Good morning!
Mostly weaker tone overnight... Soybeans faced pressure overnight after a poor close on Thursday, while wheat traded mostly lower and corn was narrowly mixed. As of 6:30 a.m. CT, corn futures are trading a penny lower to 3 cents higher, soybeans are 4 to 7 cents lower and wheat futures are mostly 1 to 2 cents lower. Front-month crude oil futures are modestly firmer, while the U.S. dollar index is holding near unchanged this morning.
U.S. mulling action on China over Phase 1 trade deal shortfalls... The Phase 1 trade agreement negotiated between the two countries under the Trump administration allowed for penalties to be assessed for failure to live up to commitments in the trade deal. The Biden administration is still considering actions to take against the People’s Republic of China (PRC) for failing to meet purchase commitments and other terms of the deal, Deputy U.S. Trade Representative Sarah Bianchi said Thursday. The administration “will continue to press the PRC on its state-centered and non-market trade practices, and to live up to its commitments through the Phase 1 agreement.” China has not met “a number of commitments” in the Phase 1 trade deal, Bianchi said. “Certainly the purchase agreements, but other provisions as well.” The Biden administration previously launched a comprehensive four-year review process of the Section 301 tariffs on imports, she noted, and said they are taking a “deliberate and strategic look at how we can serve our interests in light of the PRC’s continued unfair policies and practices.”
Russia: West still has time to solve issues with grain deal... The West still has time to remove “obstacles” hindering the implementation of the Black Sea grain deal before a deadline on May 18, senior Russian diplomat Mikhail Ulyanov said on Friday. Russia has been increasing its rhetoric that the grain deal won’t be extended unless its demands are met, including removing what it says are obstacles to grain and fertilizer exports, along with state bank Rosselkhzbank being reinstated in the SWIFT global financial communications system.
Brazil soybean cargo headed to Southeast United States... The Agia Marina, a 30,000 metric ton vessel, is scheduled to leave from the Brazilian port of Santarem in the last week of April and is headed for North Carolina with a cargo of soybeans, Bloomberg News reported, citing sources familiar with the situation. This would be the first Brazilian soybean shipment to the U.S. since 2021 and comes much earlier than previous years, as record production has pushed Brazilian prices to the biggest discount relative to U.S. soybeans in nearly a decade.
China targets less soymeal in feed rations... China’s ag ministry issued an action plan on Friday proposing soymeal rations in animal feed are reduced to under 13% by 2025, down from 14.5% in 2022. China is trying to reduce its heavy reliance on soybean imports. China already issued guidelines in 2021 to its animal feed industry recommending lower soymeal ratios. The new plan would “guide the feed industry to reduce the amount of soybean meal, promote the saving and consumption reduction of feed grains, and contribute to ensuring the stable and safe supply of grain and important agricultural products,” the ministry said. The new target of under 13% by 2025 is slightly lower than an earlier target of 13.5%. Meanwhile, China will conduct pilot projects in more than 20 large and medium-sized cities for use of food leftovers in animal feed.
Russia sharply increases wheat export tax... Russia’s wheat export tax for April 19-25 will be 5,759.5 rubles ($70.55) per metric ton based on an indicative price of $283.90. That’s up from a rate of 5,339.4 rubles per metric ton the previous week and the highest since late July 2022.
Japan, Philippines visit by Tai to promote U.S. Indo-Pacific trade plan... U.S. Trade Representative (USTR) Katherine Tai will meet with leaders in the Philippines and Japan next week, as the Biden administration works to prove that its year-old trade framework is yielding results. The next negotiating round will take place in Singapore in May. Tai likes “deliverables” and some ag-sector announcements are possible, contacts advise. Recall that President Ferdinand Marcos Jr. agreed to extend the country’s reduced tariff rates on pork for another year — through the end of 2023. Another extension is possible.
Fed’s Bostic: Fed can ‘hit the mark and hold’ with one more rate hike... One more 25-basis-point interest rate hike can allow the Federal Reserve to end its tightening cycle with some confidence inflation will steadily return to its 2% target, Atlanta Fed President Raphael Bostic said. Recent inflation data, including this week’s reports of slowing consumer price increases and falling producer price inflation, “are consistent with us moving one more time,” Bostic told Reuters. “There’s more to do. I think the next step is going to be to figure out how much more,” Bostic said. But he noted, “I think the point of ‘hit the mark and hold’ is ‘hit the mark and hold,’ unless you see a trend that is unmistakable, that is going in a way that makes you uncomfortable.”
China starts review of tariffs on Aussie barley... China’s commerce ministry said on Friday it will review the necessity of continuing to impose anti-dumping and anti-subsidy tariffs on imported Australia barley from April 15, with the survey to be completed within a year. The statement follows an agreement reached between China and Australia earlier this week to resolve their dispute over barley imports. Australian Foreign Minister Penny Wong said China had agreed to carry out an “expedited review” of the duties over three or four months.
IEA forecasts record global oil demand, warns about supplies... The International Energy Agency (IEA) forecast world oil demand will grow 2 million barrels per day (bpd) in 2023 to a record 101.9 million bpd, driven in most part by stronger Chinese consumption after the lifting of Covid restrictions. But IEA also warned OPEC+ output cuts could exacerbate an oil supply deficit. IEA expects global oil supply to fall by 400,000 bpd by the end of the year, citing an expected production increase of 1 million bpd from outside of OPEC+ beginning in March versus a 1.4-million-bpd decline from the cartel.
GOP, McCarthy planning one-year deal on debt limit... House Speaker Kevin McCarthy (R-Calif.) is developing a plan to suspend the federal government’s debt ceiling for a year in exchange for spending cuts, according to reports. The plan will be disclosed when Congress reconvenes next week and proposes a House vote next month to suspend the ceiling until May 2024. Republican leaders are weighing whether to cap nonmilitary discretionary spending, or overall discretionary spending, at fiscal 2022 levels. McCarthy’s proposal would keep nonmilitary discretionary spending at fiscal 2022 levels, but allow for a 1% annual increase over 10 years, Bloomberg reported. It would take back unspent Covid-19 relief money, prohibit President Joe Biden’s student loan forgiveness program, require Medicaid recipients aged 60 and under without dependent children to work, repeal some green tax credits, and implement the House Republican energy plan, Punchbowl News reported. McCarthy is scheduled to speak Monday morning at the New York Stock Exchange, when he is expected to talk about the debt ceiling and Congress’ determination not to raise it without spending cuts.
April live cattle chasing cash... Cash cattle traded sharply higher for a third straight week, with prices around $175 in the Southern Plains and up to $185 (live)/$290 (dressed) in the northern market. April live cattle futures were supported by the strong cash gains, but deferred contracts ended lower on Thursday amid profit-taking and corrective selling. Followthrough selling in deferred live cattle futures today would signal traders sense the cash price surge is nearing an end.
Cash hog index marks new low for the year... The CME lean hog index is down 30 cents to $71.95 (as of April 12), falling below the January low. A spring low in the cash market hasn’t historically occurred often, but it has been more common recently, happening now four of the past six years. In each of the other three years, the sharp spring price break has led to an even stronger runup to the summer high.
Overnight demand news... South Korea purchased 68,000 MT of corn expected to be sourced from South America. Thailand purchased 55,000 MT of Black Sea origin feed wheat. The Philippines is seeking 330,000 MT of rice to boost state-owned emergency reserves.
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
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Turkey Hatchery — NASS
- 2:30 p.m. Commitments of Traders — CFTC