First Thing Today | May 22, 2023

First Thing Today
First Thing Today
(Pro Farmer)

Good morning!

Corn and beans firmer, wheat weaker to open the week... Corn and soybeans were supported by corrective buying overnight, while wheat faced followthrough selling. As of 6:30 a.m. CT, corn futures are trading fractionally to 2 cents higher, soybeans are 6 to 8 cents higher, SRW and HRS wheat are mostly around 6 cents lower and HRW wheat is 9 to 11 cents lower. Front-month crude oil futures and the U.S. dollar index are both near unchanged.

Warm, dry week ahead for the Corn Belt... The Corn Belt is expected to see normal to above-normal temps and limited rainfall this week, resulting in net drying over the region. The northwestern Corn Belt and Northern Plains will have better planting weather, though some rain is expected. Rains are expected across areas of the Southern Plains this week.

G7 calls for full implementation of Black Sea grain deal... The Group of Seven (G7) called on all participants of the Black Sea Grain deal “to continue and fully implement its smooth operation at its maximum potential and for as long as necessary.” G7’s statement on global food security also stressed “the importance of allowing grains to continue to reach those most in need.”

G7 condemns China but wants ‘constructive and stable’ ties with Beijing... G7 leaders strongly criticized China for its economic coercion and militarization activities in the South China Sea. They agreed to establish a new entity to counteract aggressive economic actions, a decision likely influenced by China’s propensity to leverage trade dependency for geopolitical gains. G7 leaders said they will seek “constructive and stable” ties with Beijing, even as they push ahead with steps to reduce dependence on China for critical supply chains.

Russia targets 55 MMT of grain exports annually... Russia plans to harvest on average around 130 MMT of grain a year and export up to 55 MMT, Russian First Deputy Agriculture Minister Oksana Lut said. She noted Russia had managed to increase its grain exports despite some countries rejecting its supplies because of the war in Ukraine. Russia is currently shipping around 80% of its grain to the Middle East and North Africa, with Turkey, Egypt, Iran, Saudi Arabia and Algeria comprising the top five buyers, according to Eduard Zernin, the head of Russia’s grain exporters union.

More Polish wheat headed to United States... Another shipment of about 30,000 MT of European Union origin wheat, believed to be from Poland, is expected to be shipped to the U.S. in June or July. This follows two previous shipments of Polish wheat to the U.S. – one of about 31,000 MT shipped in April and another of about 32,000 MT shipped in January both to Tampa, Florida.

The week ahead in Washington... The focus remains the debt-limit talks. President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) will meet this afternoon in a one-on-one meeting to discuss the impending U.S. government debt default. Biden said he would cut spending and Republicans must now shift their demands. The Supreme Court is expected on Thursday to issue additional rulings. The ag sector hopes it will rule on the pending Waters of the U.S. (WOTUS) case. Key economic releases include minutes from the last Federal Open Market Committee meeting on Wednesday, the second estimate of U.S. first quarter GDP on Thursday and the personal consumption expenditures price index, the Fed’s preferred inflation gauge, on Friday. USDA on Friday will update its food price outlook.

Powell signals pause... Fed Chair Jerome Powell on Friday gave a clear signal he’s inclined to hit the pause button on monetary policy next month and said rates could top out at a lower level than previously expected. “We’ve come a long way in policy tightening and the stance of policy is restrictive, and we face uncertainty about the lagged effects of our tightening so far and about the extent of credit tightening from recent banking stresses,” Powell told a Fed conference Friday in Washington. “Having come this far, we can afford to look at the data and the evolving outlook to make careful assessments,” he said, reading from prepared notes.

Mexico asks Texas to stop cargo truck inspections at the border... The Mexican government is requesting Texas to discontinue its state-run cargo truck inspections at the border due to long delays and significant trade losses. Texas Department of Public Safety (DPS) initiated these inspections on May 2 at the Veterans International Bridge in Brownsville and Free Trade International Bridge in Los Indios, causing delays from 8 to 27 hours. This has had a significant impact on perishable products. Texas DPS’s checkpoints are supplementary to the commercial truck inspections performed by U.S. Customs and Border Protection (CBP) and have significantly slowed down CBP’s processing. The Mexican government has threatened to lodge a complaint under the United States-Mexico-Canada (USMCA) trade agreement if inspections are not immediately halted.

Atypical BSE case announced... On Friday, USDA’s Animal and Plant Health Inspection Service (APHIS) announced an atypical case of Bovine Spongiform Encephalopathy (BSE) has been found in South Carolina. The approximately five-year-old or older beef cow tested positive following routine surveillance protocols and the carcass was condemned soon after. The animal possessed a radio frequency identification tag associated with a herd in Tennessee.

Neutral Cattle on Feed Report... Last Friday’s Cattle on Feed Report showed On Feed down 3.4%, placements down 4.2% and marketings down 10.1% from year-ago levels. On the surface, the report data is neutral as it lined up closely with pre-report expectations. But the underlying numbers are bullish, as this marked the eighth straight month of year-over-year declines in feedlot inventories.

Hog premiums to cash continue to narrow... The CME lean hog index is up another 71 cents to $79.13 (as of May 18), the highest since mid-March. After Friday’s losses, the premium in June lean hog futures was down to $3.895. At that level, additional seller interest should be relatively limited, especially if the cash index continues its seasonal climb.

Overnight demand news... Taiwan tendered to buy up to 65,000 MT of corn that can be sourced from the U.S., Brazil, Argentina or South Africa and 56,000 MT of U.S. milling wheat. South Korea tendered to buy 135,000 MT of milling wheat that can be sourced from the U.S., Canada or Australia.

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.

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