First Thing Today | February 12, 2024
Good morning!
Corn and beans firmer, wheat weaker overnight... Corn and soybean futures firmed amid mild corrective buying overnight, while wheat traded lower. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 4 to 6 cents higher, winter wheat markets are 3 to 5 cents lower and spring wheat is unchanged to a penny lower. Front-month crude oil futures are around 85 cents lower and the U.S. dollar index is trading just above unchanged.
Needed South American rains expected this week... Southern Brazil continued to dry out during the weekend as temps were warm while rainfall was minimal. World Weather Inc. says needed rains will move into these areas Tuesday through Thursday. Another round of dry weather is expected during the middle to latter part of next week. Rains were more significant from Mato Grosso to western Bahia during the weekend. Northern Brazil will experience net drying Tuesday through Friday of this week and then a pattern alternating rain and sunshine is expected for the weekend and next week. Rains were more sporadic and lighter than expected in Argentina during the weekend. World Weather says most of Argentina will receive rain early this week with central and northern areas expected to be the wettest. Drying is expected late this week through the weekend across Argentina.
Rapid soybean harvest, safrinha corn planting continues in Brazil... Brazil’s soybean harvest reached 23% complete as of last Thursday, according to AgRural, the second fastest pace on record behind 26% in 2018-19. AgRural noted with more than half of the soybean crop harvested in Mato Grosso, attention is on conditions in southern Brazil. The firm estimated safrinha corn planting jumped to 38% done. AgRural raised its safrinha corn production estimate nearly 5 MMT to 91.2 MMT, citing expectations farmers will plant more area to the crop than previously estimated. It estimates safrinha corn plantings will decline 4.7% from year-ago, though that’s less than the 9.4% drop it previously expected.
Asian markets mostly closed for Lunar New Year... Most Asian markets are closed today for Lunar New Year celebrations, including China, Singapore, South Korea, Taiwan and Malaysia. Asian markets will be closed for varied periods of time for the holiday. China’s markets reopen Feb. 19.
Poland to check Ukraine grain quality... Poland plans to start quality checks on all grain shipments from Ukraine, Deputy Agriculture Minister Michal Kolodziejczak said as Polish farmers continued nationwide protests against EU policies, including allowing grain imports from the neighboring country. Farmers started blocking roads and border crossings with Ukraine on Friday, kicking off a month-long general strike to protest against EU policies and a lack of government action to protect their livelihoods. “Today... I will request that all grain transports that are exported and have an embargo imposed on them be examined in Poland,” Kolodziejczak told state news agency PAP. He said poor quality Ukrainian grain moves into Germany and other EU countries and noted “99% of the time it returns to Poland as European grain.”
Indonesia assures consumers rice supplies are adequate... Indonesia’s government assured consumers rice stocks were adequate amid increasing sale restrictions in retail outlets since the end of 2023. The availability of five kilograms sacks at modern retail outlets have been reportedly scarce since around September last year, leading to a restriction for retail customers. Head of the retail business association confirmed the restrictions, saying it was to ensure distribution and avoid reselling. Data from the ag ministry showed the country had a rice deficit of 1.63 MMT in January and 1.15 MMT in February. Indonesia plans to import 2.44 MMT of rice this year, of which around 445,000 MT is a quota carried over from 2023.
The week ahead in Washington... Despite former President Donald Trump’s opposition, a significant number of Republican senators defied him by supporting a bill to provide $95 billion in foreign aid to Ukraine, Israel and Taiwan. The package includes $60 billion for Ukraine, $14 billion in security assistance for Israel, $9 billion in humanitarian assistance for Gaza, the West Bank and Ukraine, and $4.8 billion to support allies in the Indo-Pacific. It was stripped of border provisions last week after conservatives objected to a bipartisan border deal. Absent a time agreement, the next vote will take place this evening. There reportedly is still no agreement on amendment votes. The economic focus this week will be the U.S. consumer price index data on Tuesday. USDA’s Ag Outlook Forum Thursday and Friday will provide an initial look at the 2024-25 balance sheets. USDA Secretary Tom Vilsack testifies before the House Ag Committee on Wednesday.
Farm bill update... Most farm bill watchers continue to predict the new bill will come in 2025, not this year. If it comes this year, sources say it would have to make substantial progress by May. Senate Ag Chair Debbie Stabenow (D-Mich.) has around $5 billion above the farm bill baseline for funding, but that is not nearly enough to adequately fund a needed hike in reference prices relative to the Title I safety net program. That would take $20 billion for a 10% boost and $50 billion for a 20% boost. House Ag Committee leaders and staff continue to pursue additional funding but efforts to tap some of the $20 billion in conservation funding via the Inflation Reduction Act has been consistently opposed by Stabenow and will likely be USDA Secretary Tom Vilsack’s comments when he testifies Wednesday before the House Ag Committee. Use of USDA’s Commodity Credit Corporation (CCC) funding is another area of potential additional farm bill funding. Vilsack has suggested this as a possibility and it will likely be another topic during Wednesday’s hearing. The Senate appears to be far apart in reaching a farm bill conclusion. Stabenow already has the $20 billion in additional conservation funding in place and ample food stamp funding is protected as the program is an appropriations entitlement. Ranking member John Boozman (R-Ark.) continues to push for higher reference prices, but funding issues remain. With odds over 50% of Republicans getting control of the Senate following Nov. 5 elections, Boozman may want to wait until 2025 to finalize a new farm bill. There is also a gap in the House between the GOP and Democrats.
Pork oversupply sparks economic concerns; industry seeks solutions... The Wall Street Journal has a major article on the challenges facing the U.S. pork industry, which has become overly efficient, resulting in an imbalance between supply and demand. Despite producing various pork products like tenderloin, ham, sausage and bacon, there’s insufficient demand to absorb the surplus. Factors contributing to this imbalance, the article notes, include the industry’s focus on efficiency, the perception of pork as less desirable compared to chicken and beef, and misconceptions about pork’s preparation and healthiness. The industry is exploring various strategies to address these challenges, such as targeting new overseas markets, repositioning pork as an affordable alternative to beef and promoting fattier, more flavorful pork breeds. However, there’s no consensus on the best approach. Furthermore, the article highlights the financial strain on pork producers, with farmers losing money on each pig due to shrinking profit margins. If the industry fails to attract younger consumers, pork consumption is projected to decline further. To stabilize profits, the industry seeks to engage U.S. consumers, invest in marketing campaigns and innovate products to meet changing consumer preferences and lifestyles.
Cash cattle strengthen... Cash cattle traded sharply higher late Friday, though traders will have to wait until later this morning to get official data, including the volume of cattle sold. That will influence this week’s showlist numbers and could impact packers’ willingness to bid for cattle.
Cash hog index declines... The CME lean hog index is down 40 cents to $73.60 as of Feb. 8. That marks the first back-to-back days of declines since late December when the index was forging a seasonal low. February lean hog futures finished Friday 7.5 cents above today’s cash quote, while April hogs held a $7.55 premium.
Weekend demand news... Egypt tendered to buy at least 50,000 MT of corn from unspecified origins. Indonesia is seeking to import 200,000 MT of rice from Thailand under a government-to-government arrangement.
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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Cotton and Wool Outlook Tables: February 2024 — ERS
- 11:00 a.m. Oil Crops Outlook: February 2024 — ERS
- 2:00 p.m. Feed Outlook: February 2024 — ERS
- 2:00 p.m. Rice Outlook: February 2024 — ERS
- 2:00 p.m. Wheat Outlook: February 2024 — ERS
- 2:00 p.m. North American Potatoes — NASS
- 2:00 p.m. Vegetables - Annual — NASS
