First Thing Today | June 16, 2022

Good morning!

Corn firmer, soybeans and wheat mixed overnight... Corn futures mildly built on Wednesday’s gains overnight, while soybeans also firmed and wheat traded mixed. As of 6:30 a.m. CT, corn futures are trading 3 to 6 cents higher, soybeans are 2 to 3 cents higher, SRW wheat futures are narrowly mixed, HRW wheat is 2 to 4 cents lower and spring wheat is 2 to 4 cents higher. Front-month U.S. crude oil futures are around $1.50 lower and the U.S. dollar index is more than 150 points lower this morning.

BOE raises rates another 25 basis points, ready to ‘act forcefully’... A day after the Fed raised interest rates by the most since 1994 with a 75 basis-point hike, the Bank of England (BOE) stuck to its more gradual approach as it warned Britain’s economy would shrink in the second quarter. BOE raised rates 25 basis points to 1.25% – the fifth increase since December – in its battle with surging inflation. “The scale, pace and timing of any further increases in Bank Rate will reflect the Committee’s assessment of the economic outlook and inflationary pressures,” BOE said. “The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary, act forcefully in response.” Meanwhile, Taiwan raised its benchmark lending rate by 12.5 basis points to 1.5%.

Weekly Export Sales Report out this morning... For the week ended June 9, traders expect:

More allied military support for Ukraine... NATO and its allies pledged new military aid to help Ukraine repulse Russia, including $1 billion from the United States. This came in response to urgent pleas from Kyiv for better weapons amid growing views within Western capitals that the conflict may require a diplomatic resolution. The U.S. will also provide Ukraine for the first time with Harpoon antiship launchers, expected to arrive in around two months. Meanwhile, Chinese President Xi Jinping marked his 69th birthday on Wednesday with a call to Russian President Vladimir Putin. During the call, Xi affirmed that the Sino-Russian relationship was as strong as ever. “China is willing to work with Russia to continue supporting each other on their respective core interests concerning sovereignty and security.” Xi also broached the Ukraine issue: “China has always independently assessed the situation on the basis of the historical context and the merits of the issue… All parties should push for a proper settlement of the Ukraine crisis in a responsible manner.”

Romania to remain key grain exporter... Romania’s grain crop will be smaller than last year’s record but the country will have surplus to sell onto the world market, according to the country’s ag minister, who didn’t provide a specific production figure. “We will certainly have a stable production this year, to me this means having an export surplus,” the ag minster told Reuters. “If 2021 was a near perfect agricultural year, 2022 is nowhere close to perfect in terms of weather and pressure on production costs. Obviously, production will likely not be at the same level, but it will ensure domestic consumption and a surplus for exports.” He also said Romania could provide temporary grain storage for Ukraine after harvest if needed.

House bill to focus on lowering food, fuel prices... House lawmakers today will take up a measure that aims to lower food and fuel prices with new emergency funding, loan authority, and biofuel waivers. The bill — an expanded version of HR 7606 — would provide a total of $700 million in emergency funding to help reduce the costs of using crop nutrients or precision agriculture practices, and for grants to expand biofuel infrastructure. The bill would also establish a USDA office to investigate competition matters in meat and poultry markets. Even if it clears the House, the measure will face hurdles in the Senate.

Farm groups to urge ITC to not invoke duties on fertilizer imports... The U.S. International Trade Commission (ITC) is holding a hearing today for the final phase of its investigation into fertilizer imports from Russia and Trinidad and Tobago. The Commerce Department issued separate preliminary rulings that Russia and Trinidad and Tobago were unfairly subsidizing UAN exports as well as selling the UAN into the U.S. at below market prices.

Exxon tells Biden it has boosted capacity... Exxon responded to President Joe Biden’s call on U.S. oil refiners to boost capacity by saying it’s been doing precisely that. The biggest U.S. oil company said Wednesday it invested through the previous market downturn to raise refining capacity to process U.S. light crude by about 250,000 barrels a day. Meanwhile, the White House is willing to use the emergency wartime Defense Production Act to boost the nation’s supply of gasoline, White House Press Secretary Karine Jean-Pierre said Wednesday.

Argentina to hike biodiesel levels to stretch diesel supplies... Argentina’s Economy Ministry will allow increased levels of biodiesel in fuel to address shortages of diesel fuel. The use of biodiesel will increase to 12.5% from the current 5% for a period of 60 days and remain at 7.5% after the 60-day period. The agency said that 2.5 percentage points would be provided by small- and medium-sized companies with an additional 5 percentage points provided by all suppliers for a “transitory and exceptional period of at least 60 days.” Argentina last year lowered the level of biodiesel in diesel fuel to 5% from 10%. Opponents of the move say it will tighten domestic supplies of soyoil and raise food prices.

China ramps up fixed-asset investments... China’s state planner said it had approved 10 fixed-asset investments worth 121 billion yuan ($18 billion) in May, a more than six-fold jump from April, as policymakers seek to get economic growth back on track after a Covid-induced slump. “We will ensure reasonable economic growth in the second quarter to provide a firm foundation and conditions for the economy in the second half of the year,” Meng Wei, spokeswoman at the National Development and Reform Commission (NDRC), said. Through the first five months of this year, NDRC approved a total of 48 fixed-asset investment projects worth 654.2 billion yuan ($97.4 billion), more than 80% of the 775.4 billion yuan ($115.5 billion) of projects in infrastructure, power, mining, water and manufacturing approved for all of 2021. NDRC also will give local governments more leeway in the use of funds they raise through special bonds, Meng said.

China’s sow herd increases in May... China’s sow herd at the end of May was larger than in April, its first monthly increase in a year, an ag ministry official said. The sow herd rose 0.4% in May to 41.92 million head but was still 4.7% smaller than a year ago. Chinese hog producers have been liquidating sows over the past year amid poor production margins.

Cattle futures supported by strong cash trade... Live cattle futures gapped higher Wednesday and finished with strong gains amid support from strength in the cash cattle market, where prices have been mostly around $2 higher. While extreme heat is stressing cattle across the central U.S., futures continue to trade at a discount to the cash market, which could trigger additional buyer interest.

Summer hogs narrow the gap with cash... Summer-month hog futures rallied sharply yesterday as traders narrowed the gap with the cash index. But with the cash market continuing to strengthen, July hogs remain at a slight discount, while August hogs are more than $4 below the cash index. That could support followthrough buying in futures today.

Overnight demand news... Japan purchased 186,441 MT of wheat in its weekly tender, including 99,293 MT U.S., 64,148 MT Canadian and 23,000 MT Canadian. Bangladesh withdrew its tender to buy 50,000 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, Dairy, and Poultry Outlook: June 2022 — ERS
• 2:00 p.m. Sugar and Sweeteners Outlook: June 2022 — ERS