First Thing Today | April 26, 2023

Corn and soybeans posted mild corrective gains overnight, while wheat traded on both sides of unchanged.

Pro Farmer's First Thing Today
Pro Farmer’s First Thing Today
(Pro Farmer)

Good morning!

Quiet trade overnight... Corn and soybeans posted mild corrective gains overnight, while wheat traded on both sides of unchanged. As of 6:30 a.m. CT, corn futures are trading fractionally to 4 cents higher, soybeans are 1 to 3 cents higher, SRW wheat is around 2 cents higher, HRW wheat is steady to fractionally higher and HRS wheat is steady to a penny lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is more than 500 points lower.

Russia sees no progress on grain deal, blames the West... Moscow has seen “practically no results” from a pact with the United Nations that aimed to help Russia’s grain and fertilizer exports and blamed Western countries for creating a deadlock. Russia’s envoy to the United Nations reiterated Russia needs to see progress on issues it has raised or there will be no extension of the deal beyond May 18.

UN chief heading to Washington today... United Nations Secretary-General António Guterres is scheduled to travel to Washington today to meet with Secretary of State Antony Blinken and members of Congress, according to UN spokesperson Stéphane Dujarric. Among the topics on the agenda are the war in Ukraine and the grain deal. “We are at a very delicate time in the renewal of the Black Sea initiative,” Dujarric said. He added that the UN was working to push forward a parallel part of the deal relating to Russia’s “ammonia pipeline” for selling fertilizers and grain, but said that several obstacles still remained.

Poland will ban Ukrainian grain imports through year-end... Poland will keep in place a ban on imports of Ukrainian grains at least until the end of the year. A government official said the country “will not repeal” the ban until the European Commission works out a broader deal and the “situation stabilizes.”

Canadian acreage intentions out this morning... Statistics Canada is scheduled to release Canadian acreage intentions at 7:30 a.m. CT. Analysts expect planting intentions of 26.3 million acres for all wheat – 18.9 million acres of spring wheat and 5.9 million acres of durum – and 21.8 million acres for canola. That would be a 900,000-acre increase for wheat and a 400,000-acre rise for canola from year-ago.

House vote on GOP debt-limit measure coming soon... The House Rules Committee voted to send the altered GOP debt-limit measure to the floor for a final vote that could come as soon as today. The measure advanced to the floor with a last-minute amendment that appears to incorporate changes sought by some of the House GOP’s most conservative members, including Reps. Andy Biggs (R-Ariz.) and Matt Gaetz (R-Fla.). The new provisions include accelerating a plan to impose work requirements on those receiving federal benefits including food stamps and cutting more Inflation Reduction Act programs. Of note to biofuel proponents, the revised bill would still repeal the tax credits on clean fuels but would now include an exception to allow the tax perk to continue for those in binding contracts or locked into investments for sustainable aviation fuel or for producing other “clean” fuel before April 19. The amendment would also kill changes in the incentive structure for renewable diesel, second generation biofuel, carbon dioxide sequestration and biodiesel. GOP leaders can afford to lose just four Republican votes, assuming no Democratic House member votes for the package. If the House passes a debt ceiling bill, there will be big pressure on the Senate to pass. They need Republicans to do it. Hence, there will have to be a bargain in the Senate. The Biden administration could act unilaterally to avoid default and that is a constitutional one that U.S. credit cannot be doubted. But any such move would likely face court challenges.

CBO: House debt ceiling bill cuts deficits by $4.8 trillion over 10 years... The Congressional Budget Office (CBO) released its official score of House Republicans’ Limit, Save, Grow Act of 2023 — a bill to address the debt ceiling and reduce federal spending. The bill would suspend the debt ceiling through either March 31, 2024, or a $1.5 trillion increase from the current $31.4 trillion ceiling — whichever comes first. CBO finds the bill would save $4.8 trillion through FY 2033, with about $4.3 trillion of policy savings and $545 billion of interest savings. The measure would return total discretionary spending to the Fiscal Year (FY) 2022 level in FY 2024 and cap annual growth at 1% for a decade thereafter; rescind unspent Covid relief funds; repeal most of the Inflation Reduction Act’s (IRA) energy and climate tax credit expansions; rescind the IRA’s increased Internal Revenue Service (IRS) funding; make changes to energy, regulatory, and permitting policies; impose or expand work requirements in several federal safety net programs, including SNAP; and prevent implementation of President Biden’s student debt cancellation and Income-Driven Repayment (IDR) expansion.

EU sets targets for SAF use... The European Union agreed to set binding targets for airlines in Europe to increase their use of sustainable aviation fuel (SAF), to kickstart a market for green fuels and cut the aviation sector’s carbon footprint. Fuel suppliers must ensure that 2% of fuel made available at EU airports is SAF in 2025, rising to 6% in 2030, 20% in 2035 and gradually to 70% by 2050. From 2030, 1.2% of fuels must also be synthetic fuels, rising to 35% in 2050. Synthetic fuels are made using captured CO2 emissions, which proponents say balances out the CO2 released when the fuel is combusted in an engine. This week EU countries also approved sweeping changes to the region’s carbon trading scheme and emissions laws.

Indonesia to raise CPO reference price, keep export taxes unchanged... Indonesia plans to set its crude palm oil (CPO) reference price at $955.53 per metric tons for May 1 to May 15, up from $932.69 during last two weeks of April. The price would put Indonesia’s CPO export tax at $124 per metric ton and export levy at $100 per metric ton, unchanged from the current period.

Cold Storage data highlights supportive supply fundamentals for beef, struggles for pork... USDA’s Cold Storage Report showed frozen beef stocks declined more than average during March. But pork stocks climbed contra-seasonally. Beef stocks totaled 480.9 million lbs., down 19.3 million lbs. (3.9%) from February, which exceeded the five-year average decline of 7.0 million lbs. during the month. Beef stocks declined 54.9 million lbs. (10.3%) from the March 2022 record and 6.5 million lbs. (1.3%) from the five-year average. Pork inventories at 533.9 million lbs. rose 12.7 million lbs. (2.4%) during March versus the five-year average decline of 12.9 million lbs. for the month. Pork stocks increased 47.9 million lbs. (9.9%) from year-ago but were still 20.7 million lbs. (3.7%) under the five-year average.

Beef movement picks up... Choice boxed beef prices firmed 51 cents while Select dropped $1.08 on Tuesday. Of greater note was movement that increased to 141 loads. Traders will watch to see if this was a short-term spike in retailer buying or if stronger movement continues, which would signal increased demand ahead of grilling season.

Cash hog index ticks up... The CME lean hog index is 2 cents higher to $71.20 (as of April 24). That’s far from enough for traders to get excited about, but even with hog supplies running stronger than USDA’s Hogs & Pigs Report indicated, the cash market will bottom at some point and start a seasonal climb to the summertime high. Given current premiums in futures, the cash market likely has to show solid strength to attract sustained buyer interest.

Overnight demand news... Iraq tendered to buy a nominal 50,000 MT of wheat that can be sourced from the U.S., Australia or Canada.

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