First Thing Today | April 11, 2024

Good morning!

Quiet overnight grain trade... Corn, soybeans and wheat held in tight ranges during relatively quiet overnight trade ahead of USDA’s April crop reports later this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 4 to 5 cents lower, SRW wheat is 2 to 3 cents lower, HRW wheat is unchanged to 2 cents lower and HRS wheat is 1 to 4 cents lower. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is trading just above unchanged.

Modest changes expected in April WASDE Report... USDA is expected to make relatively modest changes to its domestic usage forecasts in the Supply & Demand Report at 11:00 a.m. CT. On average, analysts expect ending stocks to decline 70 million bu. for corn to 2.102 billion bu., rise 2 million bu. for soybeans to 317 million bu. and increase 17 million bu. for wheat to 690 million bushels. Globally, focus will remain on South American production, though USDA will likely remain above many private crop forecasts and Conab with its Brazilian crop estimates.

Weekly Export Sales Report out this morning... For the week ended April 4, traders expect:

Exchange slashes Argentine corn crop estimate... The Rosario Grain Exchange slashed its Argentine corn crop forecast by 6.5 MMT to 50.5 MMT, citing “unprecedented” damage from spiroplasma disease carried by leafhoppers. The exchanged noted, “This is the first time since estimates have been made that such significant damage has been seen from a non-climatic factor.”

Chinese buyers cancel more Ukrainian corn cargoes... Chinese importers won’t take delivery of four or five cargoes of Ukrainian corn previously booked for delivery between April and June, people familiar with the matter told Bloomberg. The sources noted more shipments could be canceled. The cancellations come after Chinese customs officials asked traders to limit deliveries of foreign corn into bonded areas in a move aimed at easing domestic oversupply and supporting prices for farmers before the planting season, as we reported last week. Traders can bring corn into bonded areas to be blended with other ingredients into animal feed, before importing it at a lower tax rate.

China raises corn, cotton import forecasts... China’s ag ministry raised its forecast for 2023-24 corn imports by 2.5 MMT to 20 MMT, which would be up 1.29 MMT (6.9%) from last year. The ministry stated, “However, it is expected that the quantity entering market circulation will be limited and import volumes will decline significantly in the later period.” The ag ministry raised its 2023-24 cotton import forecast by 300,000 MT to 2.3 MMT, which would be up 870,000 bales (60.8%) from last year.

Strategie Grains raises EU wheat production forecast... Strategie Grains raised its EU wheat production forecast by 200,000 MT to 121.8 MMT, due to favorable conditions in Spain, though that would still be down 4.1 MMT (3.3%) from last year. Heavy rains have hampered wheat crops in other areas of Europe. Strategie Grains raised its EU barley crop forecast by 700,000 MT to 52.5 MMT, which would be up 10.5% from last year’s drought-hit crop. The firm cut its EU corn production outlook 1 MMT to 63.4 MMT, though that would still be up 2.8% from last year. The changes to the barley and corn production forecasts were due to adjustments in expectations for planted area.

Deflationary concerns rebuild in China... China’s consumer prices edged up 0.1% from year-ago in March, though that was down notably from the 0.7% rise in February, which was the first gain in six months. Food prices fell 2.7%, as the costs of pork and fresh vegetables dropped following gains the previous month. Non-food prices increased 0.7%, down from a 1.1% increase in February. China’s producer prices fell 2.8% from year-ago in March, the 18th straight month of contraction in factory-gate prices and the steepest decline since last November.

China to support equipment upgrades, consumer goods trade-ins... China will give strong financing for firms involved in the program of equipment upgrades and trade-ins of consumer goods, government officials said, the latest bid to spur domestic demand and support the economy. Annual investment in China’s equipment upgrades in key industrial and farm sectors exceeds 5 trillion yuan ($690.89 billion) and demand for the replacement of automobiles and household appliances is above 1 trillion yuan, said an official with the National Development and Reform Commission. China aims to boost equipment investment in key sectors of the economy by 25% from 2023 to 2027, alongside efforts to speed up recycling of used cars and home appliances. The push could lift China’s equipment investment growth by 3.8 percentage points per year and add 0.4 point to fixed-asset investment in 2024-27, Citi analysts said in a note. Consumer goods trade-ins could give a 0.5% boost to retail sales this year, they said.

Brazil intends to uphold tariffs on U.S. ethanol to safeguard its domestic industry... Brazil will maintain tariffs on U.S. ethanol imports despite “tough” complaints from the Biden administration, said Agriculture Minister Carlos Fávaro. U.S. authorities have been pressuring Brazil to remove the tariffs reinstated by President Luiz Inacio Lula da Silva’s administration. Fávaro said one option may be for Brazil to reduce tariffs in exchange for an increase in the domestic U.S. blending mandate. Such a move would increase overall demand for ethanol, he noted. Brazilian ethanol already has duty-free access to the U.S. market and additional incentives via various U.S. environmental standards.

U.S. sees imminent missile strike on Israel by Iran, proxies... The U.S. and its allies believe major missile or drone strikes by Iran or its proxies against military and government targets in Israel are imminent. If so, that would mark a significant widening of the six-month-old conflict. Iran has threatened to hit Israel in retaliation for an attack on a diplomatic compound in the Syrian capital of Damascus last week that killed senior Iranian military officials.

BIAV detected in North Carolina... Bovine Influenza A Virus (BIAV) was detected in a dairy herd in North Carolina, the state’s Agriculture Commissioner Steve Troxler said. This is the 21^st case of BIAV and North Carolina is the seventh state with an outbreak of the virus, joining Texas (9), New Mexico (4), Kansas (3), Michigan (2), Ohio (1) and Idaho (1).

Wholesale beef prices tumble... Wholesale beef prices dropped $3.86 for Choice and $3.88 for Select on Wednesday, with both now back below the $300.00 mark. Choice beef spent two days above that level, while Select only lasted one day above it. Packer cutting margins remain deep in the red, which will keep them on limited slaughter schedules and reduce needs for cash cattle purchases.

Pork margins weakening... The seasonal rise in the cash hog market is strengthening, with the CME lean hog index up another 90 cents to $88.78 as of April 9. Wholesale pork prices aren’t keeping pace, falling 46 cents on Wednesday. As a result, packer margins have tightened, with some now cutting in the red.

Overnight demand news... Japan purchased 121,485 MT of milling wheat via its weekly tender, including 27,470 MT U.S., 58,925 MT Canadian and 35,090 MT Australian. South Korea rejected all offers in a tender to buy up 140,000 MT of optional origin corn.

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. Weekly Export Sales — FAS
• 11:00 a.m. WASDE — WAOB
• 11:00 a.m. Crop Production — NASS
• 11:15 a.m. Cotton: World Markets and Trade — FAS
• 11:15 a.m. Grains: World Markets and Trade — FAS
• 11:15 a.m. Oilseeds: World Markets and Trade — FAS
• 11:15 a.m. World Agricultural Production — FAS
• 2:00 p.m. Livestock and Poultry: World Markets and Trade — FAS