Good morning!
Wheat firms, soy complex futures face followthrough selling... Wheat futures are trading sharply higher this morning, while soybeans and the soy product markets are lower on followthorugh selling from Thursday’s losses. Corn is caught in the middle. As of 6:30 a.m. CT, corn is trading 3 cents lower to 2 cents higher, soybeans are 8 to 12 cents lower, winter wheat futures are 13 to 19 cents higher and spring wheat is 21 to 26 cents higher. Front-month U.S. crude oil futures are trading around 50 cents lower, while the U.S. dollar index is around 150 points higher.
Russia/Ukraine update... Talks between Russia and Ukraine are set to continue today. Russia agreed to hand back control of the highly contaminated Chernobyl nuclear plant to Ukraine. But NATO said Russian troops are repositioning — not withdrawing — in Ukraine. Russian leader Vladimir Putin said the time is not right for a ceasefire, according to Italy, which means a war of attrition. Russian forces are now likely to concentrate on eastern regions of Ukraine. Observers say the move could presage an attempt to split the county in two and to give Russia a route to Crimea, which it seized in 2014, and a path through Ukraine to the Black Sea. Many believe Ukraine and Russia could be locked in fighting for months if not years.
Russia attacking Ukrainian grain storage.... Russia has launched attacks on Ukrainian grain storage, according to U.S. government images seen by Reuters. The images showed damage to grain storage facilities in eastern Ukraine that were intact in January before the Russian invasion, with a U.S. official telling the news service, “As of late March, at least six grain storage facilities had been damaged as a result of these attacks.” The official said that the reliance on Ukrainian wheat exports by African and Mideast countries, “the destruction of these food stocks and storage facilities could result in shortages and drive up prices in already vulnerable economies.”
UN: Food price ‘breaking point’ near for Middle East, North Africa... Soaring costs for food staples in import-dependent Middle Eastern and North African countries are putting people’s resilience at a “breaking point,” according to the United Nations’ World Food Program (WFP). Russia’s invasion of Ukraine has added to surging costs for flour and vegetable oil, which are central to the region’s diets, it said. “We are extremely concerned about the millions of people in this region who are already struggling to access enough food because of a toxic combination of conflict, climate change and the economic aftermath of Covid-19,” said Corinne Fleischer, WFP regional director for the Middle East and North Africa. “This crisis is creating shock waves in the food markets that touch every home in this region.”
Ukrainian farm leader expects at least 30% plunge in spring plantings... Spring planting of corn, soybeans and sunflowers will drop “at least 30%” in Ukraine because of the war, said Leonid Kozachenko, president of the Ukrainian Agrarian Confederation. Overall production of the spring-planted crops will drop “at least 40% to 45%” and depend on supplies of fertilizer, pesticides and diesel fuel, all of which are in short supply, he added. The war’s impact will not be as great on winter wheat, which already has been planted, with production down “not more than 20%” versus last year. Mining of farmland by Russian troops is also hindering planting. “About 50,000 hectares is closed because of mines put there by Russian troops. Every day they place more,” he detailed. Kozachenko spoke during a Zoom call on the war’s impact hosted by the U.S./Ukraine Business Council.
European bank forecasts Ukraine’s economic output would contract by 20%, Russia’s by 10%... Those figures represent a stark reversal of the development bank’s forecasts in November 2021, months before the invasion, which predicted that Ukraine’s economic output would grow by 3.5% this year, and Russia’s by 3%. The war’s economic impact will also extend far beyond the immediate zone of conflict, the bank said in a statement.
March jobs growth expected to slow... Economists polled by Reuters expect this morning’s employment report to show the U.S. economy added 490,000 non-farm payrolls in March. That would be down from jobs gains of 678,000 in February. The unemployment rate is expected to decline 0.1 point to 3.7%.
Soy crush, corn-for-ethanol expected to drop from January but rise sharply from year-ago... Analysts expect USDA this afternoon to report February soybean crush at 175.4 million bu., based on a Bloomberg survey. If realized, that would be down 9.7% from January but up 6.8% from last year. Corn-for-ethanol use is expected to decline to 414.6 million bu., which would be down 12.5% from January but up 24.5% from last year.
Euro zone inflation reaches another record high... Euro zone inflation surged 7.5% above year-ago in March, hitting another record high, up from 5.9% in February and well above expectations. Excluding food and fuel prices, consumer inflation jumped 3.2% from 2.9% the previous month.
China’s fertilizer supplies, deliveries impacted by Covid restrictions... China’s Covid-19 curbs are disrupting the supply of fertilizer to the country’s main northeastern crop production region. Fertilizer producers, dealers, analysts and associations said rules requiring truck drivers to take Covid tests every 24 hours, a need to obtain special passes to deliver goods and factory suspensions due to local Covid cases are all contributing to tight supplies. The bottleneck comes on top of record fertilizer prices, driven up by strong global demand, high energy costs and sanctions on major producers Russia and Belarus. Despite efforts by Beijing to cool prices, China’s wholesale fertilizer index is 40% higher than a year ago.
China auctions state-owned soybean reserves... China auctioned 500,000 MT of state-owned soybean reserves to alleviate tight supplies. Results of the auction have not yet been released.
China’s factory activity contracts at sharpest rate in more than two years... China’s factory activity slumped at the fastest pace in more than two years in March due to Covid restrictions and economic fallout from the war in Ukraine. The Caixin/Markit Manufacturing purchasing managers index (PMI), which measures activity by smaller, privately owned factories, fell to 48.1 in March from 50.4 in the previous month – the steepest rate of contraction since February 2020. On Thursday, China’s official PMI showed contraction in larger, state-owned factories for the first time since October 2021.
U.S. closing in on 100 HPAI cases... USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed 95 cases of highly pathogenic avian influenza (HPAI) with 55 in commercial poultry operations and 40 in backyard/non-commercial operations. Confirmations on March 29 in commercial operations were in Minnesota (40,000 commercial turkeys in Kandyohi County; 44,000 commercial turkeys in Lac Qui Parle County); South Dakota (51,000 commercial turkeys in Bon Homme County; 46,300 commercial turkeys in Spink County); North Carolina (32,137 commercial turkeys in Johnston County); with March 30 confirmations in Iowa (35,500 commercial turkeys in Buena Vista County); and South Dakota (55,219 commercial turkeys in Brule County).
U.S. drops charges against five of 10 defendants in chicken price-fixing charges... The move comes after jurors deadlocked in the case on Tuesday, causing a second mistrial after a different jury failed to reach a verdict in December. Justice Department lawyers asked U.S. District Judge Philip Brimmer to dismiss charges against the five defendants “to streamline the case and conserve the resources of the court, the parties, and the public.” The judge agreed. The government plans to go forward with a third trial against the remaining five, including former Pilgrim’s Pride chief executive officers Jayson Penn and William Lovette. Also to be tried are Roger Austin, a former Pilgrim’s vice president; Mikell Fries, president of Claxton Poultry, and Scott Brady, a Claxton vice president. The decision to drop the charges removes from the case Timothy Mulrenin, a Perdue executive who previously worked at Tyson; William Kantola, a Koch Foods Inc. executive; Jimmie Lee Little, a former Pilgrim’s sales director; Gary Brian Roberts, a Case Farms employee who had worked at Tyson; and Ric Blake, a former director and manager at George’s Inc.
Still waiting on cash cattle trade in northern market... Feedlots in the Southern Plains moved some additional cattle around $138 on Thursday, steady with both earlier trade and last week. Feedlots in the northern dressed market continued to hold out for hopes of firmer bids. If cattle futures extend Thursday’s losses it could result in feedlots deciding to sell at steady or lower prices or carrying some showlist supplies into next week.
Bearish reaction to bullish data in hogs... It’s never a good sign when a market fails to capitalize on bullish news. Thursday’s sharp losses and low-range closes after a bullish Hogs & Pigs Report Wednesday afternoon create short-term concerns for bulls. Outside markets and money flow will be critical to how the market closes today, which could set the near-term price tone.
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
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Dairy Products — NASS
- 2:00 p.m. Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC