First Thing Today | February 14, 2023

Two-sided trade was seen in the grain and soy markets overnight, with corn and wheat mildly firmer and soybeans weaker early this morning.

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

Good morning!

Varied price tone overnight... Two-sided trade was seen in the grain and soy markets overnight, with corn and wheat mildly firmer and soybeans weaker early this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are mostly 1 to 4 cents lower and wheat futures fractionally to 2 cents higher. Front-month crude oil futures are around $1.25 lower and the U.S. dollar index is down nearly 400 points this morning.

Consultant lowers Brazil corn crop, Argentine soybeans and corn... South American crop consultant Dr. Michael Cordonnier cut his Brazilian corn crop estimate by 2 MMT to 123 MMT, citing safrinha corn planting delays and the possibility not all intended acres will be seeded. He left his Brazilian soybean crop estimate at 151 MMT, noting early yields in Mato Grosso are “good” and will likely compensate for any potential losses in southern Brazil. Cordonnier cut his Argentine soybean and corn crop estimates by 2 MMT and 1 MMT, respectively, indicating a return of “problematic weather” after temporary relief. He now estimates Argentine production at 36 MMT for soybeans and 43 MMT for corn.

Mexico issues new GMO corn decree... Mexico on Monday scrapped a January 2024 deadline to ban GMO corn for animal feed and industrial use but retained plans to prohibit use of the grain for human consumption as well as the herbicide glyphosate. Mexico still plans to revoke and refrain from granting new authorizations for GMO corn for human consumption, which the decree defined as flour, dough or tortillas made from the grain. The ban does not apply to GMO corn used in the industrial manufacturing of products like cosmetics, textiles and paper. The decree also said Mexico will revoke authorizations and permits to import, produce, distribute and use glyphosate, with a transition period until March 31, 2024. Health authority COFEPRIS will be responsible for authorizations of GMO corn to be used as animal feed or in industrial manufacturing processes. Mexico maintains the new decree does not violate its commitments under the U.S.-Mexico-Canada Agreement as it does not affect trade and imports since the country is self-sufficient in white corn used for food. Politico reported the Office of the U.S. Trade Representative said it was reviewing the decree and that it does not meet the U.S. request for an explanation of Mexico’s plans by Feb. 14.

China wants explanation for U.S. high-altitude balloons... China’s foreign ministry said the U.S. had released more than 10 high-altitude balloons since May 2022, which then illegally flew into its airspace and that of other countries. “The U.S. needs to make a thorough investigation and give China an explanation on this,” foreign ministry spokesperson Wang Wenbin said. U.S. Secretary of State Antony Blinken is reportedly mulling a meeting with Wang Yi, China’s top diplomat, at a security conference later this week. It would be their first face-to-face talks since Beijing ignited an international uproar with an alleged spy balloon that moved across the U.S. mainland.

France raises wheat planted area... France’s ag ministry slightly increased its estimate for the area seeded to wheat for 2023 harvest. It now forecasts winter wheat area at 4.76 million hectares, compared with its previous estimate of 4.75 million hectares. The new planted area forecast would be up 2% from last year and 0.4% above the five-year average.

Indian trade body trims cotton production estimate... India is likely to produce 32.15 million bales of cotton in 2022-23, down 2.7% from an earlier estimate, the Cotton Association of India (CAI) said, as adverse weather curtailed yields. The drop in output is likely to lead to lower cotton exports, allowing rivals such as the U.S., Brazil and Australia to increase cargoes to key Asian buyers such as China and Pakistan. India’s cotton exports in 2022-23 could fall to 3 MMT from 4.3 MMT last year, CAI said.

U.S. to sell oil from SPR... The Biden administration said on Monday it is selling 26 million barrels of oil from the Strategic Petroleum Reserve (SPR), a release that is in accordance with a budget mandate enacted in 2015 for the current fiscal year. After this latest release, the reserve will dip to about 345 million barrels, the lowest level since 1983. The Energy Department has sought to stop some of the sales required by the 2015 legislation so that it can refill the emergency reserve.

Biden restarts $10 billion tax credit for clean energy makers... The Biden administration is restarting a popular tax credit for manufacturers of solar panels, wind turbines, fuel cells and other clean energy equipment after getting a $10 billion infusion from the climate-and-tax law.

China to strengthen regulation of hog production... Part of China’s No. 1 document, the blueprint for agricultural policy, includes strengthening regulation of its hog production capacity, mainly for breeding sows. Details of the new regulations are lacking, though following the African swine fever outbreak, China has pushed more production to major hog farms and tried to eliminate smaller backyard herds.

Argentina announces price controls for beef cuts... Argentina’s economy ministry announced a price control program to bring down the cost of popular beef cuts amid ongoing high inflation. An economy ministry official said some popular cuts of meat would see prices drop around 30%. The ministry said the program has been applied to seven different types of meat and will be in effect until March 31, when a smaller price cut of 3.2% will come into play until June 30.

Cash cattle climbing... Cash cattle averaged $159.62 last week, up $1.45 from the previous week and the highest since mid-May 2015. Packers purchased 108,000 head of cattle last week, the largest weekly tally since November. While packers are likely to dig in their heels and the pace of gains is likely to slow after rising $4.37 the past two weeks, cash cattle are expected to trade steady/firmer this week.

Cash hog rally picking up steam... The CME lean hog index is up 63 cents to $74.64 (as of Feb. 10), marking the eighth straight daily gain and 12 of the last 14 it has firmed. The cash market has not only posted a seasonal low but the rally is picking up steam with today’s rise being the biggest daily gain since Dec. 27. But the cash index is only $2.53 off its January low and still $14.28 below last year at this time.

Overnight demand news... Japan is seeking 76,203 MT of milling wheat in its weekly tender.

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