First Thing Today | May 6, 2022

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Good morning!

Price pressure overnight... Wheat futures took back a small portion of Thursday’s strong gains amid corrective selling overnight. Soybeans and corn more than erased yesterday’s gains, with corn scoring new lows for the week. As of 6:30 a.m. CT, corn futures are trading mostly 10 to 12 cents lower, soybeans are mostly 16 to 19 cents lower, winter wheat is 10 to 11 cents lower and spring wheat is 3 to 5 cents lower. Front-month U.S. crude oil futures are nearly $2.50 higher and the U.D. dollar index is around 450 points lower this morning.

Global food prices ease, but still near all-time high... The UN Food and Agriculture Organization (FAO) global food price index eased 0.8% in April from March’s all-time high. Prices for dairy, meat and sugar increased in April, but they were more than offset by modest declines in vegoils and cereal grains. Compared to year-ago, the global food price index was up 29.8% amid surges of 16.9% for meat, 23.5% for dairy, 34.3% for cereal grains, 46.4% for vegoils and 21.8% for sugar.

FAO: Trapped grain in Ukraine a ‘grotesque situation’... An FAO official says nearly 25 MMT of grain is trapped in Ukraine, unable to leave the country due to infrastructure problems and blocked ports in the Black Sea. He also said there’s “anecdotal evidence” Russia is stealing grain from Ukraine by truck. The Kremlin says allegations by FAO that Russia is stealing grain from Ukraine “appears to be fake.”

FAO cuts global wheat production forecast... FAO cut its 2022 global wheat production forecast by 2 MMT from last month to 782 MMT, though that would still be up 5.4 MMT (0.7%) from last year. The monthly cut to production was driven mostly by drought concerns in the U.S. and an expected 20% reduction in harvested area and lower yields in Ukraine. But an FAO official said, “Despite the war, the harvest conditions don’t look that dire. That could really mean there’s not enough storage capacity in Ukraine, particularly if there’s no wheat corridor opening up for export from Ukraine.”

Firm raises Russian wheat export forecast... SovEcon raised its 2021-22 Russian wheat export forecast by 200,000 MT to 34.1 MMT. The Russia-based consultancy expects the country to export 41 MMT of wheat in the 2022-23 marketing year.

Russian wheat export tax declines... Russia’s wheat export tax for May 13-17 will be $114.30 per metric ton, based on an indicative price of $363.40 per metric ton, down $5.80 from the previous week and the first decline since mid-March.

April employment data out later this morning... Economists expect the Labor Department to show the U.S. economy added around 400,000 non-farm payrolls in April. That would be down from 431,000 jobs added in March. The unemployment rate is expected to drop to 3.5% from 3.6% in last month’s report.

Data will remind of tight Canadian wheat, canola stocks... Statistics Canada will update Canadian grain stocks as of March 31. Traders expect the report to show all-wheat stocks at 10.442 MMT, down from 16.231 MMT last year. Canola stocks are expected to be 4.581 MMT, down from 6.572 MMT last year.

ASA analysis: Little impact from proposed loan rate increases, crop insurance double-crop incentive... The Biden administration proposal to extend commodity loan terms for 2022 crops to 12 months, increase marketing assistance loan (MAL) loan rates for 2022 and 2023 crops, and provide a $10-per-acre payment under crop insurance to incentivize double-cropping of soybeans after winter wheat in 2023 would not appear to have a significant impact, according to analysis by the American Soybean Association (ASA). The extension of the loan term for 2022 would give farmers “more time to market the upcoming crop,” ASA noted. The group also said the higher loan rates would not be used for calculating payments under either the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, leaving those safety net programs unchanged. As for MALs, ASA said the county or regional loan rates reflect local prices and production and can vary from the national average levels contained in the proposal and that payments can occur even if the national average price for the year is above the national loan rate. The group used the FARPI-MU (Food and Agriculture Policy Research Institute-University of Missouri) April 2022 Marketing Snapshot and are forecast to be well above the proposed loan rate for soybeans in 2021-22 through 2023-24. ASA said simulations run indicated payments only occur 0.2% of the time in 2023-24 and virtually none in 2022-23, and that Loan Deficiency Payments (LDPs) of around $0.05 per bushel could be available, with payments triggered in about 8% of outcomes. As for the crop insurance subsidy, ASA said winter wheat and double crop soybean area would increase by 47,000 acres with the additional premium subsidy. Single-crop acres of soybeans and wheat would fall slightly so the net increase would be 35,000 acres of total soybean acres and 37,000 of total wheat acres. Bottom line: As proposed, the effort would have minimal impact on both production and payments to farmers. And that does not include any adjustments that could be made by Congress in the proposal if it is included at all in any final package.

China to sell more state-owned soybeans... China will sell another 314,000 MT of imported soybeans from its state reserves on May 13. Beijing has been putting 500,000 MT of state-owned soybean reserves up for sale in recent weeks to boost supplies, though slackened demand may have caused the lower volume for next week’s auction.  

Packers buying cattle ‘with time’... Packers purchased a lot of cattle for a third week in a row, though it’s believed a fair share were once again bought “with time” for delivery in upcoming weeks. Feedlots have done a good job of cleaning up front-end inventories with cash prices at their highs for the year, suspecting prices will decline in the next couple of weeks.

Cash hog index continues to slide... The CME lean hog index is down another 8 cents today (as of May 4), marking the seventh consecutive daily decline. Strong corrective gains the past two in deferred lean hog futures suggests traders anticipate the cash index will put in a bottom soon and begin an extended climb to a normal seasonal high.

Overnight demand news... Taiwan tendered to buy 40,000 MT of U.S. milling wheat. South Korea tendered to buy 140,000 MT of optional origin corn, including the Black Sea region.

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

Today’s reports


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