First Thing Today | May 19, 2022

Good morning!

Followthrough selling in wheat, corn overnight... Wheat and corn futures faced continued pressure from Wednesday’s losses overnight, while soybeans traded mixed. As of 6:30 a.m. CT, corn futures are trading 3 to 7 cents lower, soybeans are 4 cents lower to 5 cents higher, SRW wheat is 15 to 18 cents lower, HRW wheat is 20 to 25 cents lower and HRS wheat is 10 to 14 cents lower. Front-month U.S. crude oil futures are around $1.50 lower and the U.S. dollar index is down about 500 points.

Russia says lifting sanctions key to opening Ukrainian ports... Russia’s Foreign Ministry said if it were to heed a United Nations (UN) appeal to open access to Ukraine’s Black Sea ports, the removal of sanctions against Russia would also have to be considered, the Interfax news agency reported. UN food chief David Beasley appealed on Wednesday to Russian President Vladimir Putin, saying: “If you have any heart at all, please open these ports.” The UN World Food Program feeds some 125 million people and buys 50% of its grain from Ukraine.

G7 meetings to focus on Ukraine situation, inflation, food crisis... Group of Seven (G7) financial leaders are likely to agree on Thursday and Friday to help Ukraine pay its bills in coming months. Finance ministers and central bank governors from the U.S., Japan, Canada, Britain, Germany, France and Italy will also discuss surging inflation, climate change, supply chains and the impending food crisis. The short-term financing package of some $15 billion to be agreed by the G7 would cover three months of Ukraine’s needs. “Ukraine is overshadowing these meetings. But there are other issues that must be discussed,” a G7 official, who asked not to be named, told Reuters.

Day 2 HRW tour results... Scouts on the second day of the Wheat Quality Council HRW tour found an average yield of 37 bu. per acre in western and southern areas of Kansas, down from 56.7 bu. per acre on similar routes last year and the five-year average of 47.1 bu. per acre. Drought and high temperatures stunted crops in the state’s southwest corner as well as portions of south-central Kansas. “This is the toughest-looking wheat we’ve had in years, and if it doesn’t get moisture soon, it’s going to get worse,” Gary Millershaski, a scout on the tour who farms near Lakin, Kansas, told Reuters.

Weekly Export Sales Report out this morning… For the week ended May 12, traders expect:

Indonesia to lift palm oil export ban... Indonesia will lift its palm oil export ban from Monday, May 23, following improvements in the domestic cooking oil supply situation, President Joko Widodo announced. The decision to lift the ban was taken despite the price of bulk cooking oil having not yet reached the targeted 14,000 rupiah per liter price, as the government considers the welfare of 17 million workers in the palm oil industry, the president said.

China lifts restrictions on Canadian canola... China has removed a three-year restriction on imports of Canadian canola, Canadian officials said. Richardson and Viterra, Canada’s two largest canola exporters that had been banned from shipping canola to China since March 2019, are listed as approved for exporting canola to China in a government document that was published on the Chinese General Administration of Customs’ website. “We welcome this decision to remove the restrictions and immediately reinstate the two companies to allow them to export Canadian canola seeds,” said Canadian Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau in a statement. However, any Canadian shipments of canola to China will be limited due to lower stockpiles.

EPA’s Regan talks gas prices, upcoming RFS decisions... EPA Administrator Michael Regan says he’s sensitive to concerns about high gasoline prices as he makes decisions about the federal renewable fuel mandate (RFS). “I’m trying to stay on the right side of the law” while also “being sensitive to the prices that we’re facing now and how we can do that to the alleviate the burdens of just average, everyday people,” Regan told a Senate appropriations subcommittee Wednesday. Upcoming decisions on annual biofuel-blending requirements and refinery exemptions from them are aimed at “getting that program on a much stronger footing” and aren’t being made in isolation. EPA is seeking to provide certainty to both the agricultural and refining industries, Regan said. “With the prices we’re looking at now and some of the pressure that refiners are facing, this war doesn’t help,” Regan added. Sen. Bill Hagerty (R-Tenn.) warned Regan of significant “economic implications on the American consumer” if more refineries are denied exemptions as he said that “puts upward pressure on prices.” EPA by June 3 will finalize biofuel-blending quotas for 2022 and 2021 while also retroactively revising 2020 requirements. The agency also has proposed denying more than 60 pending refinery exemptions from 2019, 2020 and 2021 biofuel-blending quotas, after already rescinding 31 previously granted waivers for 2018.

China in talks with Russia to buy oil... China is in talks with Moscow to purchase oil from Russia, according to Bloomberg News. This comes shortly after Russian Deputy Prime Minister Alexander Novak stated that Russia continues to seek demand from sources outside Europe for its oil, with the potential for an EU embargo on Russian oil looming.

Russia’s economy slowed more than expected in the first quarter... Russia’s gross domestic product rose 3.5% from a year ago, down from a gain of 4% in the previous three months, the Federal Statistics Service said Wednesday, citing preliminary numbers. That was less than the median forecast of economists polled by Bloomberg for an increase of 3.7%, which matched an estimate from the Economy Ministry. Most of the latest results were recorded before Putin sent troops into Ukraine on Feb. 24, triggering sweeping economic sanctions from the U.S. and its allies.

More U.S. food aid... Secretary of State Antony Blinken told a U.N. Security Council meeting on food security the U.S. was donating an additional $215 million in humanitarian assistance to address the world’s worsening food crisis. Countries benefiting from the aid include Burkina Faso, Cameroon, Kenya, Nigeria, Zimbabwe and Yemen.

House panel clears WRDA bill... The House Transportation and Infrastructure Committee voted to send to the full chamber a water policy bill (WRDA) that would authorize the completion of dozens of Army Corps of Engineers projects and studies. The legislation was approved unanimously by voice vote after the committee considered 53 amendments.

Cattle hammered by broad selloff... Weaker cash cattle trade set a negative tone for cattle futures on Tuesday, but it was broad risk aversion in commodities and the stock market that really hit cattle hard yesterday. How outside markets trade will likely be the primary price driver for cattle futures again today, especially if they again move broadly in the same direction.

Big finish for hog futures on Wednesday... Lean hog futures rebounded from sharp losses earlier Wednesday to finish higher. The strong close not only came in the face of heavy risk-off trade but it also marked the fourth consecutive day of gains. That’s the strongest signal yet hog futures have started a delayed seasonal rally. We don’t anticipate strong gains in futures until the cash hog index shows sustained strength, but the near-term outlook has improved.

Overnight demand news... Japan purchased 174,744 MT of wheat in its weekly tender, including 59,556 MT U.S., 91,465 Canadian and 23,723 MT Australian. South Korea purchased 69,000 MT of South American corn. 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
• 2:00 p.m. Livestock Slaughter — NASS