First Thing Today | April 22, 2024
Good morning!
Varied tone in grains to open the week... Winter wheat markets built on Friday’s corrective gains during overnight trade, while corn, soybeans and spring wheat struggled to find followthrough buying. As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are 2 to 3 cents lower, winter wheat markets are 6 to 8 cents higher and spring wheat is a nickel lower to 2 cents higher. Front-month crude oil futures are trading near unchanged while the U.S. dollar index is modestly firmer.
U.S. soybean exports to China continue to lose market share to Brazil... During the first quarter of 2024, China imported 7.14 MMT of soybeans from the U.S., down 50% from the previous year. Imports from Brazil surged 155% to 9.99 MMT. Market share for soybean shipments to China stood at 54% for Brazil versus 38% for the United States. During March, China’s corn imports from Brazil jumped 72% to 1.18 MMT, while arrivals from the U.S. fell 78% to 109,685 MT.
IKAR raises Russian grain export forecast... Russia’s IKAR agricultural consultancy raised its Russian 2023-24 grain export forecast by 2 MMT to 72 MMT, including 53 MMT of wheat. The wheat export estimate was up 1 MMT from its prior outlook.
Putin orders Russian gov’t to outline grain trading with BRICS countries... Russian President Vladimir Putin ordered his government to present proposals to facilitate grain trading with other countries including India, China, Brazil and South Africa among others, which together with Russia make up the group of countries known as the BRICS, by July 1. The proposal would allow buyers to purchase directly from producers. Putin also ordered the government to set out additional support measures for farmers, including funding as well as ensuring supplies of gasoline and diesel.
Southern China hit by major flooding... Floods swamped southern China’s Pearl River Delta following record-breaking rains since last Thursday. The province of Guangdong has been hit hardest, with more rains in the forecast for this week. World Weather says, “Early indications suggest rice damage has been most significant and replanting will be necessary. Some sugarcane, corn and a few other crops produced in the region may have also been negatively impacted or will be impacted in the coming days.”
The week ahead in Washington... The House on Saturday passed a $95.3 billion foreign aid package for Ukraine, Israel and the Indo-Pacific region. The measures now go to the Senate for a Tuesday vote. A fourth bill that cleared the House would seize frozen Russian sovereign assets and force a sale of the Chinese-controlled social media app TikTok, among other priorities. The Biden administration is gearing up to issue a significant executive order on immigration, intending to utilize Section 212 of the Immigration and Nationality Act. This move aims to establish new obstacles for asylum seekers who enter the country unlawfully. The economic focus this week will be Thursday’s initial estimate of first quarter GDP and Friday’s personal consumption expenditures price index, the Fed’s preferred inflation gauge. Key agricultural data includes Wednesday’s Cold Storage Report and Thursday’s update on the food price outlook.
Farm bill setbacks – again... House farm-state Democrats are clearly showing opposition to the new farm bill package being put together by House Ag Chair Glenn “GT” Thompson (R-Pa.) and staff. House Ag Ranking Member David Scott (D-Ga.) has penned an Op-Ed item on Agri-Pulse that takes Thompson and Republicans to task for proposing changes to food and nutrition programs, decrying the effort as not bipartisan relative to reaching agreement on the farm bill. House Dems keep saying the House GOP plan impacts the Thrifty Food Plan, and that’s a no-no. Thompson is looking at a committee markup sometime between May 14-17 or the following week between May 21-24. But the only consistent thing about this process has been delays and postponements. Another farm-state Democrat hands-off item: CCC. USDA Secretary Tom Vilsack urged lawmakers not to restrict his authority over the Commodity Credit Corp as a way to pay for the farm bill. Another potential hotspot ahead: If the coming House GOP farm bill contains variable boosts to reference prices, some observers say it could lead to charges of equity concerns relative to North/South concerns.
U.S. to introduce stricter standards aimed at enhancing integrity of carbon markets... According to climate envoy John Podesta, the State Department will advocate for carbon credits to represent tangible, additional and permanent reductions in emissions that would not have occurred otherwise. Furthermore, the U.S. will emphasize the importance of avoiding carbon leakage, where reductions in one area are offset by increased pollution elsewhere. The standards will also clarify that companies should not use carbon credits as a substitute for or delay in making investments to reduce their own emissions. Critics express concerns about the difficulty in accurately assessing the real-world impact of carbon offsets and fear that companies may exploit these tools to evade responsibility for reducing their own pollution. The guidance being developed by the U.S. State Department aligns with similar efforts by the UK and EU to address these issues.
China leaves benchmark lending rates unchanged... The People’s Bank of China left the 1-year loan prime rate (LPR), the benchmark for most corporate and household loans, at 3.45%. The 5-year rate, a reference for property mortgages, was maintained at 3.95%. Both rates are at record lows, indicating Beijing continues its attempt to spur an economic recovery following weak activity data in March due to ongoing headwinds from the property sector, lingering deflation risks and fragile trade performance.
Limited reaction expected to Cattle on Feed Report... USDA estimated there were 11.821 million head of cattle in large feedlots (1,000-plus head) as of April 1, up 174,000 head (1.5%) from year-ago but 35,000 head less than the average pre-report estimate implied. This marked the seventh consecutive month with a year-over-year increase in feedlot inventories. March placements of cattle into feedlots fell 12.3%, while marketings dropped 13.7%. There won’t likely be much market reaction. If anything, it could encourage some bull spread unwinding, with pressure on nearby futures and support for deferred contracts.
Retailer beef demand strong... Wholesale beef prices were mixed Friday, with Choice down 13 cents to $295.67 while Select firmed $1.56 to $290.83. Movement was strong at 126 loads and averaged 118.4 loads last week, signaling there’s solid underlying demand. Until packers can strengthen wholesale prices, however, their interest in actively bidding for cash cattle will remain limited.
Cash hog index slips... The CME lean hog index is down 11 cents to $91.35 as of April 18. May lean hog futures finished last Friday at a $4.875 premium to the cash index, while June hogs were $13.475 above today’s cash quote. The pork cutout value firmed 13 cents to $100.09.
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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Raw-Fiber Equivalents of U.S. Textile Trade Data ERS
- 2:00 p.m. U.S. Bioenergy Statistics — ERS
- 2:00 p.m. Chickens and Eggs — NASS
- 2:00 p.m. Milk Production — NASS
- 3:00 p.m. Crop Progress — NASS
