First Thing Today | April 1, 2024
Good morning!
Beans firmer, corn and wheat weaker overnight... Soybeans posted solid gains amid corrective buying overnight, while corn and wheat futures pulled back from last Thursday’s gains. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are 3 to 5 cents higher, SRW wheat is mostly 7 cents lower, HRW wheat is 10 to 13 cents lower and HRS wheat is 4 to 7 cents lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is trading just above unchanged.
Brazil’s safrinha corn areas get some rain... Areas of center-west and center-south Brazil received rains over the holiday weekend, improving soil moisture from Mato Grosso to Goias, northern Sao Paulo and Minas Gerais. Partial relief from dryness is expected in Mato Grosso do Sul early this week with more during the middle to latter part of next week. Rain will return to the previous flooded areas of southeastern Argentina and Uruguay later this week.
Precip in central U.S.... Rains and snow are falling on areas of the central U.S. this morning, bringing needed moisture to some of the driest areas. Forecasts show possible tornadoes, large hail and damaging wind gusts in parts of Texas, Oklahoma and Missouri. A generally wet pattern is expected across the central U.S. this week, with an even wetter forecast for next week.
Stronger February soy crush, corn ethanol use expected... USDA is expected to show February soybean crush at 196.7 million bu., based on a Bloomberg survey. That would be up 1.9 million bu. (1.0%) from January and 19.8 million bu. (11.2%) above February 2023. Corn-for-ethanol use is expected to total 440.5 million bu., which would be up 6.9 million bu. (1.6%) from January and 41.7 million bu. (10.5%) above last year.
Soyoil for biofuels use falls below 1 billion pounds... Soybean oil used to produce biofuels in the U.S. fell to 960 million lbs. in January. That’s the first time it was below 1 billion lbs. since crossing that threshold in May of last year.
Update on Baltimore bridge collapse... Ship traffic at the Port of Baltimore remains suspended, but the Maryland Port Administration said trucks were being processed at marine terminals. There are plans to create a temporary alternate channel near the collapsed Francis Scott Key Bridge that will allow commercial vessels to access the port, though federal officials did not say when the alternate channel is expected to open.
India mandates weekly reporting on wheat stocks to prevent hoarding... India has asked traders, major retailers and food processors to declare wheat stocks every Friday from April to prevent hoarding and price spikes. A limit on how much wheat stock traders could hold expired on March 31. However, a limit could be reimposed if prices rise.
Gold posts another record high... Gold prices extended their record run overnight as the latest data showing a slowing U.S. inflation trend boosted expectations that the Federal Reserve could deliver its first interest rate cut in June. Several other factors, including heightened tensions in the Middle East and Ukraine, have contributed to gold’s rise of approximately 14% since mid-February.
The week ahead in Washington... Lawmakers are out on an extended Easter recess. The economic focus will be Friday’s employment data for March. The personal consumption expenditures price index released last Friday showed inflation rose 2.8% in February, in line with expectations. USDA will issue its first national winter wheat crop conditions ratings of spring this afternoon.
Criticism over EPA’s new electric truck mandate... EPA quietly on Good Friday announced new emissions standards for heavy-duty trucks, particularly focusing on the mandate for electric truck adoption. The timing of the announcement was intentional to minimize public attention. EPA claims it is pushing these regulations in the name of climate change without considering the associated costs and practical challenges. But some analysts note concerns about its feasibility, economic impact and effectiveness in addressing climate change. EPA’s mandate requires electric semi-trucks to make up a significant portion of manufacturer sales by 2032. Analysts see this as costly and impractical, especially given the current low adoption rate of electric trucks in the U.S., which is primarily limited to California due to heavy subsidies and mandates there.
China’s factory sector shows growth in March... China’s official manufacturing purchasing managers index (PMI) rose to 50.8 in March, above the 50.0 level signifying growth for the first time in six months and the highest level in a year. The Caixin/S&P Global manufacturing PMI rose to 51.1 in March, marking expansion of smaller and privately owned factories for a fifth consecutive month and the highest reading since February 2023. China’s factory sector was boosted by increased domestic and foreign demand.
H&P Report: Negative compared to expectations... USDA’s Hogs & Pigs Report last Thursday showed nearly all categories above the average pre-report estimates. USDA estimated the March 1 hog herd up 0.6% from year-ago, with the market hog inventory 0.8% bigger while the breeding herd declined 2.1%. The winter pig crop increased 1.9%. While winter farrowings declined 2.6%, litter size jumped 4.6% to a record 11.53 head. We expect price pressure on hog futures from the report data.
Update on HPAI in dairy cattle... A highly virulent bird flu initially found in dairy cows in Texas and Kansas has spread to more herds, extending to five states. The strain has been confirmed in Michigan, with presumptive positive tests in Idaho and New Mexico. There’s evidence suggesting the virus may be transmitted from cow to cow. USDA initially reported incorrect presumptive positive tests in Ohio. USDA said there continues to be “no concern about the safety of the commercial milk supply because products are pasteurized before entering the market, or that this circumstance poses a risk to consumer health.” Dairies are required to send milk only from healthy animals into processing for human consumption. Milk from infected animals is being diverted or destroyed so that it does not enter the human food supply, USDA said.
Holiday weekend demand news... Saudi Arabia purchased 795,000 MT of optional origin wheat. Egypt purchased 150,000 MT of optional origin raw sugar.
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
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats and Oils: Oilseed Crushings — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS
- 3:00 p.m. Crop Progress — NASS
