First Thing Today | January 23, 2024

First Thing Today
First Thing Today
(Pro Farmer)

Good morning!

Grains mildly firmer this morning... Corn, soybeans and wheat are mildly favoring the upside this morning after trading narrowly on either side of unchanged overnight. As of 6:30 a.m. CT, corn futures are trading a penny higher, soybeans are mostly 2 to 4 cents higher and wheat futures are 1 to 2 cents higher. Front-month crude oil futures are around 65 cents lower and the U.S. dollar index is more than 100 points higher.

Cordonnier leaves South American crop estimates unchanged... South American crop consultant Dr. Michael Cordonnier maintains a lower bias toward Brazil’s soybean and corn crops but kept both production estimates unchanged this week at 149 MMT and 115 MMT, respectively. He also kept his Argentine crop estimates at 52 MMT for soybeans and 56 MMT for corn. Cordonnier expects total South American production to rise 9.2% for soybeans and 0.5% for corn versus last year.

Canada expects smaller wheat seedings but slightly bigger production... Agriculture and Agri-Food Canada’s preliminary projections for the 2024-25 marketing year call for wheat seedings excluding durum to fall 2.9% from last year to 8.2 million hectares due to lower prices and relatively ample global supplies, though that would still be about 5% above the five-year average. With yields expected to recover, assuming normal weather conditions, total wheat production is projected to rise about 1% to 27.9 MMT.

Australia’s crop production boosted by El Niño-defying rains... Australia is poised to produce much more wheat and other crops this year than previously thought after rainfall confounded expectations that an El Niño weather pattern would maintain dry and hot conditions, analysts and industry associations told Reuters. The weather turnaround has been striking, with the driest three-month period on record between August and October giving way to what some farmers say is their greenest summer in memory. Australia’s wheat production could reach roughly 30 MMT, according to Ole Houe at IKON Commodities in Sydney, instead of the 24 MMT to 25 MMT crop if weather had remained dry.  Commonwealth Bank forecast the wheat harvest at 31.4 MMT.

China to expand use of GM soybeans, corn ‘in orderly manner’... Beijing, who has been cautious on the development and deployment of GM crops, is steadily opening up to commercial cultivation. China has successfully completed its pilot projects for commercialization of GM soybeans and corn, an ag Ministry official said. In December, China issued licenses to 26 companies to produce and sell GM corn and soybean seeds and last week approved additional varieties of GM soybeans and corn for import and production. “In the next step, we will improve technology and strengthen management and will expand the use of GM corn and soybeans in an orderly manner,” said Pan Wenbo, director of the planting management department at the ag ministry.

EU to allow wider measures to control Ukraine grain imports... The European Commission is looking into ways of allowing eastern EU member states to restrict ag imports from Ukraine as it extends trade liberalization with Kyiv. EU Trade Commissioner Valdis Dombrovskis said the commission was about to present a proposal for the new period to June 2025, taking into account the sensitivities of agricultural sectors in eastern member states of the bloc. The existing arrangement does include safeguards but these only apply if the whole EU market is affected. “We’re looking at the best ways to do it, including the possibility of having the safeguards not only in the case of disturbances to the EU market as a whole, but also in case of disturbances in a single member state or a few member states,” Dombrovskis said. One EU diplomat said the plan would allow affected EU members to take action quickly for an initial four months, subject to a Commission assessment within three weeks. Ukraine would also be encourage to align more with EU standards.

Argentine workers to strike against president’s economic reforms... Hundreds of thousands of Argentine workers are set to strike against President Javier Milei’s economic reforms. Union leader Gerardo Martínez accused the government of breaking the social contract and reneging on deals with unions. The strike, expected to be the earliest in a presidential term in modern Argentine history, aims to protest against sweeping labor and economic changes introduced by Milei’s government, including cuts to worker protections and deregulation of industries. The strike reflects growing tensions in Argentina as the government attempts to address economic challenges amid rising poverty and surging inflation.

China weighs stock market rescue package... Chinese authorities are considering measures to stabilize its slumping stock market, Bloomberg News reported citing people familiar with the matter. Policymakers are reportedly seeking to mobilize about 2 trillion yuan ($278.53 billion), mainly from offshore accounts of state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link. The report came after the cabinet, following a meeting chaired by Premier Li Qiang, on Monday said it would step up mid- and long-term fund injection in the capital market to strengthen stability and promote healthy development.

BOJ maintains monetary policy but suggests negative rate period is ending... The Bank of Japan (BOJ) kept its key short-term interest rate unchanged at -0.1% and that of 10-year bond yields at around 0%. But BOJ signaled its growing conviction that conditions for phasing out its huge stimulus were falling into place, suggesting that an end to negative interest rates was nearing. Ending negative rates, which have been in place since 2016, would be a landmark shift away from former governor Haruhiko Kuroda’s radical stimulus that focused on pushing up inflation to the bank’s target.

Slow but steady increase in ERP Phase 2 payments... As of Jan. 21, payments made under Phase 2 of the Emergency Relief Program (ERP) reached $879.14 million distributed among 10,273 recipients. This marked a slight increase from the previous update on Jan. 15, when Phase 2 payments amounted to $877.23 million distributed among 10,223 recipients.

EPA proposes new guidelines for water pollution control rules for slaughter plants... EPA proposed to establish new guidelines for discharges from meat and poultry processing establishments, beginning a 60-day comment period. Public hearings will take place Jan. 24 and Jan. 31. The proposed rule includes new phosphorus limits and revised nitrogen limits for large direct dischargers, as well as new pretreatment standards for specific conventional pollutants for large indirect dischargers. EPA emphasized its plan aims to avoid significant impacts on smaller firms.

China’s sow herd drops more than 5% in 2023... China’s sow herd declined 2.5 million head (5.7%) to 41 million head at the end of 2023, according to an ag ministry official. Farmers reduced their breeding herds during the final quarter of last year to cut losses amid poor margins and an oversupply of hogs.

Wholesale beef prices resume march higher... After two days of declines to end last week, Choice boxed beef prices firmed $3.17 on Monday, while Select rose $3.53. But the slowdown in movement to only 78 loads on Monday suggests retailers may be turning more selective with their purchases as Choice beef nears the $300.00 level. Cutting margins remain in the red but the wholesale beef strength should encourage packers to more actively bid for cattle after buying a historically low 38,000 head in the negotiated cash market last week.

Pork cutout back above $90... The pork cutout value firmed $1.61 on Monday to $90.17, marking the first time it has been above $90.00 since Nov. 6 of last year. Rising wholesale pork prices are strengthening packer margins, giving them incentive to keep raising cash hog bids. The CME lean hog index is up another 34 cents to $68.40 (as of Jan. 19), the ninth rise in the last 10 days.

Overnight demand news... Japan is seeking 88,710 MT of milling wheat in its weekly tender. Algeria tendered to buy up to 240,000 MT of corn from Brazil or Argentina.

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

 

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