First Thing Today | April 13, 2022
Good morning!
Corn and wheat mixed, soybeans lower this morning... Grain and soybean futures posted two-sided trade overnight, with wheat and corn narrowly mixed and soybeans under pressure this morning. As of 6:30 a.m. CT, corn futures are 2 cents lower to 2 cents higher with old-crop weaker and new-crop firmer, soybeans are 5 to 11 cents lower and wheat futures a penny lower to 2 cents higher. Front-month U.S. crude oil futures are around $2 higher and back above $100, while the U.S. dollar index is just above unchanged.
Russia/Ukraine update... Russian President Vladimir Putin said peace talks with Ukraine are at a “dead end” and it’s unclear when the war will end. The U.S. is monitoring claims Russian forces may have deployed a poisonous substance in Mariupol. But verifying a chemical attack will be difficult. Ukraine’s Deputy Defense Minister Hanna Malyar said the incident was being investigated, but that a preliminary assumption was that phosphorous bombs — gruesome weapons not classed as chemical — may have been responsible. President Joe Biden said for the first time Russia's invasion of Ukraine amounts to genocide, a significant escalation of the president’s rhetoric. “Yes, I called it genocide because it has become clearer and clearer that Putin is just trying to wipe out the idea of being able to be Ukrainian and the evidence is mounting,” Biden told reporters. Meanwhile, Biden's administration is also expected to announce as soon as today another $750 million in military assistance for Ukraine for its fight against Russian forces, two U.S. officials familiar with the matter told Reuters.
Chinese are stockpiling amid Covid restriction concerns... People across China are stockpiling food and other necessities, concerned their cities might follow Shanghai’s Covid-19 lockdown. The Wall Street Journal reports they are buying kitchen staples, toilet paper, toothpaste and other household necessities, with some even consulting shopping lists on social media. Meanwhile, the U.S. State Department ordered the departure of all nonemergency U.S. Consulate staff and their families from Shanghai, as the city battles China’s worst Covid-19 outbreak in two years. The pandemic lockdowns are also impacting manufacturing. More factories in and around Shanghai are halting production, adding to pressure on the global supply chain.
China’s winter wheat crop improves more than expected... China’s winter wheat crop improved more than expected after a poor start last fall. The percentage of first and second grade wheat was on par with normal levels, the country’s ag ministry said. But recent Covid outbreaks and stricter lockdowns are impacting farmers to varying degrees, with some facing reduced crop inputs and fuel, while others are stuck in cities where they take on winter jobs. That combination has resulted in spring planting delays in key growing regions, especially the major grain producing provinces in northeast China.
China’s soybeans imports fall sharply versus year-ago in March... China imported 6.4 MMT of soybeans in March, down 18.3% from last year, as poor crush margins and delays in shipments from Brazil slowed arrivals. Through the first three months of the year, China’s soybean imports stood at 20.3 MMT, down 4.2% from the same period last year.
China’s March imports unexpectedly fall... China’s overall imports fell 0.1% from year-ago in March, marking the first decline since August 2020. That was a stark slowdown from the 15.5% gain in imports notched in the first two months of the year due to strict Covid restrictions at major ports. China’s exports rose 14.7% from year-ago, though that was down from a 16.3% rise in the first two months of the year. China posted a trade surplus of $47.4 billion in March, more than double the forecast of $22.4 billion, thanks to the unexpected decline in imports. China’s trade surplus with the U.S. rose by 50% from last year to $32.1 billion.
Fed’s Bullard: ‘Fantasy’ to think modest rate hikes will quell inflation... St. Louis Fed President James Bullard continues to be a consistent voice for a more-aggressive stance by the Fed on monetary policy as it seeks to quell inflation. “There’s a bit of a fantasy, I think, in current policy in central banks,” Bullard told the Financial Times. “Neutral is not putting downward pressure on inflation. It’s just ceasing to put upward pressure on inflation.” The hawkish Bullard said the Fed needs to “put downward pressure on the component of inflation that we think is persistent. Getting to neutral isn’t going to be enough it doesn’t look like, because while some of the inflation may moderate naturally... there will be a component of it which won’t.” Bullard said his judgment is the Fed needs to get rates to 3% by the third quarter relative to the target range for the Fed funds rate, which is currently at 0.25% to 0.5%. He acknowledged that is an “aspirational” level but issued this stark warning: “If markets and households get the idea that the Fed’s not going to do the right thing and not going to keep inflation under control, then you have to gain credibility by actually doing things that show them you are serious.” While he said the Fed is “holding on to our credibility,” he warned if that slips it will become “much more difficult” to beat inflation.
France cuts non-EU wheat exports... France’s ag ministry lowered its forecast for French 2021-22 wheat exports outside the European Union by 200,000 MT to 9.5 MMT. The reduction partly reversed a 3-MMT upward revision to the ministry’s forecast last month, when it anticipated France would replace some Black Sea trade disrupted by Russia's invasion of Ukraine. Traders say a wave of demand for French wheat to replace Black Sea supplies disrupted by the war has subsided, partly due to the continuation of Russian exports despite Western sanctions.
Argentine grain trucker strike continues... Grain truckers in Argentina extended their strike that started Monday, bringing grain transportation to a virtual halt. The indefinite strike has not yet hit exports because the ports have large reserves of grains, but a prolonged protest could affect shipments. The truckers are demanding higher freight rates as inflation and fuel prices soar. “We will come out of the strike with a new rate schedule. Otherwise, we won't come out of the strike at all,” Pablo Agolanti, vice president of the Federation of Argentine Carriers (FETRA), told Reuters. A meeting is scheduled today between the country’s transport ministry and FETRA.
China’s meat imports plunged in March... China imported 594,000 MT of meat in March, down 42% from last year’s record. Its meat imports during the first three months this year at 1.7 MMT fell 37% from the same period last year. The preliminary data doesn’t give specifics of meat imports by category, but the sharp drop was driven by a significant decline in pork arrivals as domestic pork production has surged as the country aggressively rebuilt its herd after the African swine fever outbreak.
Cash cattle trade higher... Some cash cattle traded around $139 in the Southern Plains, around $1 higher than last week’s trade in the region. Firmer bids also surfaced in the northern market on Tuesday, though there wasn’t much movement. With packers raising cash bids, most feedlots are still holding out in hopes of even firmer prices.
April hogs now above the cash index... The CME lean hog index is down another 53 cents today (as of March 11), the ninth straight daily decline totaling nearly $4. April hogs, which expire on Thursday and are settled against the cash index on April 19, finished Tuesday 52 1/2 cents above today’s quote.
Overnight demand news... Algeria bought an estimated 80,000 to 100,000 MT of optional origin milling wheat, though that figure could change. Japan is seeking 70,000 MT of feed wheat and 40,000 MT of feed barley.
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
- 11:00 am Feed Grains: Yearbook Tables — ERS
- 2:00 pm Broiler Hatchery — NASS
- 2:00 pm Turkey Hatchery — NASS
