First Thing Today | May 12, 2023
Good morning!
Wheat leads gains ahead of USDA reports... Corrective buying supported corn, soybean and wheat futures overnight ahead of USDA’s May crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading mostly a penny higher, soybeans are 3 to 9 cents higher, SRW wheat is 8 to 9 cents higher, HRW wheat is 12 to 16 cents higher and HRS wheat is 13 to 14 cents higher. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is around 175 points higher.
May crop reports out later this morning... USDA’s May Supply & Demand Report at 11 a.m. CT will feature updated U.S. and global old-crop ending stocks, along with the first official look at the 2023-24 balance sheets. USDA will also issue its first winter wheat production estimate. Traders expect increases in 2022-23 ending stocks for corn, soybeans and wheat. For 2023-24, ending stocks are expected to be 2.094 billion bu. for corn, 293 million bu. for soybeans and 602 million bu. for wheat. Traders expect USDA to estimate the winter wheat crop at 1.230 billion bushels.
Turkey says extension of Black Sea grain deal nearing... Parties to the Black Sea grain deal are nearing an extension after two days of talks between Ukrainian, Russian, Turkish and United Nations officials, Turkey’s Defense Minister Hulusi Akar said. But the Kremlin said there was nothing new to report on a possible renewal of the deal and a potential meeting between Russian President Vladimir Putin and Turkish President Recep Tayyip Erdoğan wouldn’t help finalize an extension. Russia continues to insist on concessions for its grain and fertilizer exports before it would to an extension.
Russia lowers wheat export tax... Russia’s wheat export tax for May 17-23 will be 4,727.6 rubles ($61.19) per metric ton based on an indicative price of $277.90. That’s down from a rate of 5,279.2 rubles per metric ton the previous week and the fourth straight weekly decline.
House Republicans pass border security bill... The measure would crack down on unlawful immigration. Republicans timed approval of the measure, which has no chance in the Democratic-led Senate, to spotlight their hardline stance on immigration just as President Biden is facing a potential border surge with Thursday night’s expiration of Title 42, the pandemic-era rule allowing for swift expulsion of migrants. House Speaker Kevin McCarthy (R-Calif.) called the package “the strongest border security bill this country has ever seen,” saying in a speech on the House floor that “meanwhile, we are seeing a very different record from President Biden.” On Fox News, McCarthy said Biden treated the border situation “like he has treated the debt limit. He has ignored the problem.”
White House meeting on new farm bill: A big nothing burger... All one needs to know about the “meeting” Thursday at the White House with President Joe Biden, USDA Secretary Tom Vilsack and the major ag panel leaders was that it looks like it was a nothing more than a meet-and-greet affair. Not bad on its surface, but… there are a lot of things to settle in Washington.
U.S., China attempt to defuse tensions... The U.S. and China have engaged in talks, seeking to defuse tensions and stabilize relations between the two countries, which have reached their lowest point since 1979, the Financial Times reports. U.S. national security adviser Jake Sullivan and China’s top diplomat Wang Yi discussed a range of issues, including the U.S./China relationship, global security matters, Russia’s war against Ukraine, and Taiwan. The two sides agreed to maintain this strategic channel of communication, building on a previous engagement between President Joe Biden and President Xi Jinping in Bali in November 2022. Both leaders had agreed to set a “floor” under the relationship to ensure competition doesn’t escalate into conflict, especially with ongoing tensions over Taiwan.
Meeting on debt limit pushed to next week... President Biden’s planned meeting today with top congressional leaders to discuss the debt ceiling has been pushed to next week. The delay will allow more time for the White House and congressional staff to make progress in their closed-door spending talks. Potential areas of compromise include clawing back unspent Covid relief funds, speeding up the permitting process for energy projects and imposing spending caps.
Farm-state lawmakers push back on SCOTUS Prop 12 ruling... Sen. Roger Marshall (R-Kan.) said he plans to reintroduce the Exposing Agricultural Trade Suppression (EATS) Act that would preempt state and local governments from “interfering with the production or manufacture of agricultural products in other states.” House Ag Committee member Randy Feenstra (R-Iowa), who represents the nation’s top pork-producing district, vowed to work to repeal Prop 12. “Quite frankly, California liberals have no jurisdiction over how Iowa farmers raise our hogs,” Feenstra said in a statement. “We simply can’t allow radical state laws to dictate the agricultural practices of the rest of the nation, especially in a way that will only increase food costs for the food insecure and drive farmers and ranchers out of business,” Marshall said in a statement.
South Korea discovers FMD... South Korean authorities have ordered the culling of several hundred cattle and put in place biosecurity measures after confirming cases of foot and mouth disease (FMD) on farms in a central province, the ag ministry said. The cases mark the first confirmed outbreak since January 2019.
Cash cattle prices weaken... After some light trade at steady/firmer prices in the Midwest earlier in the week, cash cattle traded more actively at lower prices compared with last week on Thursday. June live cattle futures finished Thursday roughly $11.00 below last week’s average cash price, so there shouldn’t be active selling even if there’s more cash trade at lower prices.
May hogs expire today... May lean hog futures expire today, meaning June will take over lead-month status. June hogs finished Thursday $8.475 above today’s cash quote (as of May 10) of $75.40. While the cash market has been on a steady climb for nearly three weeks, daily gains have been small, which has limited traders’ willingness to buy futures.
Overnight demand news... South Korea purchased 132,000 MT of corn expected to be sourced from South America.
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
- 11:00 a.m. WASDE — WAOB
- 11:00 a.m. Cotton Ginnings - Ann. — NASS
- 11:00 a.m. Crop Production — NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grains: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. Agricultural Chemical Usage - Field Crops — NASS
- 2:00 p.m. CE: Cotton — NASS
- 2:00 p.m. CE: Peanuts — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC
