First Thing Today | April 3, 2024
Good morning!
Grains post corrective gains overnight... Corn, soybeans and wheat firmed amid mild corrective buying during overnight trade. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 2 to 3 cents higher, SRW wheat is mostly a nickel higher, HRW wheat is 7 to 9 cents higher and HRS wheat is 5 to 6 cents higher. Front-month crude oil futures are around 70 cents higher and the U.S. dollar index is about 100 points lower.
Attaché expects China’s corn, wheat production to rise... The ag attaché in China projects the country’s corn production will increase 2.4% to 296 MMT this year amid an expected increase in yields and slightly larger planted area. The post projects China’s wheat production will rise 1% to 138 MMT on an expected rise in yields and steady planted area. China’s corn imports are forecast to decline 3 MMT to 20 MMT in 2024-25, while wheat imports are likely to be steady at 10 MMT. The attaché projects China will import 7.5 MMT of sorghum in 2024-25, unchanged from the current marketing year.
Ukraine’s grain exports fall nearly 7%... Through the first nine months of the 2023-24 marketing year, Ukraine exported 35.4 MMT of grain, down 2.6 MMT (6.8%) from the same period last year. The exports included 19.1 MMT of corn, 14 MMT of wheat and 1.96 MMT of barley. Ukraine’s ag ministry said it has exportable grain supplies of about 50 MMT for 2023-24.
EPA issues final conditions for dicamba usage... EPA issued a notice detailing the final conditions for dicamba product usage after revoking their registration. The notice outlines an existing stocks order for XtendiMax®, Engenia® and Tavium® for over-the-top use on dicamba-tolerant cotton and soybeans. The agency defined existing stocks as products registered before Feb. 6, 2024, and laid out timelines for the end of sale and distribution, ranging from May 13 to the end of June, depending on the state. Final use dates vary from June 12 to July 30 across different states.
Major earthquake rocks Taiwan... The strongest earthquake in 25 years hit Taiwan overnight. The epicenter of the quake was in Hualien County on the island’s east coast, with the United States Geological Survey (USGS) measuring it at a 7.4 magnitude, while Taiwan’s monitoring agency said it was 7.2 magnitude. According to Reuters, at least 26 buildings have collapsed on the island and more than 50 people sustained injuries. Analysts at Barclays believe the impact of the quake may have indirect effects on Taiwan’s industrial zones. “We believe this could lead to supply disruptions in the tech supply chain,” Barclays says.
U.S. interest rate policy watch: Higher for longer... Bond traders priced in less monetary policy easing by the Federal Reserve this year — briefly setting the odds of a first cut in June at below 50% — after a gauge of U.S. manufacturing activity showed expansion for the first time since 2022. Swap contracts for this year priced fewer than 65 basis points of reductions in the Fed rate — well less than the 75 basis points that U.S. policymakers themselves are forecasting — after the ISM manufacturing for March exceeded all estimates in a survey of economists.
PBOC will make efforts to expand demand, boost confidence... The People’s Bank of China (PBOC) will accurately and effectively implement prudent monetary policy, pay more attention to counter-cyclical adjustments and make efforts to expand domestic demand and boost confidence, it said. That will include supporting banks to replenish capital and guide financial institutions to increase medium- and long-term loans to the manufacturing industry. PBOC announced revisions to car loans to promote auto trade-ins and scrap government-set minimum down payments for consumers financing new car purchases, the first such adjustments since 2018. PBOC noted the economy continues an upward trend, “but it still faces challenges of inadequacy of effective demand and weak social expectations.”
Euro zone inflation unexpectedly eases... Consumer inflation in the euro zone slowed to 2.4% above year-ago in March. Core inflation, excluding food and energy prices, cooled to 2.9%, the lowest since February 2022. Amid the falling inflation, the European Central Bank is expected to start cutting interest rates in June.
EU exits winter with gas storage at record levels... Gas storage for the EU at the end of March, considered the end of the winter season by the industry, stood at 58.72% full, according to industry body Gas Infrastructure Europe. That is about 3 percentage points higher than the previous high, set last year. As the EU refills its storages over the summer, analysts warn the bloc may need to scale back imports of liquefied natural gas in the coming months to avoid capacity filling too early.
Mexico taking ‘preventative measures’ in wake of U.S. HPAI outbreak in dairy cattle... Mexico’s agriculture ministry on Tuesday said it is taking preventative measures to increase surveillance and reinforce inspections of U.S. livestock imports after highly pathogenic avian influenza (HPAI) was found in dairy cattle. The Mexico-United States Commission for Prevention of Foot-and-Mouth Disease and other Animal Exotic Diseases (CPA) will visit livestock farms to take samples for lab analysis, a statement by Mexico's agriculture ministry said. Officials from Mexico's agriculture sanitation authority Senasica will also increase surveillance of cattle entering the country for any sign of respiratory distress.
Wholesale beef prices continue to drop... Wholesale beef prices rallied sharply during a five-week stretch from mid-February but have been on a near-daily retreat since peaking nearly two weeks ago. Choice beef fell another $1.58 and Select dropped $2.80 on Tuesday. Packer margins have declined along with wholesale beef prices and are deep in the red once again. That’s likely to keep pressure on cash cattle prices after they retreated from the all-time high during last week’s trade.
Seasonal strength continues for cash hogs, pork cutout... The CME lean hog index is up another 14 cents to $84.92 as of March 30. The pork cutout value firmed another 52 cents on Tuesday to $97.13. While the cash market continues to strengthen seasonally, the rise in wholesale pork prices has been strong enough to keep packer margins solidly in the black.
Overnight demand news... Jordan tendered to buy up to 120,000 MT of optional origin milling wheat . Tunisia tendered to buy 50,000 MT of optional origin soft milling wheat. Iran tendered to buy 120,000 MT of corn (sourced from Brazil, Europe Union, Russia, Ukraine or other Black Sea region countries), soymeal (sourced from Brazil or Argentina) and feed barley (sourced from Europe Union, Russia, Ukraine or other Black Sea region countries).
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. Broiler Hatchery — NASS
