First Thing Today | June 17, 2022

Good morning!

Followthrough buying in corn and soybeans, wheat fades... Corn and soybean futures saw active followthrough buying overnight after strong gains Thursday, while the wheat market pulled back. As of 6:30 a.m. CT, corn futures are trading 6 to 9 cents higher, soybeans are 6 to 8 cents higher, winter wheat futures are 4 to 7 cents lower and spring wheat is 1 to 4 cents lower. Front-month U.S. crude oil futures are just below unchanged and the U.S. dollar index is more than 700 points higher this morning.

Markets, gov’t offices closed Monday... Markets and government offices are closed for the Juneteenth federal holiday on Monday, June 20. Therefore, there will be no Pro Farmer market updates. Enjoy the extended weekend.

Slow progress on restarting grain exports via Ukrainian ports... Russia is in contact with Turkey regarding the export of grain from Ukraine but there are a lot of uncertainties from the Ukrainian side, Kremlin spokesperson Dmitry Peskov told reporters on Friday. France’s president said he saw little chance of an agreement with Russia for now to get grain out the Ukrainian port of Odesa, but said there were talks to regenerate rail routes linking Odesa to the Danube River in Romania as an alternative.

More signals of a slowing U.S. economy... U.S. housing starts fell 14.4% to a seasonally adjusted annual rate of 1.549 million, the Commerce Department said, well below expectations. And a survey by the Federal Reserve Bank of Philadelphia found manufacturing activity contracting for the first time in two years. Combined with an earlier report of a 0.3% decline in May retail sales over the previous month, the evidence is clear that the U.S. economy is slowing. A tracker produced by the Federal Reserve Bank of Atlanta now estimates a flat growth rate while IHS Markit sees a 0.8% growth rate, down from 2.4% earlier this month. The U.S. economy contracted 1.5% in the first quarter. Another contraction in the second quarter would fit the definition of a recession.

Recession fears surge among CEOs... Most top executives say they think a recession is looming or already here, according to the new survey by the Conference Board, reflecting a rapid deterioration of the economic outlook among business leaders. More than 60% of CEOs expect a recession in their geographic region in the next 12 to 18 months, according to a survey of 750 CEOs and other C-suite executives. An additional 15% think the region of the world where their company operates is already in a recession. In late 2021, 22% of CEOs surveyed by the firm reported seeing recession risk. That total was down from 39% a year earlier. The survey, which is based on data collected in May, was conducted before the Federal Reserve on Wednesday approved its largest interest-rate increase since 1994 and Fed officials said it was becoming more difficult to tame inflation while avoiding a recession.

Euro zone confirms record inflation in May... Final data confirmed euro zone consumer inflation jumped to a record 8.1% above year-ago in May, unchanged from the preliminary figure for the month, but up from 7.4% in April amid soaring food and energy prices. Core inflation, which excludes food and energy prices, accelerated 4.4%, up from a 3.9% rise in April.

French wheat crop ratings decline again... The condition of France’s soft wheat crop deteriorated for a seventh consecutive week. The country’s ag ministry rated the crop 65% good/excellent, down a point from the previous week. Crop ratings have plunged 24 percentage points since the beginning of May amid extended heat and dryness across the country. France is currently facing intense heat as the wheat crop nears maturity. Strategie Grains expects further loss of yield potential from the heatwave.

Exchange warns of further cuts to Argentine wheat acreage... Argentina’s 2022-23 wheat planted area estimate could be cut further if drought persists in large parts of producing areas, the Buenos Aires Grains Exchange warned on Thursday, adding chances were slim for strong rainfall. The exchange currently forecasts wheat planted area at 6.4 million hectares, down from its original projection of 6.6 million hectares. In its monthly weather report, the exchange is heading toward a “severe, dry and cold winter” during the July to September period.

Malaysia keeps July crude palm oil export tax at max level... Malaysia will maintain its July export tax for crude palm oil at 8%, based on a reference price of 6,732.26 ringgit ($1,530.41) per metric ton. The tax maxes out at 8% when the reference price is above 3,450 ringgit per metric ton.

EVs now average over $60,000 as Tesla, Rivian and Ford raise prices... Market leader Tesla Inc. is boosting sticker prices by as much as $6,000 a car, its third increase this year, Electrek reported. Ford Motor Co. has raised the price of its Mustang Mach-E, following a similar move by electric-truck startup Rivian Automotive Inc. The average price of an EV reached $60,984 last month, well above the $46,634 mark for the overall market, according to automotive researcher Edmunds.com. That average excludes Tesla, which doesn’t share pricing data with research firms, but Electrek reported that the popular Model Y long-range model now starts at $65,990, up from $62,990.

Fannie Mae slashes forecast for home sales amid soaring interest rates... The government-backed mortgage company now expects total home sales to fall 13.5% to 5.96 million units this year, compared with a projected drop of 11.1% in its May forecast. Fannie also cut its 2023 forecast to 5.29 million units from 5.42 million, saying substantially higher mortgage rates are now the housing market’s primary constraint. Fellow lender Freddie Mac says the 30-year fixed-rate mortgage is now averaging 5.78%, up from 5.23% last week and 2.93% a year ago, marking the biggest one-week increase since 1987.

Plan to bolster infrastructure workforce to be unveiled... The Biden administration is taking steps to ensure there are enough trained workers ahead of the expected flood of new construction work created by the bipartisan infrastructure law. Members of the administration, including Labor Secretary Marty Walsh, will announce today a summer-long “Talent Pipeline Challenge” that would connect employers to organizations that offer job training, such as unions, industry associations and community colleges, senior administration officials said on Thursday. The effort also encourages state and local government to use funding from the infrastructure law and the American Rescue Plan to invest in opportunities to provide workers with training to support industries that will see increased demand under new infrastructure investment and workers acutely affected by the pandemic, according to a fact sheet.

Another item going up in the year of inflation: earmark requests... House appropriators fielded more earmark requests for additional money for fiscal year 2023 than the previous year, but stalled negotiations over top-line spending figures create uncertainty around how much funding will be available. Members of the House Appropriations Committee advanced six of their 12 annual funding bills through subcommittee markups this week, including earmarks in five of the bills so far. Nearly 80% of the House — 345 lawmakers — submitted 4,761 earmarks requests in fiscal 2023 appropriations bills totaling $12.4 billion, according to a list published by the House Appropriations Committee. That includes 224 Democrats who submitted 3,326 requests totaling nearly $6.9 billion, and 121 Republicans who submitted 1,435 requests totaling more than $5.5 billion. The funding amount of the House requests is a 74% increase over fiscal 2022, when the committee fielded 3,019 requests totaling $7.1 billion. The final fiscal 2022 omnibus spending package included 4,975 earmarks totaling nearly $9.7 billion, including 2,449 earmarks requested solely by House members, which totaled $3.6 billion. House members were allowed to submit up to 15 requests each for fiscal 2023, up from 10 in fiscal 2022.

Retailers buying beef – at lower prices... Packers have moved quite a bit of beef this week as retailers are making final purchases ahead of Father’s Day and Independence Day. But the strong movement has come amid lower prices, signaling the wholesale market is likely to be weak once these “beef” holidays have passed.

Big jump in pork cutout but movement slows... The pork cutout value firmed $5.57 on Thursday amid gains in all cuts, led by a $10.48 jump in bellies. While prices shot sharply higher, movement slowed to around 208 loads, signaling retailers aren’t interested in buying a lot of product with the cutout value back above $110.00.

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

• 8:00 a.m. Food Expenditure Series — ERS
• 2:00 p.m. Peanut Prices — NASS
• 2:00 p.m. Potato Stocks — NASS
• 2:30 p.m. Commitments of Traders — CFTC