First Thing Today | March 11, 2022

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Good morning!

Quieter trade overnight... Volatility was reduced in grain and soy complex futures overnight, as corn, soybeans and wheat all traded within relatively tight ranges compared to recent standards. As of 6:30 a.m. CT, corn futures are mostly 3 to 6 cents lower, soybeans are 9 to 13 cents lower, SRW wheat is steady to 11 cents lower, HRW wheat is 1 to 4 cents higher and HRS wheat is mostly 6 to 8 cents higher. Front-month crude oil futures are around $1 higher and the U.S. dollar index is around 100 points lower this morning.  

Russia/Ukraine update... Russian forces bearing down on Kyiv are regrouping northwest of the Ukrainian capital, satellite pictures showed, with Britain saying Moscow could now be planning an assault on the city within days. Russian troops took out two military airfields in Lutsk and Ivano-Frankivsk, while Moscow-backed separatists have captured Volnovakha, north of Mariupol, according to Russian defense ministry. Russia said it will send thousands of fighters from the Middle East to join its forces in Ukraine. Russian forces are operating with “reckless disregard” for civilians as they face stronger-than-expected resistance in Ukraine, and American intelligence agencies are tracking their actions to hold them to account, U.S. Director of National Intelligence Avril Haines said on Thursday. “The Russian military has begun to loosen its rules of engagement to achieve their military objectives,” Haines told the Senate Intelligence Committee. Meanwhile, Russian President Vladimir Putin says discussions with Ukraine have taken “positive shifts.”

Ukraine farmers to focus on food grains... Ukraine is likely to reduce the area sown to sunseeds, rapeseed and corn in 2022 and replace it with buckwheat, oats, millet, peas the country’s agriculture producers' union said. “For the full nutrition of its population and the armed forces, more emphasis will be placed on buckwheat, peas, those types of crops that will make it possible to harvest so that Ukraine is fully provided with food,” said Denys Marchuk, deputy head of the Ukrainian Agrarian Council. Farmers will start planting crops in the safe areas of the country as soon as possible. Deputy agriculture minister Taras Vysotskiy said a war-induced shortage of fuel would be the main problem for farmers.

FAO: Russia/Ukraine war could inflate global food/feed prices by up to 20%... Global prices of food and feed could rise by 8% to 20% as a result of the conflict in Ukraine, the UN’s Food and Agriculture Organization (FAO) warned. FAO said it was unclear whether Ukraine would be able to harvest crops during a protracted conflict, and there also uncertainties surrounding Russian food exports. The FAO global food price index already surged to a record high in February.

Wells Fargo boosts inflation forecast... Higher oil prices likely will lift inflation rates even more than Wells Fargo analysts forecast a month ago. Wells Fargo lifted its oil price forecast significantly and now looks for the price of Brent oil, the global benchmark, to average $140 per barrel in the second quarter. It looks for the overall rate of CPI inflation to average 8.2% during the second quarter and to only recede to 6.3% by the end of the year. “Higher inflation will erode growth in real income, which likely will lead to slower growth in real consumer spending. But we do not look for consumer spending to crater, unless oil prices rise significantly higher than we currently forecast. Wells Fargo analysts now see the Fed raising rates by 25 bps at its meetings in March, May, June, July, September and December.

MFN status for Russia to be removed... President Joe Biden will announce today that along with the European Union and the Group of Seven countries, the U.S. will move to revoke “most favored nation” trade status for Russia over its invasion of Ukraine. Top Democratic and Republican lawmakers vowed to push forward with their campaign to suspend Russia’s preferential trade relations with the U.S. and clear the way for tariff increases after the provision was removed from a House bill banning the nation’s energy imports. The moves by the heads of the trade committees could mean amending the House-passed oil ban in the Senate before it becomes law.

Renewed demand for coal... Estimated fuel shortages have sent energy prices and demand for coal soaring. Coal prices spiked roughly 30% in one week. Asian Newcastle benchmark futures rose to $440 per metric ton, while Europe’s futures reported trading above $350 a metric ton — triple their pre-pandemic levels. Analysts said they don’t expect the prices to drop anytime soon and are bracing for an estimated supply shortage of 3% to 5% in 2022. “Everything related to energy is in deficit,” Siddharth Choudhary, an executive of thermal coal at global commodities trading firm Trafigura, told Reuters. “So, there is not [an] alternative. With the current crisis for Europe, coal looks to be the best option.”

China sells 84% of soybeans put up for auction... China sold 59,452 MT of the 71,126 MT of state-owned soybean reserves put up for auction, according to Sinograin. The state stockpiler also sold 10,172 MT, or 71%, of the rapeseed oil reserves offered. It previously sold 126,891 MT of soyoil from reserves. Sinograin will auction 295,596 MT of imported soybeans from reserves next Monday.

China issues cotton import quotas... China’s state planner issued a 400,000 MT quota for cotton imports with a sliding tariff rate. The first batch of import quotas for 2022 are for private traders only, the National Development and Reform Commission said.

Chinese new bank loans plunge... Chinese banks extended 1.23 trillion yuan ($195 billion) in new loans in February, down sharply from a record 3.98 trillion yuan in January. The sharper-than-expected drop in bank lending and a decline in credit growth increase pressure on the People’s Bank of China to ease monetary policy to support China’s slowing economy. Chinese Premier Li Keqiang said he is confident of hitting this year’s economic growth target of around 5.5%, despite China’s slowing economy and headwinds such as the war in Ukraine and surging global inflation.

Senate passes spending measure... The Senate Thursday night passed a $1.5 trillion bill to fund the government for the remainder of fiscal 2022. It now goes to the White House for President Biden’s expected signature. The bill includes two provisions that limit the federal government’s ability to regulate emissions from animal agriculture, despite objections from dozens of environmental groups. One provision bars new permitting requirements under the Clean Air Act for emissions of pollutants like carbon dioxide and methane from livestock production, while the other disallows any new greenhouse gas reporting requirements from manure management systems.

Beef prices firm, but movement slows... Packers raised wholesale beef prices by $1.24 in Choice boxes and $2.58 in Select on Thursday, but movement slowed to just 106 loads. That signals retailers are still rather reluctant buyers when packers raise wholesale prices but have shown earlier this week they are willing buyers if prices aren’t sharply higher.

Ham prices remain volatile... The pork cutout value dropped $3.54 on Thursday as primal hams fell nearly $15. Wholesale ham prices continue to fluctuate rather significantly and are almost solely directing day-to-day price action in the cutout value.

Overnight demand news... Taiwan purchased 50,000 MT of U.S. 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

 

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