First Thing Today | April 24, 2024
Good morning!
Grain rally pauses overnight... Grain futures mildly pulled back from recent corrective gains during the overnight session. As of 6:30 a.m. CT, corn futures are trading fractionally lower, soybeans are 1 to 2 cents lower, SRW wheat is 4 to 5 cents lower, HRW wheat is mostly 2 cents lower and HRS wheat is 1 to 2 cents lower. Front-month crude oil futures are modestly lower and the U.S. dollar index is nearly 200 points higher this morning.
India struggling to rebuild gov’t wheat stocks... India is struggling to replenish government wheat stocks, with purchases down sharply from year-ago levels. State-run agencies have bought 11.92 MMT of wheat from farmers so far this season, down 25% from the 15.92 MMT purchased at this time last year, according to data from the Food Corporation of India (FCI). Untimely rainfall in northern states, particularly in Punjab, has delayed purchases, a government official told Reuters. Higher open market prices, which encourage farmers to sell to private traders, are also slowing government purchases. There is growing speculation India may not reach its procurement target of 30 MMT to 32 MMT, potentially leading to wheat imports for the first time since 2017.
Senate passes foreign aid package... The Senate passed a $95.3 billion aid package for Ukraine, Israel and Taiwan, sending it to President Joe Biden’s desk. The $95.3 billion supplemental includes: $60.8 billion in Ukraine-related funds; $26.4 billion in assistance for Israel and Gaza; $8.1 billion for various Indo-Pacific security needs, including $3.3 billion for the submarine industrial base, $2 billion for support to Taiwan and $1.9 billion to replenish stocks given to Taiwan; and several policy provisions that were not originally in the Senate’s supplemental, including language that would ban TikTok in the U.S. unless its Chinese owners divest from the social media app, the transfer of $5 billion in repossessed Russian assets to Ukraine and increased sanctions on Russia and Iran.
Blinken arrives in China for meetings... Secretary of State Antony Blinken arrived in Shanghai on Wednesday with U.S./China ties on a steadier footing, but with a long list of issues to address. Blinken will meet with business leaders before heading to Beijing for talks on Friday with his counterpart, Foreign Minister Wang Yi, and a likely meeting with President Xi Jinping. While recent meetings between officials from both countries have eased tensions, Washington and Beijing have made little headway on curbing China’s supply of chemicals used to make fentanyl, the Taiwan situation and China’s backing of Russia in its war in Ukraine.
China strongly criticizes U.S. investigation into shipbuilding industry... U.S. Trade Representative Katherine Tai announced a probe into China’s shipbuilding industry following demands from major U.S. union groups, amid broader U.S. measures including proposals for higher tariffs on Chinese steel and aluminum to support the American steel sector. Beijing has denounced the investigation as baseless and contrary to economic rationale, accusing the U.S. of using the probe for domestic political gains and making “false accusations” about China’s trade practices threatening U.S. national security and corporate interests. The Chinese government insists the U.S. is misinterpreting normal trade activities and has urged Washington to abandon these “wrong practices” and adhere to a rules-based multilateral trading system. This conflict occurs amid broader tensions and ongoing disputes between the two nations over trade policies and economic practices.
PBOC steps up rhetoric over long-end government bond rally... The People’s Bank of China (PBOC) warned that sharp gains in long-dated government bonds failed to reflect future economic growth prospects. PBOC also noted supply and demand dynamics are at play and said investors need to pay close attention to interest rate risk as long-dated bonds are sensitive to fluctuations in rates. Markets reacted to the warnings with a selloff in government bonds. Futures on China’s 30-year debt closed down 1.1%, the worst loss on record since their debut a year ago. Cash bonds also fell, with the 10-year sovereign yield rising three basis points and the 30-year yield up four points. Regulators have stepped up efforts to cool the rally through a slew of measures but long-term yields remain on track to test the record lows set about two decades ago.
Chinese developer extends bonds to avoid first local default... Chinese developer Country Garden Holdings Co., one of the biggest symbols of the nation’s broader property debt crisis, won approval to push back payments on three yuan bonds, people familiar with the matter told Bloomberg, staving off its first local default for now. Noteholders finished voting this week to extend coupon and principal installment payments to September, said the people. The company had missed initial deadlines from March 12 through April 12 for the payments. Grace periods of 30 trading days were set to soon expire, after which creditors could have declared defaults if they hadn’t agreed to the extensions.
FDA says commercial milk safe despite H5N1 virus presence... The U.S. Food and Drug Administration said on Tuesday it had found H5N1 virus particles in some samples of pasteurized milk, but said commercial milk supply remains safe. FDA said that because the milk is pasteurized, it remains safe for human consumption as the process kills harmful bacteria and viruses by heating milk to a specific temperature. The agency said it has been evaluating milk from affected animals, in the processing system and on the shelves. It said it is completing a large, representative national sample to understand the extent of the findings. FDA said it is further assessing any positive findings through egg inoculation tests, which it described as a gold standard for determining viable virus.
Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of March. The five-year average is a 12.4-million-lb. decline in beef stocks and a 10.3-million-lb. drop in pork stocks during the month.
Key period ahead for beef market... Choice boxed beef prices firmed $1.47 while Select rose 89 cents on Tuesday. Movement improved to 147 loads amid the higher prices. Beef demand is entering its most critical timeframe of the year as packers and retailers gear up for the big “beef” holidays through the Fourth of July. Slaughter levels and wholesale beef prices will be a good gauge of beef demand.
Cash hog index rebounds, pork stumbles... The CME lean hog index is up 14 cents to $91.45 as of April 22, ending a modest 13-cent slide the two previous days. The pork cutout value dropped $4.84 on Tuesday to $96.86. While the pork decline was led by a $23.70 plunge in primal bellies, all cuts except butts dropped on the day. If the wholesale pork market shows further declines it would suggest a short-term top may be in place.
Overnight demand news... Jordan tendered to buy up to 120,000 MT of optional origin milling wheat.
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
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Livestock Slaughter - Annual — NASS
