First Thing Today | January 18, 2024

First Thing Today
First Thing Today
(Pro Farmer)

Good morning!

Grains mostly firmer overnight... Corn, soybeans and spring wheat contracts traded higher overnight amid light corrective buying, while the winter wheat markets favored the downside. As of 6:30 a.m. CT, corn futures are trading a penny higher, soybeans are mostly 6 cents higher, SRW wheat is 2 cents lower, HRW wheat is steady to fractionally lower and HRS wheat is 2 to 3 cents higher. Front-month crude oil futures are near unchanged, while the U.S. dollar index is about 150 points lower.

Middle East tensions rising... The U.S. launched more strikes on Yemen’s Houthis overnight, citing an “imminent threat” to merchant vessels and U.S. Navy ships in the Red Sea area. Hours later, Pakistan launched retaliatory missiles against militants in Iran in the latest incident to roil the wider region. The attacks have had consequences for the global economy as they have effectively closed off the Red Sea — one of the main trade routes for container ships. Of note: Iran is embroiled in an escalating spat with its southeastern neighbor Pakistan, which targeted locations inside Iran a day after deadly Iranian strikes on separatists in Pakistani territory. The new strikes mean both countries have now taken the extraordinary step of attacking militants on each other’s soil at a time of expanding conflict in the Middle East and the broader region.

Senate vote on CR today; House action may be pulled forward... The Senate will begin voting on a continuing resolution (CR) to fund the federal government through early March at 12:30 p.m. ET. There will be several votes, including amendments that will be rejected. The short-term spending measure is expected to clear the Senate and will then be sent to the House where it faces GOP conservative opposition but widespread support among Democrats. Of note: The Washington area is bracing for a major snowstorm. House leadership will face pressure to bring up the CR today instead of Friday.

Export sales pushed back to Friday... Due to Monday’s government holiday, export sales data for the week ended Jan. 11 will be released Friday morning.

Thompson wants to fast track farm bill for 2024 passage... House Ag Chair Glenn “GT” Thompson (R-Pa.) told Bloomberg he wants to “fast track” a new farm bill, with plans to advance it through his committee before March. IN about three weeks, they will start with a Chairman’s Mark to unveil the bill, with the goal of completing committee action in March. But the timeline will depend on securing floor time from House Speaker Mike Johnson (R-La.). This suggests the bill’s progress will be contingent on House leadership’s support and scheduling. But our sources say it was Johnson who was pressing Thompson to get something done during House floor action in March. The $1.5 trillion, five-year farm bill reauthorization was initially planned for last year but was deferred to 2024. Congress provided some breathing room by agreeing to a one-year extension of the 2018 Farm Bill through Sept 30.

Stabenow outlines goals, priorities in new farm bill... Senate Ag Chair Debbie Stabenow (D-Mich.) in a letter to colleagues said the new farm bill presents an opportunity to modernize and improve the safety net for American farmers. She stressed crop insurance is a crucial tool that has seen improvements and expansion and called for more options and affordability in crop insurance for all commodities, including specialty crops and livestock. She also noted the Title I farmer safety net needs updates to Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs and will consider increasing the “effective reference price” for covered commodities. Stabenow is working on a plan for crop insurance that would bolster the program but would force farmers to choose either crop insurance or the farmer safety net programs currently available, which would help “justify a very high federal subsidy.” Stabenow indicated this was not a new concept since it was deployed previously for cotton. “In order to get an 80% federal subsidy, you would choose between programs. That's worked well… And I think it is the path that has the most support.”

Perspective on Stabenow’s crop insurance or safety net choice plan... One farm bill analyst told us: “The cotton choice did not work out well. That is why cotton farmers were put back into the commodity title in 2017. Crop insurance is absolutely vital to producers. But it is not designed to handle every peril a farmer faces. Multiple years of depressed prices are not addressed by crop insurance. High and rising foreign subsidies, tariffs and non-tariff trade barriers are not addressed by crop insurance. That is the job of the commodity title. As we head into lower commodity prices again, lawmakers should not repeat the same mistakes as in the past where some farm bills were written as though crop prices would always be high. At some point, we ought to learn from the past as we chart the future.  2024 would be a good year in which to start.”

Ukraine: Talks underway on UN-brokered grain deal... Ukraine’s ambassador to Turkey said “certain negotiations” were underway regarding the UN-brokered Black Sea grain export initiative that ended last summer. “Unfortunately, this grain initiative is not functioning at the moment, although certain negotiations are ongoing to find a format for possible assistance from international partners to Ukraine,” Vasyl Bodnar said, though he provided no details.

China approves several GMO soybean, corn varieties... China approved additional varieties of genetically modified soybeans and corn for import and production while expanding their planting areas nationwide, as part of a drive to improve food security and reduce imports. China’s ag ministry approved the domestic production of six more GMO varieties of corn, two of soybeans and one of cotton, and another two of gene-edited soybeans. The planting zones for most of the varieties were expanded from “ecologically suitable” areas to the whole country, according to the notice. Previously, some corn varieties were restricted to the northern or southern producing areas. For imports, the ministry approved gene-modified insect- and herbicide-resistant soybean variety, DBN8002, developed by Beijing Dabeinong Technology Group Co Ltd, which had been licensed for planting in Argentina since 2022. China also approved a Corteva Inc herbicide-tolerant corn variety DP202216. The new approvals extend for five years, effective from Jan. 2, 2024.

China’s grain imports surged in 2023... China imported 3.59 MMT of corn, 660,000 MT of wheat, 1.22 MMT of barley and 540,000 MT of sorghum during December. That pushed the annual totals to 22.18 MMT of corn (up 12.3% from 2022), 11.49 MMT of wheat (up 29.4%), 9.67 MMT of barley (up 83.0%) and 4.87 MMT of sorghum (down 51.5%).

Strategie Grains cuts EU wheat exports, 2024 production... Strategie Grains cut its 2023-24 EU wheat export forecast 800,000 MT to 31.7 MMT, citing a lack of competition against Russian wheat and poor demand. The firm also reduced is EU wheat production forecast by 2.1 MMT to 122.7 MMT, mainly due to a cut in Germany where the area sown is now expected to fall to its lowest level since 1999. At that level, wheat production would fall 2.6% from last year. The firm projected total EU soft wheat area would fall by 3.2% year on year, mainly because of excessively wet conditions at planting time in the west and north of Europe. “Concerns now center on yield potentials, especially for soft wheat, which was hit by the adverse conditions at planting time in many places,” it said. “With rains forecast to return during the second half of January in western and northern parts of the EU, the situation will need to be closely monitored.”

China’s December pork imports fall sharply from year-ago... China imported 90,000 MT of pork during December, unchanged from November but 54.3% less than last year. For 2023, China imported 1.55 MMT of pork, down 11.7% from the previous year.

Cattle slaughter slowly rebounding... Wednesday’s estimated cattle slaughter improved to 118,000 head, though that was still 3,712 head below last year. The week-to-date tally stood at 341,000 head, up from last week but still well behind last year. Most beef plants are expected to run sizable Saturday kills to make up for holiday and weather-related downtime. As slaughter regulates, packer demand for cash cattle is expected to improve and support cash cattle prices.

Cash hog rally gaining steam... The CME lean hog index is up another 49 cents to $67.34 (as of Jan. 16), marking the sixth gain in the last seven days. The index is now $2.29 off what appears to be the seasonal low posted at the beginning of January. February lean hog futures finished Wednesday $4.11 above today’s cash quote.  

Overnight demand news... Japan purchased 87,641 MT of milling wheat from its weekly tender, including 62,121 MT U.S. and 25,520 MT Canadian. Lebanon purchased 72,000 MT of Ukrainian milling wheat. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat. Indonesia tendered to buy 500,000 MT of rice.

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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