First Thing Today | February 22, 2024
Good morning!
Grains firmer this morning... Wheat futures led a round of corrective buying in the grain markets during overnight trade. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are 3 to 4 cents higher, SRW wheat is 5 to 6 cents higher, HRW wheat is 7 to 11 cents higher and HRS wheat is 10 to 11 cents higher. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is down around 275 points.
Export sales data pushed back to Friday... Due to Monday’s government holiday, USDA’s export sales data for the week ended Feb. 15 will be released Friday morning.
Houthis prepare for long battle with U.S. in Red Sea... Houthi militants and their Iranian backers are preparing for a lengthy confrontation with the U.S. and allies around the Red Sea regardless of how the Israel/Hamas war plays out. The Yemen-based group is shoring up military and defense capabilities to continue attacking ships around the vital waterway, Bloomberg reports, citing people with knowledge of the situation. Steps include fortifying mountain hideouts for more secure and effective missile launches and testing unmanned vessels above and below water.
Polish Prime Minister refuses to meet with Ukraine’s Zelenskyy at border... Polish Prime Minister Donald Tusk said there was no need to meet with Ukrainian President Volodymyr Zelenskyy at the border to defuse a farmer blockade that has disrupted grain shipments from Ukraine. Tusk pledged at a Warsaw briefing Thursday to introduce a special regime on the frontier to ensure safe passage for humanitarian and military aid for Kyiv despite the protests. Tusk said the cabinets of the two countries had agreed to meet in the Polish capital on March 28.
ASA survey reveals concerns over EPA’s herbicide strategy for soy farmers... The American Soybean Association (ASA) conducted a survey to assess the potential impacts of EPA’s proposed Herbicide Strategy on soy farmers. The Herbicide Strategy aims to align herbicide registrations with the Endangered Species Act (ESA). The survey results indicate significant concerns among soybean producers regarding their ability to comply with the proposed regulations and the potential financial and operational burdens they may face. The Herbicide Strategy applies to a wide range of herbicides and includes over 900 listed species. It delineates areas with different requirements based on the presence of endangered species. The proposal entails significant costs for farmers to implement runoff conservation practices and large spray buffers. ASA, along with numerous other groups, expressed concerns to EPA during the public comment period. The deadline for finalizing the Herbicide Strategy has been extended to Aug. 30 to allow for more consideration of public comments and input regarding the practicality and effectiveness of mitigation measures. ASA plans to engage with EPA and other stakeholders to address the challenges posed by the Herbicide Strategy and advocate for changes that alleviate the concerns raised in the survey. They will also participate in discussions regarding the Vulnerable Species Pilot Program, which has similar implications for soybean growers.
India’s rice prices reach record high again... India’s parboiled rice export prices climbed to fresh record highs on limited supplies and slight improvement in demand. India’s 5% broken parboiled variety was quoted at record $546 to $554 per metric ton, up $4 from last week. Vietnam’s 5% broken rice was offered at $625 to $630 per metric ton, down from $637 to $640 a week ago. Thailand’s 5% broken rice prices were quoted at $615 per metric ton, up from last week’s $610 rate.
Lawmakers’ visit to Taiwan could heighten tensions with China... A visit to Taiwan by lawmakers, spearheaded by House China Chair Rep. Mike Gallagher (R-Wis.), may further strain relations between the island and Beijing. The delegation is set to engage with key Taiwanese figures, including President Tsai Ing-wen and President-elect Lai Ching-te, during their three-day visit beginning today.
Japan stocks surge to highest level since 1980s, reflecting economic turnaround... Japan’s Nikkei stock index reached a historic high, surpassing levels not seen since the late 1980s. This milestone comes amid Japan’s recovery from a prolonged period of economic stagnation, marked by a real estate crash and deflation in the early 1990s. The Covid-19 pandemic acted as a catalyst for change, driving inflation and prompting companies to enhance productivity and profitability. With optimism surrounding Japan’s economic resurgence, expectations of continued stimulus from the central bank, and a bullish stock market outlook, the nation faces the challenge of swiftly exiting the recession experienced in the latter half of last year.
China’s property foreclosures surge, new home prices continue to slide... The number of foreclosed properties for sale in China rose at a faster pace in January, a sign of the country’s continued economic struggles. New listings of foreclosed properties nationwide rose 48% in January from a year earlier, compared with 37% in 2023, according to a report by real estate agency China Index Holdings. Meanwhile, China’s new home prices dropped 0.4% from year-ago in December – the sixth straight monthly decline and the steepest pace since March amid persistently weak demand despite efforts from the government to mitigate the impact of a prolonged property downturn.
Euro zone inflation eases in January... Consumer inflation in the euro zone slipped to 2.8% above year-ago in January, in line with the preliminary estimate and down from a 2.9% rise the previous month. Core inflation, excluding food and energy prices, rose 3.6% annually. An even narrower measure excluding alcohol and tobacco increased 3.3% from year-ago.
Euro zone business activity inches up... HCOB’s preliminary euro zone composite purchasing managers index compiled by S&P Global rose to 48.9 this month from January’s 47.9. That marked the ninth consecutive month of falling output, though the contraction was the weakest since last June, as stabilization of output in the service sector offset a further steep downturn in manufacturing. Business confidence within the bloc improved for the fifth successive month in February, rising to the highest level since last April, amid hopes of reduced cost of living pressures and expectations of lower interest rates in the year ahead.
Packers continue to slow cattle slaughter runs... Estimated slaughter totaled 349,000 head through the first three days this week, 14,000 head below last week and 4,247 head below last year. Cash sources expect the weekly tally to fall below 600,000 head, with some as low as 590,000 as packers try to control tight supplies amid highly negative margins. That also means packers won’t likely be very active with cash cattle bids after buying a lot of cattle the past two weeks. And feedlots appear in no hurry to move cattle at lower prices with Friday afternoon’s Cattle on Feed Report expected to be bullish.
Cash hog rally gaining steam... The CME lean hog index jumped another $1.17 to $77.97 as of Feb. 20, marking back-to-back days of $1.00-plus gains. The cash index is outpacing futures, with the premium in the April contract down to $8.005 as of Wednesday’s close.
Overnight demand news... Japan purchased 115,921 MT of milling wheat, including 30,435 MT U.S., 51,586 MT Canadian and 33,900 MT Australian. South Korea tendered to buy 136,400 MT of milling wheat – 50,000 MT from the U.S., 50,000 MT from Australia and 36,400 MT from Canada. Tunisia tendered to buy 100,000 MT optional origin soft milling wheat.
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. Livestock Slaughter — NASS
- 2:00 p.m. Poultry Slaughter — NASS
