First Thing Today | February 24, 2023

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Good morning!

Mild corrective buying in soybeans... Soybeans firmed on light corrective buying overnight, while the corn and wheat markets faced pressure. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are mostly 3 to 6 cents higher, winter wheat futures are 7 to 9 cents lower and spring wheat is 4 to 7 cents lower. Front-month crude oil futures are modestly higher, while the U.S. dollar index is more than 300 points higher.

Vilsack signals USMCA case coming on GMO corn situation with Mexico... USDA Secretary Tom Vilsack said a dispute settlement request under the U.S.-Mexico-Canada Agreement (USMCA) is likely “coming” relative to Mexico’s decree barring imports of GMO corn for food use as of 2024. During a press conference at USDA’s Outlook Forum, Vilsack said the two sides are currently in an information-sharing stage, which needs to occur. But the U.S. appears to be pursuing a case via USMCA on the matter. “That is going to happen, because we’re essentially in a circumstance where this is not a situation that lends itself to a compromise,” he remarked. Other U.S. officials addressing the topic during another session at the Forum would only say the U.S. was keeping the option open to pursue dispute settlement processes under USMCA. U.S. Trade Representative Special Agriculture Negotiator Doug McKalip said the U.S. was reviewing a response from Mexico in the matter and there would be something coming “soon.” McKalip noted Mexico is granting approvals to applications for new genetically modified plant traits. Speaking to reporters on Thursday, McKalip said Mexico appears “interested in finding a solution. I think they’d like to avoid going to a dispute panel.”

Weekly Export Sales Report out this morning... For the week ended Feb. 16, traders expect:

 

2022-23 expectations (in MT)

Last week (in MT)

Corn

500,000-1,300,000

1,024,499

Wheat

150,000-500,000

209,847

Soybeans

300,000-850,000

512,802

Soymeal

150,000-300,000

270,853

Soyoil

0-10,000

8,293

Japanese consumer inflation hits new 41-year high... Japan’s core consumer inflation hit a fresh 41-year high in January as companies passed on higher costs to households. Japan’s core consumer price index rose 4.2% annually in January, up from a 4.0% increase in December and the highest since September 1981. Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said the central bank should maintain ultra-low interest rates for the time being to prevent an economic slowdown. But he added BOJ should be “creative” with its policy.

Biden nominates Banga as World Bank president... President Joe Biden will nominate former Mastercard CEO Ajay Banga in a surprise pick to be the next president of the World Bank as Washington pushes the lender to expand its financial firepower and confront issues like climate change. Banga focused on climate change as Mastercard’s chief executive. David Malpass, the previous head, resigned last week, a year before his term was set to expire, amid concerns he did not take climate change seriously.

Brazilian exporters expect to keep supplying China with beef despite ban... Brazilian meatpackers Minerva SA, Marfrig and JBS said they will be able to keep supplying China with beef despite a ban after a confirmed case of bovine spongiform encephalitis (BSE) in the country. The companies say they intend to fill export orders to China via plants in neighboring South American countries.

Another drop in feedlot numbers expected... USDA’s Cattle on Feed Report this afternoon is expected to show a 3.5% decline in feedlot numbers compared with year-ago, which would be the fifth straight month with a year-over-year reduction. January placements are expected to have declined 2.9%. Last month’s marketings are anticipated to have increased 3.9% from last year.

Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of January. The five-year average is a 7.7-million-lb. increase in beef stocks and a 54.6-million-lb. rise in pork stocks during the month.

Cash cattle trade higher... Light to moderate cash cattle trade was reported at $1 higher prices in the northern market and roughly $2 higher levels in the Southern Plains on Thursday, though some feedlots held out for hopes of even stronger prices. With carcass weights falling and wholesale beef prices strengthening, packers have incentive to actively compete for tightening supplies.

Hog premium narrows... The CME lean hog index continues to rise with another 65-cent gain today (as of Feb. 22). Yesterday’s decline in April lean hog futures combined with gains in the cash index the past month have narrowed the lead contract’s premium to around $8.00. That’s still more than the five-year average gain of around $6.60 in the cash index from now until mid-April.

Overnight demand news... South Korea purchased a total of 247,000 MT of corn from four separate tenders – 197,000 MT optional origin and 50,000 MT expected to be sourced from South Africa. Iraq purchased 250,000 MT of Australian 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

 

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