First Thing Today | June 7, 2023
Good morning!
Grains firming this morning... Corn, soybeans and wheat posted two-sided trade overnight but are mostly firmer this morning. As of 6:30 a.m. CT, corn futures are trading fractionally lower to 2 cents higher, soybeans are mostly 2 to 8 cents higher, SRW wheat is 4 to 5 cents higher, HRW wheat is mostly a penny higher and HRS wheat is fractionally to a penny higher. Front-month crude oil futures are around 80 cents higher and the U.S. dollar index is about 250 points lower this morning.
China’s soybean imports surge to record level... China imported a record 12.02 MMT of soybeans during May, up 68% from April and 24% above year-ago, as cargoes delayed by strict inspections were unloaded at ports. Imports this month could be even larger as active shipments of Brazilian supplies arrive at Chinese ports. But a slowdown is likely in the following months as demand for soymeal has waned amid low hog prices and plentiful cheap wheat supplies that are being used in feed rations.
China’s exports, imports slowed during May... China’s exports fell 7.5% from last year in May to a three-month low of $283.5 billion. Imports dropped for a third straight month, declining 4.5% to $217.7 billion. That left China with a trade surplus of $65.8 billion, down from $78.4 billion the previous month. The trade surplus with the U.S. narrowed to $28.1 billion in May from $29.7 billion in April.
China’s wheat farmers face ‘disaster’ after heavy rains... About one-third of the wheat across southern Henan, known as the granary of China, reportedly has sprouted from recent heavy rains. As we reported last week, an estimated 30 MMT of China’s wheat crop was impacted by the adverse late-season weather, which will result in an abundance of feed wheat – and the need for Chinese millers to import more high-quality supplies, despite record production.
China’s foreign exchange reserves fall to three-month low... China’s foreign exchange reserves fell to $3.177 trillion in May from April’s $3.205 trillion, which was the highest since February of 2022. China held 67.27 million fine troy ounces of gold at the end of May, up from 66.76 million ounces the previous month, though the value to $132.15 billion from $132.35 billion.
Black Sea grain deal talks will be held on Friday... Talks on the Black Sea grain export deal will be held in Geneva on Friday, Russia’s RIA news agency reported, citing a source with knowledge of the situation. Top United Nations trade official Rebeca Grynspan is expected to take part in the talks, RIA said.
Ukraine: Extension of EU grain import bans ‘inappropriate’... Ukraine’s ag ministry says it was “inappropriate” for the European Commission to extend restrictions for grain shipments to Bulgaria, Hungary, Poland, Romania and Slovakia through Sept. 15. The ministry noted it hopes there is no further extension. The countries have asked that the ban be extended through year-end.
Treasury updates EV tax credit criteria... The Treasury Department updated the criteria for electric vehicle (EV) tax credits, making all Tesla Model 3 sedans eligible for the full $7,500 tax credit. As part of a Biden administration plan to increase EV adoption, this change increases the number of eligible EV models to 22, including models from General Motors, Ford, and Volkswagen. Before this change, only the performance version of the Model 3 was eligible for the $7,500 credit, while the long-range Model 3 qualified for a reduced credit of $3,750. Tesla's Model S and Model X are not eligible for any tax credit. The tax credits are part of the Inflation Reduction Act, which aims to reduce U.S. reliance on China in the EV battery supply chain by requiring specific North American and domestic content in the vehicles' batteries.
First ASF vaccine nearing approval in Vietnam... Vaccines against African swine fever (ASF) being tested in Vietnam are close to approval, global and U.S. veterinary officials said. Two vaccines co-developed by U.S. scientists being tested in large pilot program by Vietnamese companies are showing “very promising” results, Gregorio Torres, head of the science department at the World Organization for Animal Health (WOAH), told Reuters. The next step will be nationwide authorization in Vietnam, the first ever for an African swine fever vaccine, and possible sales overseas. USDA researchers have reviewed the results of one of the vaccines, NAVET-ASFVAC, and reported “no safety issues.” USDA has not yet reviewed the data for the second vaccine, AVAC ASF LIVE.
Wholesale beef prices surging... Cash cattle prices posted an all-time high last week and front-month cattle futures rallied to the highest level ever on Tuesday. While wholesale beef prices are still far from their Covid-induced record peak in 2020, values are surging. Choice boxes jumped another $7.21 on Tuesday to $321.40, the highest level since September 2021. Select firmed $2.71 to $299.44.
Cash hog market continues slow, methodical climb... The CME lean hog index is up 65 cents to $81.86 (as of June 5), extending the seasonal price climb. June and July hogs both held nearly $6.50 premiums to today’s cash quote on Tuesday’s close. For futures to continue their recent climb, the cash market must start showing stronger daily gains.
Overnight demand news... Egypt purchased 55,000 MT of Russian wheat. Taiwan tendered to buy 56,000 MT of U.S. milling wheat. Algeria tendered to buy up to 140,000 MT of optional origin corn.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
