First Thing Today | March 21, 2023
Good morning!
Mostly firmer tone this morning... Light corrective buying has surfaced in some of the grain and soy futures early this morning after they faced pressure for much of overnight trade. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 2 to 6 cents higher and wheat futures are steady to 4 cents higher. Front-month crude oil futures are posting modest gains, while the U.S. dollar index is more than 200 points lower this morning.
Consultant again cuts Argentine crop estimates... Rains over the weekend and those expected during the middle of this week could stabilize later-maturing crops in Argentina. But the prolonged drought has already done major damage to most of crops. As a result, South American crop consultant Dr. Michael Cordonnier cut another 2 MMT off his Argentine soybean crop forecast, lowering it to 26 MMT. He lopped another 1 MMT off his Argentine corn crop estimate, dropping it to 36 MMT. Cordonnier says if this week’s rains across central Argentina prove disappointing, his Argentine crop pegs may be lowered again. Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 121 MMT for corn.
Russian PM backs project to supply grain to China... Russia supports the New Land Grain Corridor project intended to supply grain to the Chinese market, Russian Prime Minister Mikhail Mishustin said. He said, like China, Russia “gives paramount attention to ensuring food security” at a meeting with Chinese President Xi Jinping on Tuesday. Russian President Vladimir Putin met with Xi on Monday. This week’s meeting between the leaders of China and Russia marks another key moment in the deepening relationship between the two powers, the New York Times reports.
Attaché expects slight uptick in Chinese soybean imports in 2023-24... The ag attaché in China forecasts the country will import 97 MMT of soybeans in 2023-24, which would be up 1 MMT from USDA’s official forecast for the current marketing year. The post notes, the “removal of Covid-related restrictions in December 2022 is expected to boost overall oilseed consumption. However, relatively high prices for soybean meal (SBM) and low returns in the swine and poultry sector continue to disadvantage SBM inclusion in feed.”
U.S. mulling expansion of FDIC coverage... Treasury Department officials are mulling whether they can temporarily expand Federal Deposit Insurance Corp. (FDIC) coverage to all deposits beyond the current cap of $250,000, Bloomberg reports. Treasury Department staff are reviewing whether federal regulators have enough emergency authority for such a measure, though they don’t yet view such a move as necessary, according to people with knowledge of the talks. “We will use the tools we have to support community banks,” White House spokesman Michael Kikukawa said.
Yellen: Gov’t ready to provide more help to banking sector if needed... Treasury Secretary Janet Yellen will say the U.S. government could repeat the drastic actions it took recently to protect bank depositors if smaller lenders are threatened. “Our intervention was necessary to protect the broader U.S. banking system,” she plans to say at an American Bankers Association event today.
USDA aid payments show little change... Emergency Relief Program (ERP) payments stood at $7.41 billion as of March 19 with non-specialty crop payments at $6.29 billion and specialty crops at $1.13 billion ($1.12 billion prior). Payments under ERP Phase 2 now are reported at $9,302 ($2,000 prior week). Coronavirus Food Assistance Program 1 (CFAP 1) payments were at $11.83 billion, including $10.63 billion in original payments and $1.19 billion in top-up payments, steady with the prior week. CFAP 2 payments stood at $19.44 billion, including $14.53 billion in original payments and $4.91 billion in top-up payments. Totals under the ERP Phase 2 effort will continue to slowly increase while there could also be an increase in CFAP 2 payments as USDA has extended the deadline for producers to submit eligibility documentation under the CFAP 2 Underserved Producer (CFAP 2 UP) effort, which issues a payment equal to 15% of the previous CFAP 2 payment and CFAP 2 top-up payment. Those payments started Jan. 10 and the deadline was extended to March 31.
WOTUS halted in Texas, Idaho... A ruling by U.S. District Court for the Southern District of Texas halted the Waters of the U.S. (WOTUS) rule from being put in place in Texas and Idaho. “AFBF is pleased the District Court ordered EPA and the U.S. Army Corps to halt implementation of the troubled 2023 WOTUS Rule in Texas and Idaho," American Farm Bureau Federation President Zippy Duvall said. “The judge recognized the new rule likely oversteps EPA’s authority under the Clean Water Act, which creates uncertainty for the farmers and ranchers who must navigate the complicated regulations. The District Court ruling also undermines the agencies’ rationale for pushing through this new rule before the Supreme Court rules in Sackett v. EPA. These legal challenges send a clear message to EPA that it should rewrite WOTUS to limit its scope to navigable waters. Farmers and ranchers share the goal of caring for the natural resources we’re entrusted with, but we need rules that don’t require a team of attorneys to interpret.”
Biden issues first veto of presidency over retirement investments... The veto by President Joe Biden upholds a Labor Department rule allowing retirement fund managers to consider the environmental and social impacts (dubbed ESG) of their investments. Earlier this month, Congress passed a bill to scrap the rule, with Republicans calling it a “woke” policy. Now, Biden has rejected the bill, saying Congress’s measure would have put the “retirement savings of individuals across the country” at risk. Any effort to override Biden’s veto is unlikely to pass in the House and Senate.
Cattle traders still watching outside markets... The cash cattle market dropped $1.23 last week and wholesale beef prices have been declining for the past two weeks, but underlying fundamentals remain bullish. Still, traders have been extremely cautious toward the long side of the market, with April through December live cattle futures trading below last week’s average cash price. Given the macroeconomic uncertainty, it’s likely going to take an uptick in wholesale beef prices and movement, along with firmer cash trade to restore buyer interest in futures.
Extended string of cash hog strength ends... The CME lean hog index is down 46 cents to $79.55 (as of March 17), ending an extended string of cash market strength. But April lean hog futures finished Monday $1.775 below today’s cash quote, suggesting the downside should be limited.
Overnight demand news... Exporters reported no tenders or sales.
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
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
