Good morning!
Corn weaker, soybeans firmer overnight... Corn futures faced light followthrough selling in overnight trade, while soybeans firmed. As of 6:30 a.m. CT, corn is trading 1 to 5 cents lower, soybeans are 3 to 14 cents higher, SRW wheat futures are narrowly mixed, HRW wheat is mostly around 8 cents higher and HRS wheat is 2 to 4 cents higher. Front-month U.S. crude oil futures are around $1 higher and the U.S. dollar index is more than 500 points lower this morning.
Russia/Ukraine update... President Joe Biden will host U.S. military leaders in an annual gathering that takes on extra significance as the war enters a risky new phase. According to senior Biden administration officials, the U.S. is preparing another $800 million military assistance package for Ukraine. The latest package would come a week after the Biden administration authorized a separate $800 million security package. Meanwhile, the Treasury Department says in fact sheet it wants to make clear U.S. sanctions in response to Russia’s invasion of Ukraine do not stand in the way of agricultural and medical exports, nongovernmental organization activities, Covid relief and other support to those impacted by the war.
Yellen warns of war’s impact on food prices for poor... Treasury Secretary Janet Yellen called on countries to drop export restrictions that affect food prices and to provide more support to vulnerable countries as the war in Ukraine threatens food supplies around the globe. Early estimates suggest at least 10 million people in sub-Saharan Africa alone could be pushed into poverty due to higher food prices, Yellen said during a meeting of Group of Seven and Group of 20 ministers along with officials from international financial institutions in Washington. Yellen said more than 800 million people worldwide suffered from chronic food insecurity before the war. “The war has made an already dire situation worse,” she said, adding “Russia’s actions are responsible for this. Institutions like the International Monetary Fund and World Bank should increase investments in agricultural capacity and resilience and help relieve global fertilizer shortages and supply chain disruptions, Yellen said. She called on technical experts to develop an action plan for a coordinated international response.
Lack of USDA staff in Russia a ‘huge void’ for crop forecasts... An absence of on-the-ground staff in Russia is a “huge void” for USDA’s crop forecasting, Patrick Packnett, deputy administrator for global market analysis at USDA’s Foreign Agricultural Service, said Tuesday at a meeting in Chicago. U.S. citizens and government workers fled Russia in the wake of the country’s invasion of Ukraine. USDA still has in-country sources in Ukraine even though the agency hasn’t published an update from its attaché since February, Packnett said. With a lack of intelligence on the ground, the government is relying on other data such as satellite images to track the “very fluid” situation. USDA will issue its first official 2022-23 outlooks for Russia and Ukraine crop production and exports in its May 12 WASDE Report.
China unexpectedly keeps interest rates unchanged... The People’s Bank of China (PBOC) surprisingly kept its benchmark lending rates unchanged, despite frequent pledges by Beijing to support its slowing economy hit by the recent Covid outbreak. The one-year loan prime rate (LPR) was kept at 3.70% and the five-year LPR was unchanged at 4.60%. Economists widely expected China to cut interest rates. Last Friday, PBOC said it would cut the reserve requirement ratio (RRR) for all banks by 25 basis points (bps), effective from April 25, and reduce RRR by an additional 25 bps for some smaller banks.
Sharp increase expected in Chinese soybean production... China’s soybean production is expected to increase nearly 26% this year amid major efforts to boost domestic output. Land planted to soybeans is forecast to rise 16.7%, according to the country’s ag ministry, and production is expected to jump 4.2 MMT to 20.6 MMT. That would, however, be less than one-fifth of China’s total consumption.
Biden administration restoring stricter environmental standards for some infrastructure projects... The stricter standard will apply to approvals of new pipelines, highways, power plants and other construction projects, including requiring consideration of how such projects might affect climate change. The changes announced Tuesday reinstate National Environmental Policy Act measures that had been removed by former President Donald Trump, who said federal regulations were needlessly hindering much-needed infrastructure projects.
China to ratify treaties on forced labor... China is set to ratify two international treaties on forced labor amid criticism over its treatment of the Uyghur ethnic minority, which has hindered trade ties with the U.S. and Europe. However, observers say China’s latest move is unlikely to improve trade ties with the U.S. and Europe after Chinese leader Xi Jinping provided diplomatic support to Russia in the wake of Vladimir Putin’s war in Ukraine.
Chinese pork output expected to rise 2.9%... China’s pork production is forecast to rise 2.9% to 54.5 MMT this year as the country’s hog sector continues to expand after being sharply reduced by African swine fever. But the rise in production has oversupplied the market, which along with high feed costs, has caused negative hog production margins for hog farmers. A Chinese ag ministry official forecasts Chinese hog farmers should see a return to profitable levels by the third quarter of this year, as he expects feed prices will decline. But he also warned hog farmers against heavy sow liquidation.
Light cash cattle trade at higher prices... Cash sources signaled some light cash cattle trade in the $140 to $141 range in the Southern Plains on Tuesday – up $1 to $2 from trade in that region last week. The stronger trade early in the week pushed asking prices on remaining supplies up to $142 in the Southern Plains. Packers in the northern market haven’t established bids yet.
Wholesale pork prices again unable to hold morning gains... The pork cutout value was $2.07 higher Tuesday morning but ended the day $2.37 lower. As has been the case, prices stayed volatile in bellies and hams, especially bellies, which flipped from $10.95 higher to $11.46 lower. Packers have struggled to find enough retailer demand on moves above $110 to hold the cutout above that level.
Overnight demand news... Jordan made no purchase in its tender to buy 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
- 2:00 pm U.S. Bioenergy Statistics — ERS
- 2:00 pm Broiler Hatchery — NASS
- 2:00 pm Livestock Slaughter - Ann. — NASS
- 2:00 pm Milk Production — NASS