Good morning!
Corrective trade overnight... Corn and wheat futures rebounded from Tuesday’s losses overnight, while soybeans pulled back from yesterday’s gains. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 2 to 3 cents lower and wheat futures are mostly 3 to 6 cents higher. Front-month crude oil futures are trading near unchanged, while the U.S. dollar index is more than 100 points lower.
Kremlin: Outlook for Black Sea grain deal ‘not so great’... The Kremlin said not all of the United Nations’ efforts to remedy the Black Sea grain deal are working. As a result, the outlook for the deal is “not so great” as promises to remove obstacles to Russia’s grain and fertilizer exports were not being fulfilled. Meanwhile, inspections resumed on Wednesday aboard ships operating under the Ukraine Black Sea grain deal after a one-day halt. On Tuesday, the UN said inspections temporarily stopped as parties needed more time to agree operational priorities.
Ukraine says Russia stole lumber, too... Ukraine says Russia pilfered lumber in its invasion of the country, adding timber to the list that already includes grain and land. The Ukrainian Defense Ministry released a letter from the head of Russia’s defense ministry from March 2022, which sought permission from Russian President Vladimir Putin to harvest timber during the military operation, with wood not used for defense purposes to be sold to finance the military operation, according to the Wall Street Journal. The item noted that a review of surveillance photos indicated the logging appeared to focus on areas of possibly higher-value timber species within managed forests, including oak and pine, rather than simply stripping the entire area of its wood.
EPA announces crackdown on vehicle pollution... EPA proposed sweeping emissions cuts for new cars and trucks through 2032, with tailpipe emission limits so tough they will compel automakers to ensure two out of every three cars and light trucks sold in 2032 are electric models. Ali Zaidi, President Joe Biden’s national climate advisor, said as much as $1.6 trillion in savings could be generated by the tailpipe emissions standard and electric vehicle push through 2055. EPA says the new emissions targets for light-, medium- and heavy-duty vehicles beginning with the 2027 model year would avoid nearly 10 billion tons of carbon-dioxide through 2055. Under the proposed standards, sales of electric vehicles could climb to 67% of light-duty and 46% of medium-duty vehicle sales by model year 2032, leading to a projected 56% fleet-average emissions reduction.
Goolsbee calls for ‘prudence and patience’ on monetary policy... Chicago Fed’s Austan Goolsbee, who votes on monetary policy decisions this year, called for “prudence and patience” in assessing the economic impact of tighter credit conditions. “We should gather further data and be careful about raising rates too aggressively until we see how much work the headwinds are doing for us in getting down inflation,” Goolsbee said in prepared remarks at an event hosted by the Economic Club of Chicago.
Yellen more upbeat than IMF... U.S. Treasury Secretary Janet Yellen downplayed the greater risks associated with recent banking stresses the International Monetary Fund (IMF) raised as a serious concern. When asked about the IMF trimming its 2023 global growth forecast, Yellen said, “I wouldn’t overdo the negativism about the global economy. The U.S. banking system remains sound,” she said. Yellen noted the global financial system remains resilient due to significant reforms implemented after the financial crisis. Yellen remains vigilant to the downside risks surrounding the world economy in the wake of the Ukraine war and banking pressures. “I’m not anticipating a downturn in the economy, although that remains a risk,” she said.
Yellen pushes back on trade policy... Yellen pushed back on the Biden administration’s trade policy. “The argument that friendshoring is going to cause huge fragmentation and loss of the benefits of trade is really not valid,” she said. The approach still maintains “tremendous scope for global trade to continue. We’re mainly concerned about over-dependence on China.”
Mainland China to probe Taiwan’s ‘trade barriers’... China’s Ministry of Commerce said on Wednesday it had launched an investigation into Taiwan’s restrictive trade measures against 2,455 mainland products amid growing cross-strait tensions. The ministry said in a statement that it would review complaints by three mainland trade groups spanning agriculture, textiles and mineral-metal chemicals. The probe will take six to nine months, according to the statement.
Gov’t outlines Colorado River water use options... The U.S. outlined options yesterday for cutting Colorado River water use. The river supplies water for tens of millions of people, but there’s not enough to go around after decades of drought. Two options: Prioritizing California farmers, which would require massive cuts to cities like Phoenix and Los Angeles; or proportional cuts across Arizona, California and Nevada. The government expects to choose an option by August if states can’t come to their own agreement.
China has world’s first death tied to H3N8 bird flu... A 56-year-old woman from the southern province of Guangdong was the third person known to have been infected with the H3N8 subtype of avian influenza and the first to die from the disease, the World Health Organization (WHO) said. The woman had multiple underlying conditions, WHO said, and a history of exposure to live poultry. Samples collected from a wet market visited by the woman before she became ill were positive for influenza A(H3), said WHO, suggesting this may have been the source of infection.
Traders remain conservative with cattle futures... April live cattle futures reached $172.475 on Tuesday, eclipsing the 2014 high on the continuation chart. It’s not often you can say traders are being conservative when a market posts an all-time high, but that’s the case in cattle futures, as the April contract remained below last week’s record cash price of $173.10. As is often the case in a strong bull market in cattle, cash is leading futures higher. Cash sources expect the cash market to strengthen further this week, so there’s still upside in futures.
Wholesale pork should find support from beef... Choice boxed beef jumped to $295.10 on Tuesday while the pork cutout inched up to $77.46, pushing the ratio above 3.8. Wholesale pork prices are cheap compared to beef. With beef prices likely to continue their climb amid tightening supplies, the pork cutout value should be well supported.
Overnight demand news... Taiwan purchased 65,000 MT of Argentine corn. South Korea purchased 45,000 MT of U.S. milling wheat and 60,000 MT of optional origin feed wheat. 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
- 11:00 a.m. Feed Grains Database — ERS
- 11:00 a.m. Meat Price Spreads — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. Broiler Hatchery — NASS