Good morning!
Grains weaker to start the week... Corn, soybeans and wheat mildly favored the downside in relatively quiet overnight price action. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are around a penny lower, SRW wheat futures are 6 to 7 cents lower, HRW is 4 to 6 cents lower and HRS is 1 to 3 cents lower. Front-month crude oil futures are around 60 cents lower and the U.S. dollar index is about 150 points lower this morning.
Middle East tensions rise... Iran’s weekend barrage of missiles and drones targeting Israel amid heightened regional tensions fueled by the Gaza conflict has spurred deliberations within Israel’s war cabinet regarding a response. Despite intercepting over 99% of the projectiles, Israel remains resolute in determining the timing and scale of its retaliation. In discussions with international counterparts, President Joe Biden’s national security team emphasized Washington’s stance against participating in offensive actions against Iran. Meanwhile, global leaders have reacted variably, with some openly condemning Tehran’s actions, others advocating for an immediate Gaza ceasefire and almost all urging restraint amid escalating tensions in the Middle East. Overnight market reaction was muted.
Big temperature swing, but no damaging cold... Extreme heat that moved into the central U.S. over the weekend will continue during the first half of this week. A cooldown during the second half of the week isn’t expected to be as cold as advertised on Friday. Most crop regions in the U.S. will receive some rains over the next 10 days, according to World Weather Inc., though west-central HRW areas will stay relatively dry.
Final phase of Brazil’s rainy season... Rainfall in center-west and southern safrinha corn areas of Brazil early this week is expected to be sufficient for improved topsoil moisture, but subsoil moisture will stay lighter than desired in Mato Grosso do Sul and western Parana. World Weather says seasonal rains are expected to end in center-west and southern parts of center-south Brazil later this week. Interior northeastern Brazil and northern parts of center-south Brazil have already started the dry season.
March NOPA soy crush expected to be highest ever... Analysts expect the National Oilseed Processors Association (NOPA) to report its members crushed 197.8 million bu. of soybeans during March, based on a Reuters. That would be a 6.2% increase from February, 6.4% greater than March 2023 and the highest level ever for any month. Soyoil stocks are expected to total 1.792 billion pounds. Of note, the Bloomberg poll pegs March soybean crush at 194.9 million bushels.
Ukraine’s oilseed production expected to fall around 3%... Ukraine’s oilseed output is likely to fall by around 3% this year to 21 MMT mostly due to a smaller sunflower seed harvest, analyst APK-Inform quoted the Ukrainian vegetable oil association Ukroliyaprom as saying. Ukroliyaprom said sunflower seed output may decrease 4.8% to 12 MMT and rapeseed production could decline by 4.8% to 4 MMT, while soybeans could rise 4.2% to around 5 MMT.
India forecasts above-average monsoon rains... India says it is likely to receive above-average monsoon rainfall this year. The monsoon, which usually arrives over the southern tip of Kerala state around June 1 and retreats in mid-September, is expected to total 106% of the long-term average this year. Above-average rainfall could boost the farm sector and wider economic growth, helping to bring down food price inflation.
The week ahead in Washington... A hearing in the House and Senate on the Biden administration’s trade policy and continued hearings on fiscal year 2025 budgets are the focus this week. U.S. Trade Representative Katherine Tai appears Tuesday before the House Ways & Means Committee on the Biden administration’s trade policy. On Wednesday she will address the Senate Finance Committee on the same topic. Farm-state lawmakers and farm groups are disgruntled regarding what they believe to be a very passive approach by the Biden administration regarding efforts to boost farm commodity exports. USDA’s estimate of the ag trade deficit this fiscal year is $30.5 billion. Biden administration officials have frequently said the reasons for the deficit is a strong U.S. dollar, imports of horticultural products unavailable in the U.S. and a robust economy. USDA Secretary Tom Vilsack will appear Tuesday before the Senate Ag Appropriations Subcommittee with the usual round of topics likely addressed including food stamp funding, farm income, a new farm bill, agricultural trade and animal diseases. The economic focus this week will be the Fed’s Beige Book on Wednesday highlighting economic conditions in the 12 federal districts. The focus for agriculture will be Friday afternoon’s Cattle on Feed Report.
China keeps policy rate unchanged, drains cash from banking system... The People’s Bank of China (PBOC) maintained the rate on 100 billion yuan ($13.82 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions at 2.50%.With 170 billion yuan worth of MLF loans set to expire this month, the central bank drained a net 70 billion yuan of cash from the banking system, the second straight month of withdrawals. Chinese policymakers are trying to manage economic risks and deal with policy divergence from the U.S., where inflation remains elevated. Some market watchers believe PBOC prefers to utilize cuts to banks’ reserve requirement ratios instead of MLF rate reductions due to capital flow considerations.
Euro zone industrial production declines... Industrial production in the euro zone declined 6.4% from year-ago in February, marking annual reductions in nine of the past 10 months. On a monthly basis, industrial production increased 0.8%.
Wholesale beef prices stabilizing?... Choice boxed beef prices firmed $2.20 on Friday, the second straight daily gain, and pushed back above the $300.00 level. Select beef rose 39 cents. For cattle futures and the cash cattle market to stop their recent price slides, wholesale beef prices likely need to signal a short-term low is in place.
Modest premium in May hog futures... May lean hog futures took over lead-month status last Friday at a $3.315 premium to the CME lean hog index, which is up another 72 cents to $90.56 as of April 11. The five-year average was an $8.14 rise in the cash index from now until mid-May, when the May contract will be cash settled.
Overnight demand news... South Korea purchased 133,000 MT of corn expected to be sourced from South America or South Africa.
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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 11:00 a.m. Cotton and Wool Outlook: April 2024 — ERS
- 11:00 a.m. Oil Crops Outlook: April 2024 — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Feed Outlook: April 2024 — ERS
- 2:00 p.m. Rice Outlook: April 2024 — ERS
- 2:00 p.m. Wheat Outlook: April 2024 — ERS
- 3:00 p.m. Crop Progress — NASS