First Thing Today | March 10, 2022
Extreme volatility continues in wheat... Wheat futures gapped lower overnight after limit-down closes on Wednesday and sharply extended losses. But wheat filled the gaps and is trading higher this morning, as are corn and soybeans. As of 6:30 a.m. CT, SRW wheat futures are mostly 7 to 21 cents higher, HRW wheat is 26 to 28 cents higher, HRS wheat is 19 to 31 cents higher, corn is 6 to 12 cents higher and soybeans are 8 to 18 cents higher. Front-month crude oil futures are nearly $4 higher this morning and the U.S. dollar index is around 200 points higher.
Russia/Ukraine update... Ukrainian Foreign Minister Dmytro Kuleba says talks between top diplomats of Moscow and Kyiv produced no breakthrough on ending the war in Ukraine. Kuleba said there are “other decision-makers” in Russia who need to be consulted, adding that he agreed with Russian Foreign Minister Sergey Lavrov to continue to seek a solution to humanitarian issues caused by the war. He said “They [Russians] seek Ukraine’s surrender. This is not going to happen.” Meanwhile, Lavrov said he did not believe the conflict in Ukraine would spiral into a nuclear war but cautioned the U.S. and Europe that Moscow never again wanted to be dependent on the West.
Russia says its businesses can steal patents from anyone in ‘unfriendly’ countries... Russia has effectively legalized patent theft from anyone affiliated with countries “unfriendly” to it, declaring that unauthorized use will not be compensated. Russian officials have also raised the possibility of lifting restrictions on some trademarks, according to state media, which could allow continued use of brands such as McDonald’s that are withdrawing from Russia. The Kremlin has not issued any decree lifting protections on trademarks. But Russia’s Ministry of Economic Development said last week authorities are considering “removing restrictions on the use of intellectual property contained in certain goods whose supply to Russia is restricted,” according to Russian state news outlet TASS, and that potential measures could affect inventions, computer programs and trademarks.
Granholm urges energy companies to boost production... Energy Secretary Jennifer Granholm urged energy companies to boost oil and gas production as the world faces a supply crunch spurred in part by Russia’s invasion of Ukraine. “We are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market and minimize harm to American families,” she said Wednesday at the Houston-based CERAWeek by S&P Global. “I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply,” she remarked. “Right now, we need oil and gas production to rise to meet current demand.” Granholm added that she did not believe boosting oil and gas output now would setback the Biden administration’s broader clean energy efforts over the long term.
Brazil cuts soybean crop estimate... Conab cut its Brazilian soybean crop estimate by 2.7 MMT from last month to 122.8 MMT. Despite the smaller production forecast, the Brazilian government’s forecasting agency kept its 2021-22 soybean export forecast at 80.2 MMT. Conab left its Brazilian corn crop estimate at 112.3 MMT. It still expects the country to export 35 MMT of corn and import 1.7 MMT during 2021-22.
Argentine exchange cuts soybean, corn crop estimates... The Rosario Grain Exchange cut is soybean and corn crop estimates due to impacts from drought. The exchange lowered its soybean crop estimate by 500,000 MT to 40 MMT and cut its corn production forecast by 300,000 MT to 47.7 MMT. Yesterday, USDA reduced its Argentine crop estimates by 1.5 MMT for soybeans to 43.5 MMT and 1 MMT for corn to 53 MMT.
Weekly Export Sales Report out this morning… For the week ended March 3, traders expect:
|
|
2021-22 expectations (in MT) |
2021-22 last week |
2022-23 expectations (in MT) |
2022-23 last week |
|
Corn |
500,000-1,200,000 |
485,118 |
50,000-700,000 |
222,844 |
|
Wheat |
200,000-400,000 |
299,967 |
50,000-300,000 |
69,800 |
|
Soybeans |
900,000-1,700,000 |
857,029 |
900,000-1,500,000 |
1,386,000 |
|
Soymeal |
75,000-350,000 |
95,351 |
0-50,000 |
60,000 |
|
Soyoil |
0-30,000 |
6,588 |
0-10,000 |
0 |
China to auction soybeans from state reserves... China will auction 295,596 MT of imported soybeans from state reserves on March 14, according to the National Grain Trade Center. Given reports of tight domestic supplies held by crushers, more soybean reserves could be auctioned near-term.
China allocates aid for winter wheat production... China has allocated 1.6 billion yuan ($253 million) to strengthen field management for winter wheat, the country’s finance ministry said. Part of the money will be used to stabilize output of winter wheat in five main production regions, including Hebei and Shandong provinces, where planting of wheat was delayed. China will also allocate money to about a dozen main production regions to prevent and control impacts of extreme weather on wheat. China’s ag ministry said the country’s winter wheat crop conditions are potentially the worst ever after heavy rains delayed planting of about a third of the normal wheat acreage.
U.S. consumer inflation expected to rise... U.S. consumer inflation is estimated to have climbed to another four-decade high in February with surging energy and commodity prices related to the Russian invasion of Ukraine expected to push costs even higher. Economists forecast the consumer price index (CPI) surged 7.8% annually in February. Rising energy prices at the end of February would be accounted for in the inflation reading, but not March increases that pushed crude oil prices to their highest levels since 2008 and U.S. gasoline prices to record highs. Excluding food and energy, the CPI is forecast to rise 0.5% from January and 6.4% versus year-ago.
ECB not expected to raise interest rates... The European Central Bank (ECB) is not expected to announce any major changes to monetary policy at 6:45 a.m. CT, despite record consumer and producer prices in Europe. But traders will parse comments by ECB President Christine Lagarde for clues to timing of future moves to combat surging inflation.
Soaring prices make nickel coins worth more than a dime... The humble nickel is worth more than a dime, after the price of the metal that makes up 25% of the coin rocketed to $100,000 a metric ton on the London Metal Exchange (LME) earlier this week — amid fears of a shortage from Russia — before trading was stopped. At $100,000 a ton, a nickel is worth about 16 cents in “melt” value, Barron’s estimates. Each 5-gram coin has 12.5 cents worth of nickel and 3.75 cents of copper, which traded at about $10,000 a metric ton on the LME. LME doesn’t expect to restart nickel trading “earlier than” Friday after suspending trading during Tuesday’s session and canceling all trades amid the price surge. Russia produces 17% of the world’s high-grade nickel supply.
More HPAI cases confirmed in commercial flocks in three states... USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed additional cases of highly pathogenic avian influenza (HPAI) in commercial poultry operations in three states — Queen Anne’s County, Maryland (broiler flock with 150,000 birds), New Castle County, Delaware (pullet flock with 265,000 birds) and Jasper County, Missouri (turkey flock with 27,000 birds). This brings total HPAI confirmations to 26 flocks with 16 of those being commercial poultry operations located in seven states — Indiana, Kentucky, Delaware, Missouri, Maryland, Iowa and South Dakota.
Beef movement picks up... The wholesale beef market is still trying to put in a bottom, but packers have found prices that are encouraging more movement. After moving 194 loads on Tuesday, packers sold another 168 loads yesterday. Some of the buying is likely retailers starting to stock up for post-Lent features. Until packers are able to move a lot of product at solidly higher prices, however, the market will remain in search of a bottom.
Cash hog index halts recent string of declines... The CME lean hog index is up 26 cents to $99.26, ending a four-day slide that saw prices drop 84 cents. Despite yesterday’s sharp losses, April hogs finished $1.89 above today’s cash index quote, which could lead to followthrough selling.
Overnight demand news... Japan purchased 163,276 MT of wheat from its weekly tender, including 83,722 MT from the U.S., 52,734 MT from Canada and 26,820 MT from Australia. Algeria purchased 600,000 to 700,000 MT of optional origin milling wheat. Jordan tendered to buy 120,000 MT of optional origin milling wheat.
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
- 7:30 a.m. Weekly Export Sales — FAS
- 11:00 a.m. Feed Grains Database — ERS
- 11:00 a.m. Meat Price Spreads — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
