First Thing Today | March 23, 2022
Firmer, but relatively quiet overnight trade... Corn, soybean and wheat futures held within Tuesday’s price ranges overnight in relatively quiet trade that has markets trading near session highs this morning. As of 6:30 a.m. CT, corn futures are 3 to 4 cents higher, soybeans are mostly 9 to 14 cents higher and wheat futures are mostly 14 to 17 cents higher. Front-month crude oil futures are nearly $2.50 higher but below yesterday’s highs and the U.S. dollar index is around 250 points higher this morning.
Russia/Ukraine update... President Joe Biden flies to Europe today for two days of emergency summits with NATO on Ukraine. The head of the International Committee of Red Cross is in Moscow for two-day talks with senior Russian officials including Foreign Minister Sergei Lavrov and will raise “pressing humanitarian issues” in Ukraine. The EU on Wednesday is due to set out plans on how it will provide jobs, education and housing for Ukrainian refugees. The Biden administration aims to make it easier for some Ukrainian refugees to come to the U.S. after only a handful were admitted in the first two weeks of March, Reuters reported, citing three people familiar with the matter. Meanwhile, Ukrainian President Volodymyr Zelenskyy said Russian forces were using the exclusion zone around the defunct Chernobyl nuclear plant to prepare new attacks.
Biden to sanction hundreds of Russian lawmakers... The Biden administration is preparing new sanctions on most members of Russia’s State Duma, the lower house of parliament, as the U.S. continues its crackdown on Moscow over its ongoing war against Ukraine. Besides new sanctions, the U.S. and partner nations will unveil a new action aimed at “enhancing European energy security and reducing Europe’s dependence on Russian gas,” National Security Adviser Jake Sullivan said. A key issue among some allied nations is how far to go in restricting Russian fossil fuels, given their reliance on it. After Biden warned Monday of intelligence indicating Russia was contemplating a cyberattack on the U.S., National Security Adviser Jake Sullivan added details about NATO’s position on such a threat. A cyberattack by Russia on a member country could trigger a collective response from the U.S. and its allies, but not necessarily a military one, he said.
Russian weather looks favorable for winter crops... Weather favors Russia’s winter grain crop, signaling good prospects, state weather forecaster Hydrometcentre said. “The forecast for the harvest of winter crops is good,” Roman Vilfand, head of science at Hydrometcentre said, without giving and production forecasts. Winter grains in the main producing regions – Russia’s south and the North Caucasus – are developing well, and only 10% of the area in other regions are at risk of poor conditions, according to Vilfand. He added that soil moisture is very good across the country, which will help protect winter crops if spring weather is drier than normal. Russia is expected to produce 123 MMT of grain this year, according to the latest ag ministry forecast, up from 121.3 million MMT in 2021.
Vilsack comments on Ukraine ag situation and impact... USDA Secretary Tom Vilsack said it is too early to tell how Russia’s war with Ukraine will have on consumers and global food supplies. While touring the exhibition of farm equipment on the National Mall Tuesday, Vilsack said that 80% of what farmers harvested in Ukraine last year has already been shipped. As for the planting season ahead, Vilsack said: “We don’t know whether there are sufficient fuel needs being met so farmers can put crops in the ground. We don’t know what their machinery situation is. We don’t know whether they… are physically able to farm,” he said.
Bunge facility at Ukraine port sustains damage... A Bunge facility in Ukraine sustained damage after the Mykolaiv port was “hit,” according to a statement by the company. Preliminary reports show some damage happened to the structure, but all employees are safe, the company added. The facility has been closed since Feb. 24 when Russia’s invasion of Ukraine began. A thorough inspection of the site will happen when it’s safe to do so, the company noted.
Kommersant: Russia’s crop-sowing costs may rise 20% this year... Russia may need at least 1 trillion rubles ($9.7 billion) for this season’s sowing of all crops, including wheat, sunflowers, potatoes and sugar beets, Kommersant reports, citing unidentified people from the industry. If so, it implies 20% growth from last year and is caused by sharp increases in prices of seeds and imported spare parts.
Republican wants Granholm to testify on rising gasoline prices... Energy Secretary Jennifer Granholm has been asked to testify at the Energy and Commerce Committee hearing on April 6 on the Biden administration’s efforts to help increase domestic oil and gas production, according to a letter from the panel’s lead Republican, Rep. Cathy McMorris Rodgers (R-Wash.). Granholm Tuesday said she was confident “there will be a significant increase in supply by the end of this year,” during a press briefing on the sidelines of an International Energy Agency ministerial in Paris. Granholm said much of her discussion with industry officials at CERAWeek by S&P Global in Houston earlier this month was “an assurance that the oil and gas industry was ramping up.” She added that there are opportunities for U.S. oil companies to take advantage of existing infrastructure “to ramp up, to do a service to the globe” so allies don’t feel limited to Russian energy supplies. U.S. gasoline prices, which hit a nationwide average record high of $4.33 on March 11, are about $1.35 higher than they were a year ago, according to AAA.
China sets green hydrogen target for 2025... China’s state planner announced a target to produce up to 200,000 MT per year of green hydrogen, a zero-carbon fuel generated from renewable energy sources, by 2025. The country aims to produce 100,000 MT to 200,000 MT of green hydrogen a year and have about 50,000 hydrogen-fueled vehicles by 2025, the National Development and Reform Commission (NDRC) said. China, the world’s largest emitter of greenhouse gases, has been striving to balance energy security and achieve its climate goals, and is focusing on hydrogen to reduce carbon emissions from its transportation and industrial sectors. China currently produces 33 MMT of hydrogen a year, with about 80% of it coming from coal and natural gas, and the rest mainly a by-product from industrial sectors.
U.S., U.K. reach trade deal to end tariffs on British steel and American whiskey... The U.S. and U.K. late Tuesday announced they have reached an agreement on U.S. Section 232 tariffs on steel and aluminum from the U.K. to historically based sustainable volumes of the products without those tariffs. A tariff-rate quota (TRQ) will be established June 1 for an aggregate annual import volume of 500,000 MT under 54 product categories of steel, and 900,000 MT for unwrought aluminum under two product categories and 11,400 MT for semi-finished (wrought) aluminum (other than foil) under 12 product categories. The deal also includes novel smelt and cast requirements on aluminum and requires any U.K. steel company owned by a Chinese entity to conduct an audit of financial records to “assess influence from the People’s Republic of China government,” according to the Office of the U.S. Trade Representative (USTR). The agreement also means that retaliatory tariffs on more than $500 million in U.S. exports to the U.K. will be removed, including ones on distilled spirits, various agriculture products and consumer goods. Meanwhile, U.S. Trade Representative Katherine Tai and U.K. Secretary of State for International Trade Anne-Marie Trevelyan talked up progress they made in the first joint Dialogues on the Future of Atlantic Trade held Monday and Tuesday in Baltimore, but Tai in particular was unwilling to give any indication of a resumption of U.S./U.K. free trade agreement (FTA) talks that were started under the Trump administration but have not been pursued by the Biden administration. Based on Tai’s remarks, the timeline for any new push by the Biden administration on new trade talks with the U.K. does not appear imminent.
Cold Storage Report out this afternoon... The data will detail frozen meat stocks at the end of February. The five-year average is a 23-million-lb. decline in beef stocks and a 35-million-lb. build in pork inventories during February.
USDA confirms HPAI in Nebraska commercial flock... USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in a flock of 570,000 commercial broiler chickens in Butler County, Nebraska, the first commercial flock confirmed with HPAI in the state. A backyard mixed species (non-poultry) flock in Merrick County, Nebraska was confirmed with HPAI on March 15. This brings the number of states with commercial flocks infected to eight and total cases of HPAI to 51 as of March 22.
Slow developing cash cattle market... As expected, packers have been slow to establish initial cash cattle bids for the week. In fact, some feedlots, especially those in the northern market, haven’t issued initial asking prices. A slow developing cash market is rather typical during weeks when there’s a Cattle on Feed Report, such as this week – and sometimes active trade doesn’t occur until after the report.
Pork cutout strengthens... The pork cutout value firmed $5.10 on Tuesday, led by a $12.82 surge in primal ham prices. The cutout gained back more yesterday than it had lost the two previous days and extended to the highest level since March 9. However, the cutout value is nearly $10 below the peak of $116.54 posted on Feb. 17.
Overnight demand news... Exporters reported no tenders or sales.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Cold Storage — NASS
