First Thing Today | April 10, 2024

Good morning!

Wheat leads overnight price gains... Grain and soy futures firmed amid corrective buying overnight, led by HRW wheat contracts. As of 6:30 a.m. CT, corn and soybean futures are trading 2 to 3 cents higher, SRW wheat is 7 to 8 cents higher, HRW wheat is 12 to 15 cents higher and HRS wheat is mostly a dime higher. The U.S. dollar index is around 100 points lower and front-month crude oil futures are around 50 cents higher.  

Ukraine ships corn, wheat to China... Ukraine has shipped 360,000 MT of corn and 65,000 MT of wheat to China so far this month, according to Spike Brokers. The export data firm says a total of 600,000 MT of Ukrainian corn could be shipped to China this month, with another 400,000 MT of corn likely to be exported in May.

Russia seizes assets of AgroTerra... Russia has seized companies belonging to agricultural firm AgroTerra and placed them under temporary management, according to a decree signed by President Vladimir Putin. Monday’s decree listed AgroTerra assets being placed under temporary management of Rosimushchestvo, Russia’s federal property management agency. The company, which is a producer and supplier of mass commodity crops and specialty, value-added crops to top food processors, said it was operating as usual and that its primary focus was the ongoing planting campaign.

Import cargo to hit 2 million containers for first time since last fall... The Global Port Tracker report indicates that next month’s inbound cargo volume at major U.S. container ports is anticipated to surpass 2 million units for the first time since last fall, despite new challenges in the supply chain. The National Retail Federation and Hackett Associates released the report, highlighting that U.S. imports continue to rise despite disruptions at U.S. ports, such as the recent shutdown of the Port of Baltimore due to a bridge collapse. Cargo originally destined for Baltimore is being redirected to other East Coast ports, such as New York/New Jersey and Virginia. Additionally, rerouting around the Red Sea and Suez Canal following earlier attacks on vessels, alongside increased vessel speed and additional vessels, has helped stabilize supply chains within a short period. However, any further strain on capacity could have serious implications for the market.

 Fitch downgrades outlook for China but affirms ‘A+’ rating... Ratings agency Fitch revised China’s sovereign credit rating to negative on Tuesday, citing increasing risks to the country’s public finance outlook. Fitch forecasts the general government deficit would rise to 7.1% of GDP in 2024 from 5.8% in 2023. While it lowered its outlook, indicating a downgrade is possible over the medium term, the agency affirmed China’s IDR rating at “A+” – its third highest category. The outlook downgrade follows a similar move by Moody’s in December. China’s government said the rating failed to reflect the “positive role of fiscal policies in promoting economic growth.”

Thompson: House farm bill markup seen before Memorial Day... House Agriculture Committee Chairman Glenn “GT” Thompson (R-Pa.) expects his panel will vote on a farm bill package before the end of May. Thompson told Politico he is “anticipating a markup before Memorial Day. I’m excited. It’s all coming together.” The report indicated the timeline is planned even if there is no immediate floor time for a vote in the full House. Comments: Key will be how additional funding for this and other GOP farm bill wishes will be paid for. If it involves, as expected, changes to the Thrifty Food Plan, the measure will not get to the White House for signature. House Ag Democrats are slated to meet late this afternoon for ranking member David Scott (Ga.) to brief members on the recently finalized GOP proposal for nutrition. Voting keys are (1) whether any Ag Committee Democrats vote for the GOP plan during the panel markup and (2) whether there are enough votes in the full House to clear the measure. Food stamp-related language has tripped up some prior farm bills. But with the U.S. debt rising $1 trillion every 100 days and interest on the debt taking 30 cents out each dollar in revenue, the overall cost of the farm bill could take on more importance if/when it gets to the House floor for debate. As noted many times previously, lawmakers and staffers have said they would be creative in finding additional funding to temper opposition of others. We will soon find out how creative and practical the tactics are in resolving lingering funding issues. In the Senate, Majority Leader Chuck Schumer (D-N.Y.) notably left the farm bill off a recent list of his legislative priorities for the next few months.

Crop insurance improvement bill introduced in Senate... The Federal Agriculture Risk Management Enhancement and Resilience (FARMER) Act seeks to improve crop insurance affordability by increasing premium support for the highest levels of coverage and enhancing the Supplemental Coverage Option (SCO). Introduced by committee member Sen. John Hoeven (R-N.S.), the FARMER Act seeks to: 

• Increase premium support for certain revenue protection and yield protection policies at the 80% coverage level from 68% to 77% and at the 85% coverage level from 53% to 68%.
• Increase premium support for the SCO, an area-based plan, from 65% to 80% and increase the SCO coverage level from 86% to 90%.
• Direct the Risk Management Agency to conduct a study to improve the effectiveness of SCO in counties larger than 1,400 square miles.

Of note: Hoeven says the bill has been scored by the Congressional Budget Office to cost $4.2 billion. Hoeven argues his new crop insurance plan will cost “a fraction” of what the federal government would have to pay out in ad hoc disaster assistance for producers. Some details of this topic will likely show up in the coming House GOP farm bill proposal. No Democrats have signed onto the bill so far.

USDA finalizes rule updating foods that can be purchased through WIC... USDA finalized a rule that updates the types of foods eligible for purchase through the WIC program, a federal initiative supporting low-income women and young children. The aim is to provide more flexibility at grocery stores and promote fruit and vegetable consumption, but it also reduces the monthly allowance for certain foods, particularly dairy products. This reduction has drawn criticism from dairy industry groups such as the International Dairy Foods Association (IDFA) and the National Dairy Producers Federation (NMPF), who argue that it contradicts the goal of ensuring consistent and equitable access to healthy foods. NMPF’s president Gregg Doud expressed concern over the reduction in access to essential dairy nutrients. IDFA president Michael Dykes, while critical of the reduction in dairy allowances, acknowledged the rule’s authorization of lactose-free milk purchases and new flexibilities for yogurt and cheese. Conversely, nutrition advocacy groups like the National WIC Association welcomed the rule, praising USDA’s adherence to science-based standards and urging prompt implementation.

NCBA criticizes USDA/NASS decision to halt vital cattle industry reports... The National Cattlemen’s Beef Association (NCBA) expressed strong criticism of USDA’s National Agricultural Statistics Services decision to halt publication of the July Cattle Inventory Report and discontinue county estimates for crops and livestock, among other changes that we reported in “Evening Report” on Tuesday. These reports are deemed essential for the cattle industry, providing vital data, and NCBA sees the decision to terminate them is seen as deeply misguided. NCBA accuses NASS of contradicting its commitment to transparency in livestock markets by discontinuing the reports. It believes that halting these reports will not lead to significant cost savings for USDA and called upon NASS to reverse its decision promptly.

USDA confirms BIAV in New Mexico dairy cattle... USDA’s Animal and Plant Health Inspection Service website shows the H5N1 virus, Bovine Influenza A Virus (BIAV) as we now refer to it, was detected at two dairy farms in New Mexico. That brings the total number of confirmed BIAV cases to 20 in six states – Texas (9), New Mexico (4), Kansas (3), Michigan (2), Ohio (1) and Idaho (1).

Corrective recovery continues in cattle futures... Cattle futures posted strong corrective gains for a second straight day on Tuesday, though the market still hasn’t clawed back all of last Friday’s losses and is well below where the market finished on March 28. More strong corrective gains and a high-range close for the week are needed to suggest a low is in place.

Cash hog index picking up steam... The CME lean hog index is up another 83 cents to $87.88 as of April 8. The index has risen an average of 68.25 cents the last four days, accelerating the seasonal climb. Expiring April lean hog futures finished Tuesday $2.72 above today’s cash quote, suggesting traders don’t anticipate any letup in the cash market near-term.

Overnight demand news... Exporters reported no tenders or sales.

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
• 11:00 a.m. Meat Price Spreads — ERS
• 2:00 p.m. Broiler Hatchery — NASS
• 2:00 p.m. Crop Production Historical Track Records — NASS