First Thing Today | March 18, 2022
Yo-yo price action continues in wheat... Wheat futures pulled back from yesterday’s gains overnight as back-and-forth price action continued. Corn followed wheat lower, while soybeans were mixed. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents lower, soybeans are 5 to 9 cents higher in old-crop contracts and 1 to 2 cents lower in new-crop, winter wheat is mostly 13 to 21 cents lower and spring wheat is mostly 2 to 7 cents lower. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is up nearly 400 points this morning.
Russia/Ukraine update... German Chancellor Olaf Scholz called for a ceasefire in Ukraine and intensified diplomatic efforts during a phone call with Russian President Vladimir Putin on Friday. Putin told Scholz Ukraine was trying to stall the negotiations with “unrealistic proposals.” “Russian forces have made minimal progress this week,” Britain said in a daily intelligence update as Ukrainian forces around Kyiv and Mykolaiv continue to push back Russian attempts to encircle the two cities. Heavy shelling in Kharkiv, Chernihiv, Sumy and Mariupol continued.
Biden to talk with Xi regarding Russia... President Joe Biden is set to speak to his Chinese counterpart Xi Jinping this morning as Russian attacks on Ukraine continue. White House Press Secretary Jen Psaki told reporters the call was a chance for Biden to see “where President Xi stands… The fact that China has not denounced what Russia is doing, in and of itself, speaks volumes,” she added. Xi and Russian President Vladimir Putin issued a statement last month in which the leaders described their growing partnership as having “no limits.” U.S. national security adviser Jake Sullivan met with Chinese officials in Rome this week and reportedly issued a warning not to assist Russia. The Financial Times reports Biden will warn Xi the U.S. is prepared to retaliate if Beijing actively supports Russia in Ukraine. U.S. Secretary of State Antony Blinken said Biden would “make clear that China will bear responsibility for any actions it takes to support Russia’s aggression, and we will not hesitate to impose costs.”
Ukraine warns of limited ag exports... Ukraine warned the World Trade Organization (WTO) it may have to limit exports of agricultural products ahead to ensure domestic food supplies, Geneva trade officials reported from the meeting this week of the WTO Committee on Agriculture. Ukrainian farmers are making their best effort not to miss the growing season, despite dangers they are facing, the country said. Countries also used the session to levy hefty criticism of the Russian action, with Russia predictably pushing back, arguing its action is outside the scope of the WTO and countries should use diplomacy and other international organizations to address their concerns.
Russian oil exports to India surge as Europe shuns cargoes... Delhi has maintained close trading ties with Moscow despite western sanctions from Russia’s invasion of Ukraine. Russia has exported 360,000 barrels a day (bpd) of oil to India in March so far, nearly four times the 2021 average. The country is on track to hit 203,000 bpd for the month based on current shipment schedules, according to Kpler, a commodities data and analytics firm.
IEA issues 10-point plan to cut oil use... The International Energy Agency (IEA) is calling on consumers to travel less, share rides, drive slower, work from home, use public transport and more actions in a 10-point plan to reduce energy use amid increased fuel prices resulting from Russia’s invasion of Ukraine. IEA said its plan could cut oil demand by 2.7 million barrels per day (bpd) within four months. But governments in some areas are mulling rebates and other fuel subsidies that could thwart the IEA efforts. IEA further suggested governments should make these changes permanent in a bid to address climate change. “Sustained reductions are important not only to improve countries’ energy security but also to tackle climate change and reduce air pollution,” IEA said.
China raises retail gasoline, diesel prices... China retail gasoline and diesel prices were increased by China’s National Development and Reform Commission, putting the gasoline price at a mark not seen since at least 2006, while diesel prices are at a 10-year high. The price of gasoline was increased by 750 yuan (about $118) per metric ton and the price of diesel increased by 720 yuan. Under the current pricing mechanism, when international crude oil prices change by more than 50 yuan per metric ton and remain at that level for 10 working days, prices of refined oil products such as gasoline and diesel in China are adjusted accordingly.
Floods may slow some U.S. planting... The risk of major flooding in the fertile Red River Valley and continued snow cover across Minnesota and North Dakota threaten to delay planting across the region for weeks, U.S. government forecasters said Thursday. Heavy snow and saturated soils mean the Red River will likely see the worst flooding this spring, the meteorologists said in a seasonal forecast Thursday. “In short, expect planting delays,” said Brad Rippey, a meteorologist with USDA. “There will be a few weeks of planting delays as we get into April.”
Record safrinha corn crop expected in Brazil... Brazil’s 2021-22 safrinha corn crop may rise 52% from last year to a record 92.2 MMT due to an increase in planted area and bigger yields, according to Agroconsult. The Brazilian consultancy says planted area will rise 7% and about 60% to 70% of the crop was planted in the ideal period.
Russian wheat export tax inches up... Russia’s wheat export tax for March 23-29 will be $86.40 per metric ton, based on an indicative price of $323.50 per metric ton, up 10 cents from the previous week. That halted a nine-week drop in the export tax. The wheat export tax is down from the peak rate of $98.20 per MT in mid-January but 207% higher than the initial rate of $28.10 per MT from last June when Russia started using the sliding scale.
Indonesia details higher export levies on palm oil... The sudden policy shift by Indonesia to remove volume limits on palm oil exports and put in place higher export levies was detailed on Friday after it was announced by the country’s trade minister yesterday. Indonesia now has in place higher progressive rates, with a maximum levy of $375 per metric ton versus the prior maximum level of $175. The March reference price for crude palm oil was at $1,432.24 per metric ton. If prices are under $1,000 per metric ton, there is no change in the export levy from the prior mark. Under the new program, the export levy ranges from $175 per metric ton when the reference price is from $1,000 per metric ton to $1,050 per metric ton, increasing by $20 for each $150 increase in the reference price. The maximum levy would be $375 per metric when the reference price is above $1,500. The export levy is in addition to an export tax that is also imposed on palm oil exports, with a maximum mark of $200 per metric ton.
Cash cattle trade steady... Moderate cash cattle trade occurred at $138 prices in the Southern Plains on Thursday, steady with last week’s trade. Cash sources signaled most feedlots in the northern market continued to pass on steady prices in hopes packers would raise bids.
April hogs at discount to cash index... The CME lean hog index is up 36 cents to $100.77. After sharp losses yesterday, April lean hog futures finished 42 cents below that level. The sharp losses and low-range close in April hogs on Thursday will likely produce followthrough selling today, but the discount to the cash index should limit seller interest.
Overnight demand news... Exporters reported no sales or tenders.
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
- 2:00 p.m. Honey — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC
