First Thing Today | May 18, 2022

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Good morning!

Wheat retreats overnight... Wheat futures faced heavy price pressure overnight, which pulled corn lower. Soybeans are mixed following two-sided trade overnight. As of 6:30 a.m. CT, wheat futures are trading 29 to 37 cents lower, corn is 2 to 6 cents lower and soybeans are fractionally lower to 3 cents higher. Front-month U.S. crude oil futures are around $2 higher and the U.S. dollar index is about 250 points higher this morning.

Day 1 HRW tour results... Scouts on the first day of the Wheat Quality Council HRW tour found an average yield of 39.5 bu. per acre in northern areas of Kansas, down from 59.2 bu. per acre in this area last year and the five-year average of 46.9 bu. per acre. Scouts reported much of the wheat sampled on multiple routes from Manhattan to Colby was shorter than normal, and plant populations were sparse in the driest fields. “We don’t seem to be catching (rains) and it feels like the crop is on a knife-edge, just hanging on,” said Jeanne Falk Jones, a Kansas State University extension agronomist. Scouts will sample fields in western and southern Kansas today along routes from Colby to Wichita.

Smaller wheat crops expected in Nebraska, Colorado... In conjunction with the Wheat Quality Council HRW tour, the Nebraska Wheat Board forecast the state’s wheat crop at 36.9 million bu., the same as USDA’s initial estimate last week and down from 41.2 million bu. last year. Colorado Wheat projected the state’s wheat crop at 40.1 million bu. on a yield of 28.6 bu. per acre, below USDA’s initial estimate of 49.6 million bu. and last year’s 69.6 million bu. crop.

Firm forecasts Russian wheat crop at 85 MMT... Russia’s wheat crop may reach 85 MMT this year, the head of IKAR ag consultancy said, in what he called a “conservative” estimate. He said Russia has potential to export 39 MMT of wheat in 2022-23, in line with USDA’s initial projection. Last week, Russian President Vladimir Putin said the country could produce a record wheat crop of 87 MMT.

Powell: Lowering inflation ‘nonnegotiable’... Federal Reserve Chair Jerome Powell said the central bank’s resolve in combating the highest inflation in 40 years shouldn’t be questioned, even if it requires pushing up unemployment. Powell said he hoped the Fed could bring down inflation while preserving a strong labor market, which he said might lead the unemployment rate — near half-century lows of 3.6% in April — to rise slightly. The central bank is raising interest rates as part of its most aggressive effort in decades to curb upward price pressures.

Euro zone inflation holds at record level... Euro zone consumer inflation held at a record 7.4% above year-ago in April, unchanged from March. The so-called core inflation, which excludes energy and food prices, rose 3.9% from last year, up from a 3.2% year-over-year gain in March.

U.K. annual inflation rate jumps to 40-year-high in April... United Kingdom consumer prices surged 9% above year-ago in April, up from a 7% jump in March and the highest inflation rate since March 1982. That was the highest inflation recorded by an industrialized nation since the start of the global price surge last year. The acceleration in prices comes as the U.K. economy is slowing and facing a possible recession, economists say. They have warned that some consumers, especially those on low incomes, could struggle to pay for food and heating next winter.

Japan’s economy contracted in Q1... Japan’s economy shrank 1% on an annualized basis during the first quarter of the year as restrictions related to a resurgence of Covid-19 infections held back consumer spending. While economists expect a rebound in the current quarter, the outlook for this year is cloudy because of factors including Russia’s invasion of Ukraine, the rise in energy prices and the weakness of the yen, which is near a 20-year low against the dollar. In contrast to the U.S., China, and major European economies, the Japanese economy has yet to recover its pre-pandemic level.

Gas prices top $4 a gallon in every state for the first time... Gasoline pump prices rose above $4 a gallon in all U.S. states for the first time ever, according to auto club AAA.

House sets vote on gas price control bill... House Majority Leader Steny Hoyer (D-Md.) said lawmakers plan to vote Thursday on a bill that would allow the president to issue an emergency proclamation making it illegal to sell consumer fuel at a price that’s “unconscionably excessive” and exploitative. The legislation would be considered under a rule with three Democratic amendments. Rep. Fred Upton (R-Mich.), one of the more centrist Republican members, said he’s “not aware of any Republicans who are supporting it.”

EPA out of step with White House, House Republicans tell Regan... House Republicans tried to describe EPA’s agenda as out of step with the Biden administration’s broader plan during a Tuesday budget hearing, a notion EPA Administrator Michael Regan repeatedly dismissed. Rep. Dan Crenshaw (R-Texas) said the White House wants to lower food prices while EPA is seeking to ban pesticides and wants to increase semiconductor manufacturing as EPA is cracking down on the PFAS chemicals that go into chips. Regan testified before a subcommittee about EPA’s fiscal 2023 $11.9 billion budget request.

House panel to consider WRDA bill... The House Transportation and Infrastructure (T&I) Committee is expected to advance bipartisan legislation today authorizing improvements to the nation’s waterways and investments in flood control and coastal resiliency projects. The panel will consider dozens of amendments to the bill, which is popular with both sides of the aisle. T&I’s legislation would direct 72 new feasibility studies by the Army Corps of Engineers, eight studies to modify existing projects, and it would authorize construction of 16 pending proposed projects. The committee’s ranking member Sam Graves (R-Mo.) will say it’s critical the Corps “prioritize investment in our rivers’ navigation and flood control infrastructure,” while highlighting floods that occurred three years ago in his district, according to his prepared remarks. The Senate Environment and Public Works Committee unanimously approved its version of WRDA earlier this month.

China’s pork imports down sharply from year-ago in April... China imported 140,000 MT of pork in April, according to official customs data, the same amount as March but down 67.6% from last year. Through the first four months of this year, China’s pork imports plunged 65.1% from the same period last year to 560,000 MT.

Cash cattle trade starts with weaker tone... Cash cattle trade started around $137 to $138 in the Southern Plains and around $227 in the northern dressed market on Tuesday. Though initial trade was light to moderate, prices in both markets were down from last week, suggesting the eventual average will be weaker. Despite their discounts to the cash market, live cattle futures softened a little on Tuesday amid the weaker cash tone.

Key day for hog futures... Lean hog futures posted strong gains for a third consecutive day on Tuesday. Since corrections tend to come in three-day waves, today’s price action could be critical in determining whether the past three days was simply strong corrective buying or the start of a delayed seasonal rally. Summer-month hog futures have rebuilt $5 to $7-plus premiums to the cash index, which is down another 17 cents to $99.90 today (as of May 16).

Overnight demand news... Taiwan purchased 55,000 MT of corn – likely to be sourced from South Africa.

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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