First Thing Today | March 20, 2024
Good morning!
Beans firmer, corn and wheat weaker overnight... Soybean futures reversed losses from the past two days during overnight trade, while corn and wheat faced price pressure. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 6 to 7 cents higher and wheat futures are 5 to 7 cents lower. Front-month crude oil futures are around $1.10 lower and the U.S. dollar index is more than 500 points higher this morning.
Brazil supplying China more soybeans and corn to start 2024, U.S. market share drops... China’s soybean imports from Brazil totaled 6.96 MMT during the first two months of this year, a 211% surge from year-ago. Combined January and February soybean arrivals from the U.S. fell to 4.96 MMT, down 48.9% from the same period last year. China imported 4.1 MMT of corn from Brazil during the first two months of this year, two-thirds of its total imports and a 178% jump from the same period last year. Corn imports from the U.S. of 766,989 MT fell 67% from the first two months of last year.
Russia will adjust grain export duties... Russia will adjust its grain export duties but not cancel them, according to Russian Agriculture Minister Dmitry Patrushev. He noted duties were adjusted at the start of 2023-24 and would be again for the new-crop marketing year, but did not give specific figures. Russian farmers have criticized grain export taxes amid falling international prices.
EU agrees to new limits on Ukraine farm product imports... The European Union (EU) reached an agreement to grant tariff-free access to Ukrainian food products in EU markets until June 2025, although some limitations will apply to grain imports. The European Commission proposed extending the suspension of duties and quotas on Ukrainian farm products for another year, with provisions for an “emergency brake” on poultry, eggs and sugar if imports exceed average levels from 2022 and 2023. In response to farmer protests, EU lawmakers expanded the emergency list to include oats, corn, groats and honey while retaining the reference years of 2022 and 2023. Some advocated for including 2021 due to restrictions and tariffs imposed on Ukrainian farm goods before the Russian invasion. The agreement also requires the European Commission to act swiftly under the emergency brake within 14 days, instead of the initially proposed 21-day period. Additionally, the commission will monitor Ukrainian wheat and other cereal grain imports and intervene if they disrupt EU markets. Approval of the agreement by the European Parliament and EU member countries is anticipated in April.
Coceral cuts EU wheat crop forecast... European grain trading association Coceral cut its forecast for this year’s soft wheat production in the European Union, including the UK, to 134.1 MMT from its projection of 139.5 MMT in December. Coceral raised its estimate for 2024 EU + UK barley production by 2.6 MMT to 61.2 MMT and increased its corn production forecast by 600,000 MT to 64.3 MMT.
China to pass new rules for labeling GM crops used in food... China is expected to pass new rules this year for the labelling of genetically modified (GM) crops used in food products, government-backed The Paper reported. In the new rules, China will change its labelling method of GM crops in food to “quantitative labelling” from “qualitative labelling,” The Paper said. That would require manufacturers to disclose if a product contains GM material exceeding 3% of its mass. Previous rules stipulated mandatory labelling as long as the product contained or was processed from GM crops. Regulation of the use of GM crops in food comes as China paves the way for commercial planting of higher-yielding GM varieties to secure its food security.
Thailand to ban corn imports from polluting neighbors... Thailand plans to ban corn imports from neighboring countries linked to agriculture burning that causes air pollution, an official said. The ban will not violate Thailand’s commitments to the World Trade Organization, government spokesperson Chai Wacharonke said, adding it would come into force after the government passes the Clean Air Act.
Focus on Fed ‘dot plot’ projections, Powell comments... The Federal Reserve will leave interest rates unchanged at the conclusion of its two-day monetary policy meeting. Economists and market participants will closely decipher the so-called “dot plot” economic projections from Fed officials and Chair Jerome Powell’s press conference for clues as to when the central bank may begin cutting rates. Today’s meeting is also expected to highlight the path forward as the Fed begins in-depth discussions about reducing its balance sheet, or quantitative tightening.
China leaves benchmark rates unchanged... The People’s Bank of China kept benchmark lending rates unchanged, as widely expected. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was retained at 3.45%. The five-year rate, a reference for property mortgages, was maintained at 3.95% following the biggest-ever reduction of 25 basis points in February. Both rates are at record lows, as the central bank seeks to spur an economic turnaround in the face of headwinds from the property sector and a near-record low in consumer confidence. Meanwhile, China’s central bank said it has reshuffled its monetary policy committee to include securities regulator head Wu Qing, vice central bank chief Xuan Changneng and two new academic members.
UK inflation falls to nearly two and a half-year low... Consumer inflation dropped to 3.4% above year-ago in February, down from the 4% increase recorded the two previous months and the lowest level since September 2021. The annual core inflation rate, which excludes energy and food costs, fell to 4.5%, the lowest rate since January 2022.
Deal reached on FY 2024 spending... Congressional leaders announced a deal to fund the rest of the government through the fiscal year. House Speaker Mike Johnson (R-La.) revealed the agreement, expressing hope the legislation’s text will be released promptly for voting. The deadline for passing the deal is midnight Friday, with the process expected to take days in both chambers. Johnson may require several Democratic votes to pass the legislation, given resistance from the far-right wing of his conference. Additionally, in the Democratic-controlled Senate, any single member can impede the process, potentially causing the federal government to miss its deadline.
USTR details allocations for increase in sugar TRQ... The Office of the U.S. Trade Representative (USTR) outlined allocations for the increased amount of raw cane sugar permitted to enter the U.S. at a reduced duty rate under the fiscal year (FY) 2024 tariff-rate quota (TRQ). USDA announced on March 7 an additional in-quota quantity of the TRQ for raw cane sugar, totaling 125,000 metric tons raw value (MTRV). USTR provided a breakdown of this allocation, distributing the 125,000 MTRV among 20 countries identified as net importers of sugar. Detailed allocations can be viewed here.
Big jump in beef movement... Wholesale beef prices paused on Tuesday, with Choice down 11 cents and Select up 13 cents, though movement improved to 138 loads. The pickup in movement signals there’s still strong retailer demand for beef ahead of the grilling season, despite strong prices.
Traders keeping hog futures premium in check... April lean hog futures dropped on Tuesday despite continued strength in the cash index. The lead contract finished yesterday at a $3.005 premium to today’s cash index quote, which is up another 28 cents to $82.82 as of March 18. That reflects expectations for a slightly bigger-than-average rise in the cash index over the next month.
Overnight demand news... Algeria purchased between 100,000 and 200,000 MT of durum wheat from unspecified origins. Egypt tendered to buy an unspecified amount of wheat from multiple origins.
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
- 1:00 p.m. FOMC Meeting Concludes — Fed
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Milk Production — NASS
