 79% headed (84% average), 5% harvested (6% average)
  • Cotton: 84% planted (76% average), 11% squaring (10% average); 48% rated good/excellent (44% last week)

Kazakhstan extends wheat export restrictions... Kazakhstan plans to extend export restrictions of 1 MMT of wheat and 300,000 MT of wheat flour until September, according to the country’s ag ministry. The restriction was originally set to expire on June 15. Exporters have used 40% of the wheat quota and 70% of the flour quota. The ministry expects the country to produce between 13 MMT and 13.5 MMT of wheat this year, with total grain production likely to be between 18 MMT and 19 MMT.

EU wheat crop increased... The European Commission raised its EU wheat production forecast by 300,000 MT to 130.4 MMT. Last week, the commission cut its 2022-23 wheat export forecast by 2 MMT to 38 MMT. The commission cut its production forecasts for barley by 1.2 MMT to 52.3 MMT and for corn by 900,000 MT to 72.5 MMT.

Philippines reduces tariffs to tame inflation... The Philippines extended through the end of this year an executive order that lowers the tariff rate for rice imported from suppliers outside Southeast Asia to 35% from the normal 40% to 50%. The country also cut the tariff on corn imports to a range of 5% to 15% from the normal 35% to 50% and will keep the duty on pork imports at the reduced rate of 15% to 25% through the end of the year.

Average gas price continues to climb, nearing $5... Average national gas prices climbed to a record of $4.87 per gallon on Monday, according to AAA — a 25-cent increase from the previous week and a $1.81 jump compared to the same point last year, when gas prices stood at just $3.05 per gallon. Areas in the Midwest saw some of the largest one-week gains, with prices rising by 45 cents per gallon in Michigan, 41 cents in Indiana and 39 cents in Wisconsin. Ohio, Nebraska, Kentucky, Colorado, Minnesota and Texas all saw one-week increases of more than 30 cents per gallon. California continued to top the list of the most expensive markets, with the average gas price rising to $6.34. The national average is expected to hit $5 a gallon within the next two weeks, according to Tom Kloza, global head of energy analysis for the OPIS, which tracks gas prices for AAA. The national average has been rising steadily for the past month, setting 27 records in the past 28 days. And in 10 states, plus Washington, DC, the average price is already at $5 or more.

U.S. tariffs on China still under contentious review... The Labor Advisory Committee urged President Joe Biden to extend former President Trump’s China tariffs on approximately $300 billion worth of Chinese goods. Commerce Secretary Gina Raimondo is joined by other Biden officials, like Treasury Secretary Janet Yellen, in arguing that removing some tariffs could ease inflationary pressures. But others, like U.S. Trade Representative Katherine Tai, argue the U.S. should take a more strategic approach to the tariffs — both to protect American workers and to maintain leverage over China.

Big wholesale beef price gains, light movement... Wholesale beef prices firmed $2.32 for Choice boxes and $1.07 for Select, but packers moved only 70 loads of product at the higher prices. Wholesale trade the past two days suggests retailers restocked following Memorial Day and are in no rush to actively buy for Father’s Day features, especially at higher prices.

Cash hog index again rises sharply... The CME lean hog index is up $1.29 today (as of June 3), the second straight day of $1-plus gains. After sharp losses on Monday, June and July hogs finished less than $2 above the cash index, while the August contract ended at a mild discount.

Overnight demand news... Japan is seeking 169,250 MT of milling wheat in 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

 

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