Good morning!
Buyer interest fading this morning... Grain and soy markets worked higher on corrective buying earlier in the overnight session, but buyer interest is drying up this morning. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny lower, soybeans are steady to 4 cents lower, SRW wheat is around a penny lower, HRW wheat is 3 to 5 cents lower and spring wheat is around a penny higher. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is up more than 200 points.
Ukraine encourages global pressure on Russia to extend grain deal... A proposal by United Nations Secretary-General Antonio Guterres on improving and extending the Black Sea grain deal can only succeed if there is international pressure on Russia, a senior Ukrainian official said. Meanwhile, Russia says circumstances are not in factor of extending the deal, saying its conditions have not been properly implemented. Russia also contends Ukraine is trying to attack its ships in the Black Sea, which threatens the prospects for an extension.
Firm expects sharp drop in Ukraine grain production, exports... Consulting firm APK-Inform forecasts Ukraine will produce 45.6 MMT of grain this year, which would be down 13% from 2022. That total is expected to include 22.9 MMT of corn and 16.2 MMT of wheat – both of which would be down around 14% – and 5.2 MMT of barley. The firm forecasts Ukraine’s exports in 2023-24 will plunge 23% for corn to 18.2 MMT and 37% for wheat to 8.8 MMT. APK-Inform also said Ukraine’s 2023 sunflower seed harvest could increase by 15% to 12.8 MMT thanks to a larger sowing area. The bigger production could allow Ukraine to increase sunoil output by 5% to 4.9 MMT in 2023-24 and export 4.5 MMT.
HRW CCI rating continues to deteriorate, SRW rating slips... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 3.4 points to a historically low 244.6. The HRW CCI rating declined in Kansas, Oklahoma, Texas and Nebraska, while the other states showed modest improvement. The SRW crop slipped 5.0 points to 376.4, though that was still above average. Click here for more details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of April 23.
- Winter wheat: 26% good/excellent (27% last week); 18% headed (14% five-year average).
- Corn: 14% planted (11% average); 3% emerged (2% average).
- Soybeans: 9% planted (4% average).
- Cotton: 12% planted (11% average).
- Spring wheat: 5% planted (12% average); 1% emerged (3% average).
Argentina’s small soybean crop getting smaller... Crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate another 1 MMT to 23 MMT, citing “very disappointing” yields. He left his Argentine corn crop estimate at 36 MMT, noting that while the growing season has been difficult, corn fared better than soybeans. Cordonnier kept his Brazilian soybean and corn crop estimates at 153 MMT and 123 MMT, respectively.
Argentine strike ends... A union of Argentine transporters on Monday ended a strike that could have posed a threat to the country’s grain shipments. The strike lasted less than a full day and therefore won’t impact Argentine grain/soy exports. The Argentine government and the union signed a memorandum of understanding with the commitment to lift any measure of force in place, within the framework of a “table for dialogue and social peace,” the transportation ministry said. The ministry said it would work on a policy “that establishes that the tariff schemes, which to date have an indicative nature, become floor or base tariffs and that they would be mandatory for the suppliers.”
Argentina raises domestic biofuels prices... The Argentine government raised the price of ethanol and biodiesel for compulsory blending with gasoline used in the local market. The ethanol price was raised to 148.479 pesos per liter (about $0.68), up from the previous 141.409 pesos. The price of biodiesel was raised to 294,430 pesos (about $1,347.38) per metric ton from 283,106 pesos previously.
Falling diesel prices an economic warning sign... A nationwide freight slowdown has helped cut U.S. diesel prices by half from last year’s record, raising concerns that parts of the economy have begun to slow. Wholesale diesel prices surged last May, after Russia’s invasion of Ukraine sent commodity markets haywire. Prices began falling months ago, when a warm winter cut demand for heating fuel and a reshuffling of global oil trade left a glut of diesel supplies on the market. Now, waning manufacturing output and trade have also dented U.S. appetite for the fuel, the Wall Street Journal reports.
ERP Phase 2 payments nearing $200,000... Payments under the Emergency Relief Program (ERP) Phase 2 effort have increased to $195,617 as of April 23, with 112 payments issued. Payouts under ERP Phase 1 and both Coronavirus Food Assistance Program (CFAP) efforts were little changed.
Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of March. The five-year average is a 7-million-lb. decline in beef stocks and a 12.9-million-lb. drop in pork stocks during the month.
Cattle bulls defend their turf... Live cattle futures gapped lower on Monday but the sharply weaker open attracted buyers and nearby futures finished slightly higher on the day. On the surface, that doesn’t seem overly bullish, but in the context of how the trading session unfolded, bulls turned in a strong performance by fending off the early sellers. If bulls are able to build on Monday’s modest gains it would strengthen odds of higher cash cattle prices after last week’s drop from the all-time high.
Still waiting on low in cash hogs... Lean hog futures posted strong corrective gains on Monday, despite continued pressure on the cash market. The CME lean hog index is down another 13 cents to $71.18. After Monday’s gains, May futures finished $6.52 above today’s cash quote (as of April 21), while the June contract held a $16.17 premium. Additional corrective buying in futures is likely limited until the cash index strengthens.
Overnight demand news... Tunisia tendered to buy 75,000 MT of optional origin soft 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
- 8:00 a.m. Food Price Outlook — ERS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Poultry Slaughter — NASS