Good morning!
Quiet grain trade overnight... Corn, soybeans and wheat traded in narrow ranges during a quiet overnight session. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny lower, soybeans are 2 to 4 cents lower, SRW wheat is a penny lower, HRW wheat is fractionally to a penny higher and HRS wheat is narrowly mixed. Front-month crude oil futures and the U.S. dollar index are both modestly higher this morning.
World Bank: Commodity prices could keep inflation high... According to the World Bank, the sharp drop in commodity prices has ended, reducing the deflationary impact they had on global economies. With geopolitical tensions and sustained demand, especially for industrial metals crucial to the energy transition, prices have stabilized, potentially keeping interest rates higher than anticipated. The pause in falling prices poses challenges for central banks aiming to curb above-target inflation and reduces their ability to lower interest rates. The situation is reminiscent of post-2008 crisis trends, signaling a “new era” where high commodity prices coincide with slowing global growth. Copper prices are expected to rise due to its importance in electric vehicle production and power grid upgrades, while energy investments are driving demand, keeping prices elevated. Middle Eastern tensions could further increase gold and oil costs.
Japan leaves rates unchanged... The Japanese yen fell to a new 34-year low against the U.S. dollar after the Bank of Japan (BOJ) made no change in monetary policy. BOJ left its short-term interest rate target at 0% to 0.1% and made small upward adjustments in its inflation forecast. The yen’s 9.7% drop against the dollar this year is the largest fall of the G10 currencies, driven mostly by the wide gap between U.S. and Japanese government bond yields, which is more than 375 basis points for the 10-year benchmarks. Markets remain on heightened intervention watch, with Japan’s finance minister warning about the negative effects of the weak currency and noted officials were ready to take action.
First cargo ship navigates new deep-water channel in Baltimore... The bulk carrier Balsa 94, bearing the Panama flag, is headed for Saint John, Canada, with two more vessels, including a vehicle carrier bound for Panama, following its lead. This marks a key development in the restoration efforts as crews have been working to clear the debris from the harbor’s entrance. The Balsa 94’s journey, flanked by tugboats and passing the site of the collapse, signals the beginning of traffic resumption through this critical port, known for processing a high volume of cars and farm equipment. The temporary channel will close shortly for further salvage operations before a scheduled reopening next month to restore the usual flow of maritime traffic.
Blinken raises U.S. concerns about China’s support for Russia... Secretary of State Antony Blinken raised concerns on Friday about China’s support for Russia’s military, one of the many issues threatening to sour the recent improvement in relations between the two countries. Blinken met with China’s top diplomat Wang Yi and President Xi Jinping, who reiterated Beijing’s concerns the U.S. was suppressing its economic development.
China passes retaliatory tariff law... The Tariff Law, which was approved by China’s top legislature after three rounds of deliberations going back to 2022, is the latest addition to Beijing’s arsenal of trade defense instruments as it maintains an uneasy truce with the U.S. following a trade war that kicked off during the Trump administration. The law, which will take effect Dec. 1, outlines a range of legal provisions related to tariffs on Chinese imports and exports, from what constitutes tax incentives to China’s right to retaliate against countries that renege on trade agreements. “It’s like a nuclear weapon: the point of having it is not to use it, but to deter others from using the same against you,” Henry Gao, professor at Singapore Management University, told Reuters.
French wheat crop ratings decline... France’s ag ministry rated the country’s wheat crop as 63% good or excellent as of April 22, down one percentage point from last week and the lowest for this time of year since 2020. The barley crop’s good/excellent rating also declined one point to 66%.
India’s rice price falls to three-month low on slowing demand... India’s rice export prices fell to their lowest level in more than three months this week on weak demand and ample supplies. India’s 5% broken parboiled variety was quoted at $528 to $536 per metric ton this week, down $10 from last week and below the record high of $560 reached last month. Thailand’s 5% broken rice prices were quoted between $580 to $585 per metric ton, similar to last week’s $585 price.
China’s gold demand surges amid safe-haven demand... China’s gold consumption in the first quarter of 2024 jumped 5.94% from a year earlier on soaring safe-haven demand, the country’s Gold Association said. Bullion consumption totaled 308.905 MT in the first three months of the year. Purchases of gold bars and coins jumped 26.77% in the January-March period to 106.323 MT, or 34% of the total consumption. Additionally, buying from China’s central bank continued for a 17th straight month in March, bringing the total gold reserve to 2,262.67 MT at the end of March.
FDA: H5N1 found in one-fifth of milk samples, but still safe for consumers... Initial results show about one in five retail samples of milk showed traces of the H5N1 virus that has impacted the U.S. dairy herd. FDA noted quantitative polymerase chain reaction (qPCR)-positive do not necessarily represent actual virus that may be a risk to consumers. Additional testing is required to determine whether intact pathogen is still present and if it remains infectious, which would help inform a determination of whether there is any risk of illness associated with consuming the product. FDA is further assessing any positive findings through egg inoculation tests, a gold-standard for determining if infectious virus is present. “To date, the retail milk studies have shown no results that would change our assessment that the commercial milk supply is safe,” FDA said.
Cash cattle strengthen... After trade on Wednesday at roughly steady prices in the Southern Plains, cash cattle firmed yesterday, with packers paying up to $2.00 higher prices in the northern market. The stronger cash trade fueled a big turnaround in cattle futures, resulting in bullish reversals. That may lead to followthrough buying in futures and strong gains for the week.
Cash hog index pulls back... The CME lean hog index is down 22 cents to $91.43 as of April 24. The index has declined three of the last five days, suggesting a pause in the seasonal price rally. That may trigger followthrough selling in hog futures after sharp losses on Thursday. Unless there’s persistent heavy pressure on the cash market, however, sustained downside pressure on futures should be limited.
Overnight demand news... Exporters reported no tenders or sales.
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
- 2:00 p.m. Dairy Products - Annual — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC