First Thing Today | May 11, 2022

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Good morning!

Followthrough buying overnight... Corn, soybean and wheat futures built on Tuesday’s gains overnight amid supportive outside markets. As of 6:30 a.m. CT, corn futures are trading 5 to 7 cents higher, soybeans are 8 to 10 cents higher and wheat futures are mostly 13 to 18 cents higher. Front-month U.S. crude oil futures are nearly $4 higher and the U.S. dollar index is around 350 points lower.

Ukraine warns of global food crisis if Russia doesn’t lift port blockade... Citing the key role that Odesa, in the southwest near Moldova, plays in global agricultural trade, Ukraine President Volodymyr Zelenskyy said in a video address shortages of grain exports were bound to get worse if attacks continued and Western powers did not put an end to the Russian blockade of Ukrainian ports. “Without our agricultural exports, dozens of countries in different parts of the world are already on the brink of food shortages. And over time, the situation can become downright terrible,” he said.  Ukraine is “sitting on 8 billion euros’ worth [about $8.4 billion] of wheat” that cannot be exported amid the war and Russia’s blockade of Black Sea ports, the president of the European Investment Bank, Werner Hoyer, said Tuesday. “They are sowing like crazy right now, and they will expect probably a good harvest, maybe 70% of last year’s harvest, in a couple of months,” Hoyer said. “And then what to do with it?”

White House to announce new measures on food prices, war in Ukraine... The measures to be announced when President Joe Biden visits a farm today in Illinois include doubling the amount of funding for domestic fertilizer production to $500 million and increasing technical assistance for adoption of precision agriculture methods — USDA programs that use technology and other tools to reduce the use of fertilizer. Also, USDA will start insuring double cropping in 681 more counties, bringing total eligible counties to 1,935. The administration explained, “Double cropping allows farmers to plant a second crop on the same land in the same year, helping boost production without relying on farmers to substitute crops or cultivate new land. But it is not free from risk and some farmers who practice double cropping cannot obtain crop insurance… As the world’s second largest exporter of wheat and soybeans, these actions will help grow new markets for American-grown food, supporting jobs in rural communities across America,” according to the administration.

Biden comments on inflation... “I know you’ve got to be frustrated,” Biden said during remarks Tuesday. “Frustrated by high prices, by gridlock in Congress, by the time it takes to get anything done.” Biden said his administration is taking steps to curb inflation, and lamented Congress’ lack of progress in enacting his agenda. He said tackling inflation is his top economic challenge as gas prices surged to a new high despite White House efforts to stabilize them. He has called on U.S. oil and gas producers to ramp up production, announced the release of 180 million barrels of oil from the U.S. emergency stockpile — the largest one-time release since its creation in 1974 — and sought to characterize the high prices as an extension of Russian President Vladimir Putin’s war in Ukraine, referring to the soaring costs on multiple occasions as “Putin’s price hike.” The administration also announced last month it will resume lease sales for oil and gas on federal land, although it made clear it only did so because of a court order.

China’s producer inflation slows, consumer prices rise... China’s producer price index (PPI) eased to a 12-month low of 8.0% above year-ago in April. This marked the 16th straight month of year-over-year gains in factory-gate prices. China’s producer price index (CPI) rose at a 2.1% annual clip in April, the fastest growth in consumer prices since last November. Prices of food rose for the first time in five months, with the 1.9% annual gain the largest since October 2020. Non-food prices increased 2.2%. Easing producer prices and a CPI still well below Beijing’s target of 3% gives policymakers room for more stimulus to shore up a slowing economy.

WHO head: China’s zero-Covid policy ‘not sustainable’... The head of the World Health Organization said on Tuesday China’s zero-tolerance Covid-19 policy is not sustainable given what is now known of the virus. “We don’t think that it is sustainable considering the behavior of the virus and what we now anticipate in the future,” WHO Director-General Tedros Adhanom Ghebreyesus. “We have discussed this issue with Chinese experts. And we indicated that the approach will not be sustainable... I think a shift would be very important.” He said increased knowledge about the virus and better tools to combat it also suggested it was time for a change of strategy. Another WHO official said, “We need to balance the control measures against the impact they have on society, the impact they have on the economy.” Beijing called the WHO statements “irresponsible” and censored the comments on Weibo and WeChat, China’s two largest social media platforms.

China warns U.S. regarding Taiwan... China admonished the U.S. over both its words and actions toward Taiwan on Tuesday on the same day senior U.S. intelligence officials gave their public assessment of China’s policy toward the island nation. China accused the U.S. of supporting “Taiwan independence secessionist forces” by sending a U.S. Navy ship through the Taiwan Strait for the second time in two weeks. It also criticized the changing of language on the U.S. State Department website which had previously said the U.S. did not support Taiwan’s independence and acknowledged Beijing’s position that Taiwan is part of China. Chinese foreign ministry spokesman Zhao Lijian called the changes “a petty act of fictionalizing and hollowing out the one-China principle.” U.S. State department spokesman Ned Price said the changes in the Taiwan fact sheet reflected “our rock-solid unofficial relationship with Taiwan.”

France cuts wheat export forecast... France’s ag ministry cut its 2021-22 French wheat export forecast outside the EU by 250,000 MT from last month to 9.25 MMT. It also lowered the export forecast within the bloc by 100,000 MT to 8 MMT.

U.S. decision on Russian sovereign debt situation being ‘actively examined’... As Russia faces another round of payments on its sovereign debt, Biden administration officials are weighing whether forcing Moscow into default for its invasion of Ukraine would really be the best outcome. Treasury Secretary Janet Yellen said Tuesday the matter is being “actively examined” before a crucial deadline in two weeks, and a decision will be made shortly.

Proposition 12 update... Environmental and animal rights groups are pressuring the Biden administration to weigh in on a case the Supreme Court has decided to hear. Today, the Sierra Club, Humane Society and Center for Biological Diversity are running an ad in the Washington Post calling for the Biden administration to publicly oppose a legal challenge from the pork industry and Farm Bureau to a ballot measure passed in California that prevents raising pigs and chickens in confinement crates.

Cash cattle trade at steady prices... Cash cattle trade started around $140 in the Southern Plains on Tuesday – roughly steady with last week’s price in the region. There wasn’t much trade in the northern market, though initial prices were also steady. If the recent pattern holds, cash prices will creep higher through the week as there’s more trade in the northern market, where supplies are tighter. While the cash market continues to perform well, beef trade has been a concern. Packers moved a strong 202 loads of product Tuesday, but it took sharp price declines of $3.05 in Choice and 78 cents for Select.

Pork cutout weakens, too... The pork cutout value weakened $4.20 on Tuesday, led by a $15.53 plunge in belly prices, as packers cut prices to move product. If that remains the case, the CME lean hog index will struggle to post normal seasonal gains into summer. June hogs finished Tuesday just 48 1/2 cents above the cash index, which is unchanged today (as of May 9), signaling traders want to see the cash market strengthen before they step in as active buyers.  

Overnight demand news... Japan tendered to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.

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

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