Good morning!
Wheat leads overnight gains... Wheat futures posted strong corrective gains overnight, while the corn and soybean markets followed to the upside. As of 6:30 a.m. CT, winter wheat futures are trading 18 to 22 cents higher, spring wheat is 16 to 20 cents higher, corn is 4 to 5 cents higher and soybeans are mostly 5 to 8 cents higher. Front-month U.S. crude oil futures are around $1 higher and the U.S. dollar index is more than 1,000 points lower this morning.
Rains this week, hotter temps coming... The Southern Plains are expected to get rains today and tomorrow, with rainfall likely across the Corn Belt Tuesday through Thursday. Rains will also be seen across the Delta and Southeast. World Weather Inc. expects a temporary ridge of high pressure to develop next week over the western Corn Belt and Plains, which will bring much warmer temps to U.S. growing regions, though some rains will develop in the Northern Plains and eastern Corn Belt.
Russia pushes for EAEU countries to restrict grain exports... Russia insisted at a meeting of the Eurasian Economic Commission last Friday that all Eurasian Economic Union (EAEU) members (Armenia, Belarus, Kazakhstan and Kyrgyzsta) impose quotas and duties on grain exports to third countries, national daily Kommersant reported. Russia’s ag ministry believes this is necessary in order to prevent re-exports of Russian grain through EAEU countries in circumvention of Russian restrictions. Kazakhstan reportedly is opposed to duties, as they could prevent the country’s farmers from fulfilling international obligations.
Biden considering reducing tariffs on China, but would back Taiwan... President Joe Biden said he was weighing cutting tariffs on Chinese goods. “I am considering it. We did not impose any of those tariffs. They were imposed by the last administration and they’re under consideration,” Biden said on reducing tariffs on China. He also called on OPEC to raise oil production amid surging energy prices that are fueling inflation. Biden also said the U.S. military would intervene to defend Taiwan from any attack from China. The comment was walked back by White House officials who said Biden simply meant the U.S. would provide equipment rather than troops should China invade.
Biden touts IPEF on first trip to Asia... The Biden administration announced a dozen Indo/Pacific countries will join the U.S. in a sweeping economic initiative designed to counter China’s influence in the region, even as questions remain about its effectiveness. Altogether the nations involved in the Indo/Pacific Economic Framework (IPEF) constitute roughly 40% of global gross domestic product, according to the White House, which has touted its launch as a marquee accomplishment of Biden’s first trip to Asia. Australia, India, Japan, South Korea and New Zealand were included, along with seven Southeast Asian countries.
White House may tap emergency diesel reserve... The White House is exploring the possibility of tapping into an emergency diesel reserve to ease the spike in prices, a senior White House official said. The emergency declaration under consideration would enable President Biden to release diesel from a rarely used stockpile, but the reserve is relatively small and will only serve as a temporary solution. The national average price for diesel stood at $5.56 a gallon as of yesterday, just shy of the record of $5.58 set last week, according to AAA.
Indonesia requires permit for palm oil exports... Indonesia’s trade ministry will require companies to secure export permits for their crude palm oil and olein shipments, with approval granted to those with proof they have met requirements on domestic sales volumes, a regulation document issued on Monday showed. The permit would be valid for six months and companies must report their exports monthly.
Malaysia scraps wheat import permit approvals, chicken exports... Malaysia has scrapped the permit approval for wheat imports. The country also halted exports of 3.6 million chickens per month, effective June 1, in an attempt to stabilize domestic prices and chicken meat production.
China provides subsidies to grain farmers... China will make available 10 billion yuan ($1.49 billion) for “one-off” subsidies to support farmers and ag companies involved in grain production, according to the country’s finance ministry. The subsidies aim to support grain farmers during the growing season, to alleviate any impact of rising costs and to “further mobilize farmers’ enthusiasm” for grain production.
Growth Energy, EPA reach deal on 2023 RFS/RVO timeline... A consent decree worked out between the Environmental Protection Agency and biofuel trade association Growth Energy would require EPA to propose the Renewable Volume Obligations (RVOs) for 2023 no later than Sept. 16 this year and then finalize those targets by April 28, 2023. Growth Energy filed suit against EPA in April, asking a court to impose a schedule on the agency for setting the RVOs. Growth Energy CEO Emily Skor called the new timeline a “significant victory in our mission to ensure certainty when it comes to biofuel blending, especially as we face a new era of the RFS.”
The week ahead in Washington... Inflation continues to be the big topic in Washington DC and the country. National Economic Council (NEC) Director Brian Deese on Sunday recognized the risk of the U.S. falling into a recession amid rising prices and elevated inflation but would not say if the country is headed in that direction. On the ag policy front this week, USDA Secretary Tom Vilsack will testify Thursday before the Senate Ag Committee. Vilsack likes to break news shortly before or during a congressional hearing so some policy announcements could be coming. On the economic front, minutes from the Federal Open Market Committee’s early-May monetary-policy meeting will be published on Wednesday.
Cold Storage Report out this afternoon... The data will detail frozen meat stocks at the end of April. The five-year average is a 15.5-million-lb. decline in beef stocks and a 16.4-million-lb. increase in pork stocks during the month.
Another bearish placements figure... The May 1 feedlot inventory rose 2.0% from year-ago, which was a little more than traders expected as placements again topped expectations. While April placements declined 0.9% from year-ago, traders expected a 4.6% drop and the figure topped the upper end of pre-report estimates for a second straight month. Marketings fell 2.2% from year-ago in April, just fractionally less than the average trade estimate. The placements data is bearish, so it could weigh on deferred live cattle futures, though traders took premium out of those contracts ahead of the report.
Bulls have short-term momentum in hog futures... That’s something we haven’t been able to say in quite a while. But after a strong price bounce that culminated in a weekly high close last Friday, the table is set for followthrough buying to kick off the week. The CME lean hog index also showed more strength and is up 80 cents today, though summer hog futures hold $7 to $8 premiums to cash.
Weekend 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. Export Inspections — AMS
- 2:00 p.m. Cold Storage — NASS
- 3:00 p.m. Crop Progress — NASS