First Thing Today | April 13, 2023

Good morning!

Followthrough buying in soybeans... Soybean futures extended this week’s price gains overnight, while wheat traded lower and corn was mixed. As of 6:30 a.m. CT, corn futures are trading fractionally lower to 1 cent higher, soybeans are 7 to 11 cents higher, SRW wheat is 2 to 5 cents lower, HRW wheat is 7 to 11 cents lower and HRS wheat is mostly 2 to 3 cents lower. Front-month crude oil futures are modestly weaker while the U.S. dollar index is nearly 200 points lower.

Exchange cuts Argentine soybean, corn crop estimates... The Rosario Grain Exchange made further cuts to its Argentine crop estimates amid the historic drought that slashed production potential. The exchange now estimates the country’s soybean crop at 23 MMT, down 4 MMT from its previous forecast. It cut the Argentine corn production forecast 3 MMT to 32 MMT.

Weekly Export Sales Report out this morning... For the week ended April 6, traders expect:

China’s soybean imports record large in Q1... China imported 6.85 MMT of soybeans during March, down 2.7% from February but 7.9% more than last year. Through the first three months of 2023, China imported 23.02 MMT of soybeans, up 13.5% from the same period last year and a record for the first quarter of the year. Strong imports are expected to continue in April and May but could slow after that unless demand for soymeal from the hog sector improves.

China’s exports unexpectedly surge in March... China’s exports surged 14.8% from year-ago to an eight-month high of $315.59 billion in March. The country’s imports fell 1.4% versus last year to $227.40 billion amid weak domestic demand. That widened China’s trade surplus to $88.19 billion. The trade surplus with the U.S. narrowed to $27.6 billion in March.

Strategie Grains cuts EU wheat production but raises export forecast... Strategie Grains trimmed its EU 2023 wheat production forecast by 600,000 MT to 128.9 MMT, though that would still be up 3.7 MMT (3.0%) from last year. Despite the smaller production forecast, the firm raised its 2023-24 EU wheat export forecast by 400,000 MT to 30.7 MMT, which would be up 1.3 MMT (4.4%) from the downwardly revised estimate for 2021-22.

France trims wheat export forecasts... France’s ag ministry trimmed its 2022-23 wheat export forecast outside the EU to 10.40 MMT from 10.45 MMT previously. It also trimmed wheat exports within the bloc to 6.43 MMT from its prior forecast of 6.51 MMT.

Judge blocks WOTUS rule in 24 more states... A federal judge on Wednesday enjoined EPA’s new waters and wetlands protection rule from being enforced in 24 states (West Virginia, North Dakota, Georgia, Iowa, Alabama, Alaska, Arkansas, Florida, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia and Wyoming), issuing a preliminary injunction similar to a ruling in March blocking the rule in Texas and Idaho. The Supreme Court is expected to issue a ruling on the topic. The timeline for the Supreme Court decision on WOTUS is murky but some contacts signal it will issue some rulings Friday.

U.S. gov’t budget deficit surges... The U.S. federal government’s budget deficit hit $1.1 trillion in the first half of the fiscal year, a 63% jump over a year ago. The strong increase was driven by higher outlays for education, health care benefits and debt interest payments.

Buffett: More U.S. banks likely to fail... Warren Buffett said more U.S. banks are likely to fail, but depositors should be confident they won’t lose any of their funds. “We are not through with bank failures,” the Berkshire Hathaway chairman and CEO said in an interview on CNBC Wednesday. “Dumb decisions” by bank managers shouldn’t be “panicking the whole citizenry of the United States about something they don’t need to be panicked about.” Buffett said the structure of the Federal Deposit Insurance Corp. — which collects assessments from the banks with deposits it insures — means the federal government won’t lose money as it resolves failed banks.

China’s meat imports continue to climb... China imported 650,000 MT of meat in March, up 7.1% from February and 9.9% more than last year. China doesn’t break out meat imports by category in its preliminary trade data, but the increase was driven by stronger pork imports, which started to increase late last year. Through the first quarter of this year, China imported 1.95 MMT of meat, up 17.2% from the same period last year.

Choice beef prices continue to surge... Choice boxed beef prices firmed $3.38 on Wednesday, reaching $298.48. With tightening beef supplies, wholesale prices are likely to continue to rise, especially if packers try to keep cutting margins in the black as they compete for reduced market-ready supplies. Not only are slaughter numbers declining but carcass weights are well under year-ago and the lightest since 2019, suggesting wholesale prices aren’t likely to top anytime soon.

Pork cutout drops... The pork cutout value dropped $1.44 on Wednesday to $76.02. Wholesale pork prices are the weakest since the end of 2020, despite surging beef values. The Choice beef/pork cutout ratio widened to 3.9 and it appears packers will continue to cut wholesale pork prices until retailers signal they have gotten cheap enough by making aggressive purchases.

Overnight demand news... Taiwan purchased 52,850 MT of U.S. milling wheat. Japan purchased 78,548 MT of milling wheat in its weekly tender, including 21,750 MT U.S. and 56,798 MT Canadian. The Philippines tendered to buy 150,000 MT of optional origin feed 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
• 11:00 a.m. Cotton and Wool Outlook: April 2023 — ERS
• 11:00 a.m. Oil Crops Outlook: April 2023 — ERS
• 2:00 p.m. Feed Outlook: April 2023 — ERS
• 2:00 p.m. Rice Outlook: April 2023 — ERS
• 2:00 p.m. Wheat Outlook: April 2023 — ERS