First Thing Today | March 9, 2022
Wheat faces heavy pressure overnight, soy complex trades higher... Winter wheat futures traded sharply lower overnight but generally held above Tuesday’s lows, while spring wheat was unable to hold those levels. Soy complex futures traded sharply higher. Corn mildly favored the downside. As of 6:30 a.m. CT, winter wheat futures are mostly 38 to 44 cents lower, spring wheat is 18 to 34 cents lower, corn is mostly 2 to 6 cents lower, soybeans are 9 to 21 cents higher, soymeal is $5 to $6 higher and soyoil is mostly around 100 points higher. Front-month crude oil futures are down more than $3.50, while the U.S. dollar index is around 450 points lower this morning.
March S&D Report out later this morning... USDA’s March Supply & Demand Report typically features just minor fine tuning to its old-crop U.S. usage forecasts. But USDA should increase U.S. corn and wheat exports to reflect major uncertainties with Black Sea grain shipments. We also anticipate higher usage forecasts for soybeans to reflect reduced South American soybean and soy product exports. The average pre-report estimates peg 2021-22 U.S. ending stocks at 1.479 billion bu. for corn (1.540 billion bu. in February), 278 million bu. for soybeans (325 million bu.) and 628 million bu. for wheat (648 million bu.).
Russia/Ukraine update... Russian Foreign Minister Sergei Lavrov will travel to Turkey today for talks with his Ukrainian counterpart Dmytro Kuleba as fighting between the two countries will extend into its third week. Ukraine said it will try to evacuate civilians through six “humanitarian corridors” Russia said it would provide. Both Russia and Ukraine said they would “observe a regime of silence” to provide safe passage from Kyiv, Chernihiv, Sumy, Kharkiv and Mariupol, though until today only the corridor from Sumy has been opened.
Kremlin accuses U.S., allies of ‘hostile bacchanalia’... The Kremlin accused the U.S. and its western allies of declaring an economic war on Russia via economic and energy sanctions and says it is analyzing how it will retaliate. Kremlin spokesman Dmitry Peskov cast the West’s sanctions as “hostile bacchanalia,” which roiled global markets and pointedly warned that it was unclear how far turbulence on global energy markets would go. He said, “Russia is going to do what is necessary to defend its interests.”
Fitch cuts Russia’s bond rating, sees ‘imminent’ default... Russia’s sovereign debt rating was cut to the second-lowest level by Fitch Ratings, which said a bond default is “imminent” because of the country’s financial isolation after the Ukraine invasion. Fitch cited a Russian measure that would require some creditors who hold foreign-currency-denominated Russian bonds to be repaid in rubles, which have plunged in value since the war began.
Ukraine bans exports of some commodities... Ukraine’s government has banned exports of rye, barley, buckwheat, millet, sugar, salt and meat until the end of this year, according to a cabinet resolution published on Wednesday. Notably missing from the export ban are corn, wheat and sunflower oil.
Indonesia to further restrict palm oil exports... Indonesia is expanding its limits on exports of palm oil with the country’s trade minister saying the new restrictions were aimed at quelling rising cooking oil prices. In restrictions that will run for at least six months, Indonesia will require firms to sell 30% of planned exports of crude palm oil and olein domestically, an increase from the 20% level currently in place. This action further restricts supplies in a market that has already become tight and comes as exports of sunflower oil out of Russia and Ukraine are uncertain at best. Those two countries account for over 70% of global sunflower oil trade.
China lowers edible oils import forecast... China lowered its 2021-22 edible oil import forecast as drought in South America, palm oil export restrictions in Indonesia and the conflict in Ukraine limited supplies and sent prices soaring. China’s ag ministry now expects the country to import 8.5 MMT of edible oils, down from February’s forecast of 9.3 MMT. China did not adjust its 2021-22 corn or soybean import forecasts this month, leaving them at 20 MMT and 102 MMT, respectively.
Boozman urges Vilsack to delay CRP signup because of Russian invasion of Ukraine... Sen. John Boozman (R-Ark.), ranking member on the Senate Agriculture Committee, called on USDA Secretary Tom Vilsack to delay signup for the Conservation Reserve Program (CRP) because of the war in Ukraine. In a letter to Vilsack, Boozman said landowners need time to decide whether to keep cultivating the land that could otherwise be locked up in the program. He also urged Vilsack to consider giving farmers some flexibilities on crop insurance this spring. The closing sales date for insurance on most crops in the Midwest and Plains is March 15. The Biden administration last week said no changes were being contemplated for CRP.
France hikes wheat export forecast... France’s ag ministry now expects the country to export 9.7 MMT of wheat outside the EU during the 2021-22 marketing year, up 800,000 MT from its prior forecast. While no explanation was immediately provided, the increased wheat export forecast presumably is due to reduced shipments out of the Black Sea region. France kept its 2021-22 wheat export forecast within the 27-member EU at 7.8 MMT.
Japan to raise imported wheat price 17.3% from April... Japan will raise prices of imported wheat it sells to private companies by an average of 17.3% to 72,530 yen ($626) per metric ton for the April to September period. It cited higher prices resulting from poor harvests in the U.S. and Canada last summer as well as Russia’s export controls. The average prices of five major wheat varieties imported from the U.S., Canada and Australia are the highest since 2008.
China tells state firms to halt gas, diesel exports in April... Beijing has told China’s state refiners to pause exports of gasoline and diesel in April as the war between Russia and Ukraine sparks supply concerns, several sources with knowledge of the matter told Reuters. “This is to prevent a shortage as independent refiners are under big pressure to lower throughput in the face of soaring crude oil prices,” said one source. Meanwhile, China will keep coal output at record levels of more than 12 MMT a day, and speed up approvals for new mining projects to ensure sufficient supplies as prices surge in the wake of the Russia/Ukraine conflict, according to China’s National Development and Reform Commission.
China’s producer prices ease, consumer prices hold steady... China’s producer price index (PPI) increased 8.8% from year-ago in February, easing from 9.1% growth in January. That was the slowest annual growth in factory-gate prices since last June. China’s consumer price index (CPI) inched up 0.9%, unchanged from January and the lowest reading since last September. Food prices dropped 3.9% amid a steeper decline in pork prices. Non-food prices rose 2.1%, up slightly from a 2.0% increase in January.
FY 2022 spending deal reached... Democrats and Republicans agreed on a $1.5 trillion spending bill that would fund the U.S. government through the rest of the 2022 fiscal year and provide $13.6 billion to respond to Russia’s invasion of Ukraine and $15.6 billion for Covid-19 relief. The legislation provides $1.87 billion for farm programs, which is $44 million above the FY 2021 enacted level. This includes $61 million to resolve ownership and succession of farmland issues, also known as heirs’ property issues. This funding will continue support for various farm, conservation, and emergency loan programs, and help American farmers and ranchers. It will also meet estimates of demand for farm loan programs. The legislation extends the mandatory livestock price reporting program. The House plans to pass the measure later today. The House also will vote on another stopgap spending bill, continuing government funding at current levels through March 15 to give the Senate time to deal with the full-year legislation.
Cash cattle trade lower... Cash cattle trade so far this week has been around $138 in the Southern Plains and $222 in the northern dressed market, down more than $2 from last week. The price recovery in cattle futures the first two days this week could encourage feedlots with cattle left to sell to hold out for firmer prices than have been recorded so far this week. But it’s unlikely packers would raise cash bids enough to push the price over last week’s average of $140.61.
April hogs above cash index... April lean hog futures firmed $2.65 Tuesday, while the CME lean hog index is down for a fourth consecutive day. The lead contract settled yesterday nearly $4.00 above today’s cash index quote. That may limit followthrough buyer interest in futures.
Overnight demand news... Jordan cancelled a tender to buy 120,000 MT of milling wheat. Japan tendered to buy 80,000 MT of feed wheat and 100,000 MT of feed barley.
- 9:30 a.m. Weekly Ethanol Production — EIA
- 10:00 a.m. Livestock and Meat International Trade Data — ERS
- 11:00 a.m. WASDE — ERS
- 11:00 a.m. Cotton Ginnings — NASS
- 11:00 a.m. Crop Production— NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grain: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Broiler Hatchery — NASS