First Thing Today | April 4, 2024

Good morning!

Grains mildly firmer this morning... Corn, soybeans and wheat posted light, two-sided trade overnight but have adopted a slightly firmer tone this morning. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny higher, soybeans are 1 to 2 cents higher, SRW wheat is fractionally to a penny higher, HRW wheat is 3 to 5 cents higher and HRS wheat is 5 to 8 cents higher. Front-month crude oil futures are near unchanged and the U.S. dollar index is more than 150 points lower this morning.

Weekly Export Sales Report out this morning... For the week ended March 28, traders expect:

Russian grain trader Aston denies shipments halted... As we reported in “Evening Report” on Wednesday, Russian authorities have halted grain exports on some ships belonging to Aston, two industry sources told Reuters. The company denied there were delays. In a statement, Aston said its export program was being implemented in line with plans agreed with partners, and there were no changes to the schedule of product shipments from sea and river ports. Aston added it was fulfilling its obligations in full and on time, saying it was coordinating closely with authorities and other interested parties. “The requirements of Rosselkhoznadzor and quarantine requirements of importing countries are fully observed,” Aston said.

Baltimore bridge, port update... Efforts to locate and reroute shipments to other ports are underway, with estimates suggesting a weekly trade impact of around $1.7 billion. Major container shipping lines have declared force majeure, indicating that they won't cover the added transport costs to alternate ports. As a result, shippers and logistics operators are facing increased transportation expenses. Automotive and heavy machinery industries are particularly affected, with car carriers and manufacturers experiencing disruptions and financial losses. The closure of the shipping channel has also led to traffic diversions and increased costs for truckers, affecting their routes and fuel expenses.  

ITC hearing today on 2, 4-D tariff petition... On March 14, Corteva filed a petition with the International Trade Commission (ITC) for the imposition of antidumping and countervailing duties on imports of 2, 4-Dichlorophenoxyacetic acid from China and India. ITC will make a preliminary determination by April 29. Shipments from the two countries made up 81% of all the imports of 2,4-D into the U.S. in 2023, Corteva said in its filing, which covers 2021-2023. The imports have cut into both sales and market share for Corteva, the company said. Alleged dumping margins for China: 143.73%; India: 62.66%.

USDA allocates $1.5 billion for climate-smart ag conservation... The funding will support conservation and climate-smart agriculture initiatives through the Regional Conservation Partnership Program (RCPP), aimed at assisting farmers, ranchers and forest landowners in adopting and expanding conservation strategies to improve natural resources while addressing climate change. USDA’s Natural Resources Conservation Service (NRCS) will administer the program, with efforts to simplify and streamline the RCPP process for better implementation. There are two funding opportunities: RCPP Classic and RCPP Alternative Funding Arrangements (AFA). RCPP Classic projects involve NRCS contracts and easements with producers, landowners, and communities in collaboration with partners. RCPP AFA allows the lead partner to work directly with agricultural producers to develop innovative conservation approaches. Additionally, $100 million will be set aside for Tribal-led projects. Of note: The $1.5 billion is up from $500 million in funding last fiscal year. Also, NRCS wants to reduce project negotiation time to six months (from 15 months).

White House launches $20 billion Climate Kickstarter program... The initiative aimed at incentivizing private investment in clean technology will distribute grants to eight recipients under the greenhouse gas reduction fund, with a focus on reducing up to 40 million metric tons of climate pollution annually. At least 70% of the funding will target low-income and disadvantaged communities, with an additional 20% allocated to rural areas. Recipients include nonprofit financing institutions and hubs delivering funding and technical assistance to community lenders. The program, part of the Biden administration's climate plan, has faced opposition from Republicans who criticize it as a partisan agenda.

Powell: Fed’s inflation fight ‘not done’ but still has plans to cut rates... Federal Reserve Chair Jerome Powell emphasized the task of reducing inflation is ongoing and the central bank requires more assurance of easing price pressures before considering interest rate cuts. But he also reaffirmed the Fed’s intention to cut interest rates this year, despite the recent surge in economic activity, attributing the decision to the expectation of declining inflation. Powell highlighted indicators suggesting the labor market is less constrained than in previous years, alleviating concerns of simultaneous increases in wages and prices. Despite projections indicating at least three rate cuts this year, Fed officials are cautious not to ease monetary policy excessively, aiming to strike a balance between controlling inflation and preventing an economic slowdown. Atlanta Fed President Raphael Bostic told CNBC rates should likely not be reduced until the fourth quarter of this year.

Euro zone business activity grows for first time in nearly a year... The HCOB euro zone composite purchasing managers index rose to 50.3 in March, marking the highest level in 10 months. This indicates a return to growth for the region’s private sector for the first time since May of last year. The services sector showed growth, while manufacturing was still in contraction.

Euro zone producer prices fall more than expected... Producer prices in the euro zone fell more than expected in February, as energy prices continued to drop. Producer prices dropped 8.3% from year-ago compared to a revised 8.0% decline in January. Energy prices declined 21.1%, accelerating from a 20.0% decrease the previous month. Excluding energy, producer prices dropped by 1.5%, marking the steepest drop since December 2009.

U.S. beef tariff quota filled as Brazil steps up exports... The U.S. quota for low-tariff beef imports for this year was filled by the end of February, marking the quickest for that to happen since 2020. Brazil and Japan were swift in claiming their shares as suppliers. With the quota filled, imports for the remainder of the year will now be subjected to a 26.4% tariff. High-priced Japanese wagyu is expected to encounter difficulties in the U.S. market, even with a weakened yen. After the quota was filled last year on May 2, exports rapidly declined, suggesting a potential decrease in Japanese beef exports from March this year.

Wholesale beef prices fall, movement stays strong... Wholesale beef prices fell further Wednesday with Choice down another $2.86 and Select $2.07 lower. Wednesday’s movement totaled 151 loads, continuing recent strong retailer demand, though packers have continued to slash prices despite reduced slaughter runs and beef output.

Pork cutout weakens, demand remains tepid... The pork cutout value fell $2.30 on Wednesday as all cuts posted sizable declines. While movement improved to 274.6 loads, retailer buying has been tepid, suggesting they are being selective buyers with the cutout in the mid- to upper-$90.00 range.

Overnight demand news... Japan purchased 113,535 MT of milling wheat via its weekly tender, including 57,890 MT U.S., 25,300 MT Canadian and 30,345 MT Australian. Indonesia tendered to buy 300,000 MT of 5% broken white rice from unspecified 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

• 7:30 a.m. Weekly Export Sales — FAS
• 2:00 p.m. Agricultural Land Values - Statistical Bulletin — NASS