First Thing Today | January 19, 2024

Good morning!

Mild followthrough buying in grains overnight... Corn, soybeans and wheat modestly extended Thursday’s corrective gains during the overnight session. As of 6:30 a.m. CT, corn futures are trading a penny higher, soybeans are 5 to 7 cents higher, winter wheat markets are 3 to 4 cents higher and spring wheat is 4 to 7 cents higher. Front-month crude oil futures are anchored near unchanged and the U.S. dollar index is around 175 points lower.

House passes CR to avert gov’t shutdown... A bill to avert a partial U.S. government shutdown secured enough votes to pass in the House. The Senate earlier Thursday approved the measure. Legislators now have until March 1 to fund some agencies, including USDA, and March 8 for the others.

Weekly Export Sales Report out this morning... For the week ended Jan. 11, traders expect:

Russia: No prospect of reviving Black Sea grain deal... The Kremlin said there was no prospect of reviving the Black Sea grain deal and that alternative routes for shipping Ukrainian grain carried huge risks. These comments came after Ukraine’s ambassador to Turkey said on Thursday “certain negotiations” were underway regarding the UN-brokered Black Sea grain export initiative.

USITC upholds duties on phosphate fertilizers from Morocco and Russia, tariffs reduced... The UN International Trade Commission (USITC) has maintained its 2020 decision to impose duties on imports of phosphate fertilizers from Morocco and Russia. However, the Department of Commerce (DOC) reduced the tariffs from 19.97% to 7.41%. The U.S. Court of International Trade will review this remand decision, and DOC will make another decision later this year through an administrative review process. The petition to USITC was brought by the U.S. fertilizer company Mosaic, alleging unfair trading practices by Morocco and Russia had harmed their business.

CEOs increase planning for geopolitical scenarios... Business leaders in Davos told Reuters they are increasingly turning to scenario planning to safeguard supply chains and lessen the potential hit from unexpected geopolitical crises. Many CEOs and executives foresee an upbeat U.S. economy in 2024, but are concerned about China and Europe, and the impact of unexpected global shocks on inflation. With supply chain disruptions caused by the pandemic worked through, CEOs are now grappling with impacts of Houthi attacks in the Red Sea.

Panama Canal faces up to $700 million loss in 2024 due to low water levels... In 2024, the Panama Canal is facing significant impacts due to low water levels, and these impacts are expected to result in financial losses. Panama Canal Administrator Ricaurte Vásquez has stated new cuts to service caused by the low water levels are projected to cost between $500 million and $700 million. To address the low water levels, the Panama Canal will reduce the daily number of ship crossings. Under normal conditions in the previous year, there were 38 ship crossings per day. However, in 2024, this number is expected to be reduced to 24 ship crossings per day. The first quarter of the waterway’s fiscal year has already seen a 20% decrease in cargo and 791 fewer ships passing through the canal compared to the same period in the previous year. These declining numbers and associated costs have led to a 36% reduction in ship crossings within the Panama Canal.

Annual foreign investment flows into China shrinks first time since 2012... Foreign direct investment (FDI) into China fell 8% 1.13 trillion yuan ($157.1 billion) in 2023, the first annual decline since 2012. That underscores the challenge Beijing faces in trying to win back foreign firms as Western governments talk up “de-risking” with China.  

Cattle on Feed Report out this afternoon... Analysts polled by Reuters expect USDA’s Cattle on Feed Report this afternoon to show the feedlot inventory up 2.1% from year-ago at 11.927 million head. That would be the fourth straight month of year-over-year increases in feedlot numbers. After aggressive placements of calves into feedlots early last fall, analysts anticipate that category will be down 4.6%, which would be the second straight month with a year-over-year decline. Marketings in December are expected to be down 0.7%.

Still waiting on active cash cattle trade... Cash cattle negotiations remained at a standstill on Thursday, with asking prices in the $174.00 to $175.00 range and limited packer bids. Active cash trade may not come until after the Cattle on Feed Report unless packers get more aggressive with bids as feedlots appear unwilling to move cattle at lower prices.

Cash hog prices continue to grind higher... The CME lean hog index is up another 53 cents to $67.87 (as of Jan. 17), marking the seventh gain in eight days. February lean hog futures finished Thursday at a $3.23 premium to today’s cash quote.  

Overnight demand news... South Korea purchased 66,000 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

• 7:30 a.m. Weekly Export Sales — FAS
• 8:00 a.m. Food Expenditure Series — ERS
• 2:00 p.m. Livestock, Dairy, and Poultry Outlook: January 2024 — ERS
• 2:00 p.m. Sugar and Sweeteners Outlook: January 2024 — ERS
• 2:00 p.m. Cattle on Feed — NASS
• 2:00 p.m. Peanut Prices — NASS
• 2:30 p.m. Commitments of Traders — CFTC