First Thing Today | March 21, 2024

Good morning!

Grains mostly firmer overnight... Soybeans posted followthrough buying to Wednesday’s strong gains during overnight trade, while corn and wheat mildly favored the upside. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 5 to 7 cents higher, SRW wheat is 2 to 3 cents higher, HRW wheat is fractionally to a penny higher and HRS wheat is 4 to 7 cents higher. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is down more than 300 points.

Weekly Export Sales Report out this morning... For the week ended March 14, traders expect:

China’s grain/soy imports to remain near record high despite cancellations... China’s grain and oilseed imports will remain near record highs this year despite a recent spate of cancellations as lower global prices and a domestic output shortfall prompt purchases. China recently canceled a combined 1.5 MMT of Australian and U.S. wheat purchases, raising concerns about reduced demand. But traders told Reuters the cancellations will not impact overall demand as lower wheat prices will spur buying, along with more government funds allocated to boost grain and oilseed stockpiles.

China wants crushers to use more domestic soybeans... China may ask its soybean crushers to prioritize local supplies as it seeks to reduce the reliance on imports. Beijing is discussing plans for some crushers to process specific amounts of domestic beans this year, people familiar with the matter told Bloomberg. However, the plan isn’t yet finalized and might still change, said the people. China has increased its domestic soybean production in recent years but still imports more than 80% of its consumption needs.

Attaché expects steady China soybean imports in 2024-25... USDA’s attaché in China projects the country will import 103 MMT of soybeans in 2024-25, unchanged from its forecast for the current marketing year, though 2 MMT less than the official forecast for 2023-24 in the March WASDE Report. The attaché noted, “Increased soybean meal inclusion rates due to competitive prices, stable demand in the poultry sector and growing demand in aquaculture is expected to offset weaker demand in the swine sector due to forecast declining production in 2023-24 and 2024-25.”

Gold surges to record high... Gold prices surged to a record high above $2,200 per ounce overnight after the Federal Reserve on Wednesday signaled it would press ahead with plans for three rate cuts in 2024. Despite a recent uptick in inflation, Fed Chair Jerome Powell said the U.S. central bank is still likely to reduce interest rates by three-quarters of a percentage point by the end of 2024, though that will depend on further economic data.

Congress racing clock to avoid partial gov’t shutdown... House and Senate leaders released the six-bill, 1,012-page second minibus package just before 2 a.m. CT. They are now “rushing” to get a floor vote in the House Friday (Speaker Mike Johnson is waiving the 72-hour rule), followed by a Senate vote to avoid a partial government shutdown at midnight Friday. Democrats got a win via 12,000 Special Immigrant Visas for Afghans who helped the U.S. during the long war in that embattled country, as well as more money for childcare. Republicans are touting language saving gas stoves, increasing the number of ICE detention beds, more border patrol agents, cuts to foreign aid and preventing the State Department from flying non-sanctioned flags at U.S. diplomatic compounds.

PBOC official says China has room to further cut RRR... China has room to further cut banks’ reserve requirement ratio (RRR), among other policy tools at its disposal, an official with the People’s Bank of China (PBOC) said. Cutting the RRR – now at about 7% – would be an important way for PBOC to inject liquidity into the economy, and it may expand the central bank’s balance sheet, which stands at about 45 trillion yuan ($6.25 trillion), the official noted. He also said the decline in deposit costs and the shift of monetary policies in other major economies will help with China’s interest rate policy operations.

Euro zone business activity close to stabilizing in March... HBOC’s preliminary euro zone composite purchasing managers index (PMI) compiled by S&P Global rose to 49.9 this month from February’s 49.2. That was the highest reading in nine months, though it marked the 10^th straight month of contraction. The service sector rose for the second consecutive month in March after six months of decline. However, manufacturing output declined for a 12^th consecutive month, albeit at a slightly slower pace.

Limited cash cattle trade... Cash sources reported light cash cattle trade at steady prices in Kansas, though most feedlots in the Southern Plains passed on those bids in hopes of steady/firmer prices. Bids were relatively nonexistent in the northern market, where prices have moved premium to the Southern Plains. Northern feedlots are expecting fully firmer cash prices this week.

Cash hogs firm, pork cutout slips... The CME lean hog index is up another 39 cents to $83.21 as of March 19 and has now firmed $18.16 from the seasonal low posted at the beginning of the year. As of Wednesday’s close, the premium in April lean hog futures dropped to $2.09 to today’s cash quote.

Overnight demand news... Japan purchased 119,345 MT of milling wheat via its weekly tender, including 65,375 MT U.S., 24,790 MT Canadian and 29,180 MT Australian. Egypt purchased 110,000 MT of wheat – 50,000 MT Bulgarian and 60,000 MT Romanian.

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
• 7:30 a.m. Extended Weather Forecast — NWS
• 2:00 p.m. Livestock Slaughter — NASS