First Thing Today | April 5, 2024
Good morning!
Wheat leads overnight price gains... Corn, soybeans and wheat have adopted firmer tones this morning, led by strong gains in SRW wheat, after two-sided trade overnight. As of 6:30 a.m. CT, corn is trading 2 to 3 cents higher, soybeans are 1 to 3 cents higher, SRW wheat is 12 to 15 cents higher, HRW wheat is 8 to 9 cents higher and HRS wheat is 5 to 7 cents higher. The U.S. dollar index is around 150 points higher, while front-month crude oil futures are near unchanged.
Timeline for reopening Port of Baltimore... The U.S. Corps of Engineers announced plans to reopen the Port of Baltimore, which was closed due to wreckage from cargo ship Dali and collapse of a section of the Francis Scott Key Bridge. It aims to have limited access (280-foot wide and 35-foot deep) channel restored by the end of April and full shipping capabilities by the end of May. Weather conditions and complexities in the wreckage may affect this timeline.
Challenges in reopening Baltimore shipping channel... The Baltimore bridge collapse represents a multifaceted challenge due to the presence of a high-pressure natural gas pipeline running beneath it, compounded by the massive cargo ship’s impact. The pipeline's location beneath the ship adds complexity to salvage operations, as its integrity must be maintained. Additionally, other infrastructure, such as an inactive water main and telephone line, complicates the situation. Salvors must carefully clear the wreckage without damaging the infrastructure below, including the gas pipeline. The depth and soil density of the pipeline are crucial factors to consider, especially as salvors work to refloat the grounded ship. The potential for damaging the pipeline adds complexity to the salvage operation, necessitating a meticulous approach to ensure safety and prevent further environmental and economic repercussions.
Two RIF Russian grain cargoes receive phytosanitary certificates... Two grain cargoes loaded by Russia’s RIF have received phytosanitary certificates, a company source told Reuters. One of the ships, loaded with 65,000 MT of wheat for Egypt’s state grain buyer, has been released from a port in Russia after being detained amid a dispute between Russian authorities and an exporter, according to the company and two sources with direct knowledge of the matter. The other cargo of 40,000 MT of grain, is not destined for Egypt and remains at a Russian port.
FAO food price index ends prolonged slide in March... The UN Food and Agriculture Organization global food price index rose 1.1% in March, ending a seven-month slide, as increases in the prices for vegoils, dairy products and meat slightly more than offset decreases for sugar and cereal grains. The March index was still down 7.7% from last year. Compared to year-ago, prices declined 1.5% for meat, 8.2% for dairy, 20.1% for cereal grains and 0.9% for vegoils, while sugar prices rose 4.8%.
French wheat crop ratings slip... As of April 1, France’s ag ministry rated the country’s wheat crop as 65% good or excellent, down one point from the previous week and well below last year’s 93% level. The French wheat crop continues to be rated the lowest since 2020. Good/excellent ratings declined to 66% for winter barley and 70% for durum wheat, down one and three points, respectively, and also a four-year low for both crops. For spring barley, the ag ministry’s first rating pegged 61% of the crop as good/excellent, the worst for this time of year on records back to 2012.
Slower jobs growth expected in March... Economists polled by Reuters expect the Labor Department to report non-farm payrolls increased 200,000 in March, which would be down from the originally reported 275,000 rise in February. The unemployment rate is expected to remain at 3.9%.
‘Extremely active’ hurricane season expected... Hurricane researchers at Colorado State University predict an “extremely active” Atlantic hurricane season with nearly two dozen tropical storms, including 11 hurricanes. They express high confidence in their forecast, noting extreme sea surface temperatures across the Atlantic basin. Historically, an average of 14 tropical cyclones form each year, but recent seasons have seen higher activity. The main drivers for this year’s expected activity are warm Atlantic surface waters and the potential development of a La Niña climate pattern, both of which provide favorable conditions for storm formation. While warm water alone doesn’t guarantee hurricanes, it significantly contributes to their likelihood.
Fed officials give varying views on timing of rate cuts... Federal Reserve Bank of Minneapolis President Neel Kashkari suggested that interest-rate cuts may not be necessary in the current year if progress on inflation stalls, particularly if the economy maintains its robustness. Philadelphia Fed President Patrick Harker said that even though the economy has been resilient and the labor market remains strong, inflation is “still too high.” Cleveland Fed President Loretta Mester suggested that the central bank could be close to gaining the confidence it needs to start lowering interest rates later this year, but that she wants to see a couple more months’ worth of data first. Richmond Fed President Thomas Barkin said it’s “smart” for the central bank to take time to gain greater clarity about the inflation path before lowering rates.
Yellen focuses on China’s excess industrial capacity... China is too large to export its way to rapid growth and would benefit by reducing excess industrial capacity, which is pressuring other economies, Treasury Secretary Janet Yellen said. Yellen and other Biden administration officials are growing increasingly concerned about China’s overproduction of electric vehicles, solar panels, semiconductors and other goods that are flooding into global markets in the face of a demand slump in China’s domestic market. She urged Beijing to shift away from state-driven investment and return to the market-oriented reforms that fueled growth in past decades. Chinese state media pushed back on Yellen’s comments, with China Daily saying, “While it is just basic economics that surplus products naturally seek out markets elsewhere once domestic demand is met, and Western nations have been doing that for centuries, when it comes to China, it becomes an ‘overcapacity problem’ threatening the world.” Yellen also said a financial working group representing both sides had been working on steps to contain the financial risks from a potential bank failure in either economy. U.S. officials on Thursday raised commercial and market access issues impacting American companies in a meeting with Chinese officials.
Wholesale beef prices continue to plunge... Wholesale beef prices fell another $4.15 for Choice to $297.15 and 87 cents for Select to $296.05. The Choice/Select spread tightened to an ultra-thin $1.10. While movement improved stayed strong at 162 loads, packers are having to slash prices to encourage retailer buying.
Cash hog index, pork cutout jump... The CME lean hog index is up another 73 cents to $85.88, the biggest daily gain since Feb. 21. The cash index has strengthened $20.83 since the seasonal low at the start of this year. The pork cutout value firmed $3.24 on Thursday, fueled by an $11.53 surge in primal bellies, though all cuts except ribs posted strong daily gains.
Overnight demand news... Egypt purchased 250,000 MT of raw sugar 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. Employment Situation — BLS
- 11:00 a.m. Livestock and Meat International Trade Data — ERS
- 2:00 p.m. Dairy Products — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC
