First Thing Today | February 4, 2022

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Good morning!

Outside markets support grain, soy futures overnight... There was broad, though relatively mild, price strength overnight across grain and soy futures amid support from outside markets. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents higher, soybeans are 4 to 7 cents higher, SRW wheat futures are 3 to 5 cents higher, HRW futures are mostly 7 to 9 cents higher and HRS wheat is around a nickel higher. Front-month crude oil futures are up nearly $2 to more than $92 per barrel, while the U.S. dollar index is around 150 points lower this morning.

Russia/China appear to be aligning forces... Russia and China in a joint statement on Friday called for NATO to halt its expansion, while Moscow said it fully supported Beijing’s One-China policy toward Taiwan, following a meeting between presidents Vladimir Putin and Xi Jinping. The two countries expressed concern about “the advancement of U.S. plans to develop global missile defense and deploy its elements in various regions of the world, combined with capacity building of high-precision non-nuclear weapons for disarming strikes and other strategic objectives.” The two countries said they opposed further enlargement of U.S.-led NATO and called on the alliance to abandon its “ideologized Cold War approaches.” China supports Russia’s proposals to create legally binding security guarantees in Europe, the joint statement said. Putin also unveiled a major new gas deal with China, a further sign of the deepening of the relationship between the two countries.

Sanctions on Russia may not have ‘devastating impact’ on Russia’s economy... President Joe Biden says planned sanctions by the U.S. and ally nations if Russia invades Ukraine would have “a devastating impact” on the Russian economy. But the Kremlin has spent the last eight years preparing by building up currency reserves and reducing foreign debt. Combined with rising oil prices, that may temper the pain of any potential penalties, Bloomberg reports.

Limited jobs growth expected for January... After the recent string of disappointing jobs data, economists have scaled back their expectations and anticipate non-farm payrolls to be up just 150,000 in January. That would be down from the initially reported figure of 199,000 payrolls added in December. Economists expect the unemployment rate to remain at 3.9%.

Corteva: High prices will persist; 90 million acres each for corn and soybean plantings... Relatively high prices for grains and oilseeds are in store this year thanks to record demand levels, Corteva CEO Chuck Magro said on the company’s earnings conference call. “Over the medium to long term, we see constructive fundamentals continuing, as possible new demand to support renewable fuels such as bio-based diesel will likely support healthy agricultural commodity price levels,” Magro said.  Strong demand for Corteva’s seed and crop protection products are helping the company to raise prices to offset higher costs due to inflation, Magro said: “Growers need the products, they need the technology. And certainly, from a pricing execution perspective, I think we’ve demonstrated that we can move prices to cover costs and grow margins.” Magro noted high fertilizer prices will prompt some growers to rotate into soybeans from corn and boost demand for the company’s Enlist biotech soybean seeds and complementary herbicides. “This provides further support for systems like Enlist, where customer demand and industry-wide penetration remains strong and we anticipate it will grow to at least 40% of total U.S. soybean acres in 2022,” Magro said. He noted the company anticipates U.S. farmers will plant 90 million acres to both corn and soybeans this year.

End of the U.S. shale boom... The end of the boom is in sight for America’s fracking companies. Less than 3½ years after the shale revolution made the U.S. the world’s largest oil producer, companies in the oil fields of Texas, New Mexico and North Dakota have tapped many of their best wells. If the largest shale drillers kept their output roughly flat, as they have during the pandemic, many could continue drilling profitable wells for a decade or two, according to a Wall Street Journal review of inventory data and analyses. If they boosted production 30% a year — the pre-pandemic growth rate in the Permian Basin, the country’s biggest oil field — they would run out of prime drilling locations in just a few years.

Hoeven: USDA to begin sending out livestock disaster assistance by March... USDA is expected to begin providing the initial phase of $750 million in livestock disaster assistance payments by March, Sen. John Hoeven (R-N.D.) announced. According to USDA, Phase 1 will:

  • Use existing Livestock Forage Program (LFP) data.
  • Require no or minimal additional paperwork from producers.
  • Distribute at least half of the $750 million by the end of March.

The $750 million for livestock producers is part of $10 billion in disaster aid, with an additional $9.25 billion in disaster funding to extend WHIP+ to aid producers who suffered losses due to droughts, hurricanes, wildfires, floods and other qualifying disasters in calendar years 2020 and 2021. USDA announced it will provide that assistance in a two-phase approach as well, beginning this spring.

No announcement on Canada dairy TRQ situation... Thursday was the deadline for Canada to indicate how it will bring its tariff rate quota (TRQ) system for dairy products in line with a ruling handed down under dispute settlement procedures under the U.S.-Mexico-Canada Agreement (USMCA). Politico reported Canada has submitted a proposal to the U.S., but the Canadian official would not indicate what it contained. While the U.S. can hit Canada with retaliation in the dispute, indications are U.S. officials do not want to push forward on that front yet. Resolution on this matter is key as it will provide a glimpse into the effectiveness of the dispute-settlement provisions of USMCA. While they have a much shorter timeline for a resolution to be found than multilateral routes like the WTO, if there are not changes to provisions found in violation, it will dampen the effectiveness of those provisions — one of the areas that many touted as being a key advancement under USMCA.

New school nutrition standards coming today... The Biden administration today will unveil its final rule on a series of recommendations for the school lunch program, rules that seek to get the program back on track to meeting basic nutrition guidelines. It will put stricter limits on sodium, call for more whole-grain items to be served and allow schools to keep serving flavored 1% milk, a change which the Trump administration put in place. The U.S. dairy industry was the only industry that was shown as having met with the Office of Management and Budget while the USDA plan was under review. The new standards will take effect with the 2022-23 school year. But if there is a push to keep a waiver authority in place for schools, that could mean the nutrition standards, including the new ones, may not be put in place.

Cash cattle, wholesale beef prices going in opposite directions... Cash cattle prices firmed to as much as $140 in the Southern Plains on Thursday before packers pulled back bids. While the cash cattle market firmed this week, wholesale beef prices continued their recent descent, with Choice down $1.69 and Select $3.10 lower yesterday. Falling boxed beef prices signal retailer demand is limited and packers are searching for values that attract more buying.

Modest gain in cash hog index... The CME lean hog index is up 4 cents today. While the recent price ascent has slowed, the cash index continues to climb. Seasonally, it wouldn’t be surprising to see the cash index fade over the next month or so, before climbing to a summertime peak.

FGIS increases official inspection and weighing fees... Effective Feb. 1, the Federal Grain Inspection Service (FGIS) increased official inspection and weighing service fees by 5%. This is the second year in a row FGIS has increased national fees since the agency began using a five-year rolling average of export tons in its calculations. FGIS also reviewed local tonnage fees, which were adjusted to reflect fiscal year 2021 costs and a five-year average of export tons.

Overnight demand news... South Korea purchased up to 65,000 MT of corn from an unspecified origin.  

Today’s reports

 

Latest News

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.

Timeline and Issues in Getting Baltimore Port Channel Reopened
Timeline and Issues in Getting Baltimore Port Channel Reopened

Exxon Mobil and SAF | Fed governor says ‘no rush’ to lower rates | Russia aids Cuba | Key USDA reports today

Cattle Strength Wanes | March 28, 2024
Cattle Strength Wanes | March 28, 2024

Japan works to support Yen, Eurozone cuts production forecast and the Biden Administration will repair Baltimore Bridge...

Ahead of the Open | March 28, 2024
Ahead of the Open | March 28, 2024

Corn, soybeans and wheat traded in tight ranges overnight, with grains showing relative strength into the break.