Good morning!
Grains firming this morning... Corn, soybeans and wheat faced light selling pressure early in the overnight session but have firmed this morning with wheat leading the move higher. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are 3 to 4 cents higher, SRW wheat is mostly 7 cents higher, HRW wheat is 9 to 12 cents higher and HRS wheat is around 9 cents higher. Front-month crude oil futures are trading near unchanged and the U.S. dollar index is modestly weaker.
FAO food price index falls further in January... The UN Food and Agriculture Organization global food price index dropped another 1.2% from December as decreases in the price for cereal grains and meat more than offset an increase in sugar, while vegoils and dairy were nearly unchanged. The January index was down 10.3% from last year and the lowest since February 2021. Compared to year-ago, prices declined 1.2% for meat, 17.8% for dairy, 18.6% for cereal grains and 12.7% for vegoils, while sugar prices rose 15.8%.
Slower jobs growth expected... Economists polled by Reuters expect non-farm payrolls to increase 180,000 for January, which would be down from a gain of 216,000 in December. The unemployment rate is expected to inch up to 3.8%. Softer U.S. jobs data may test the Fed’s wait-and-see approach to rates. Of note, the head of the International Monetary Fund (IMF) said the Fed and other major central banks face more risks by easing monetary policy too early rather than too late.
China clashes with IMF over its forecast for decelerating growth... The International Monetary Fund (IMF) has expressed a high level of uncertainty regarding China’s economic outlook for this year, mainly attributed to factors such as a significant property market downturn and sluggish external demand. IMF’s annual review indicates China’s economic growth will slow in 2024 and continue to ease in the following years. However, Chinese authorities hold a more optimistic view of the recent economic developments in China compared to IMF’s characterization of a “subdued recovery.” IMF staff should “study carefully” the nation’s growth trend, said Zhang Zhengxin, IMF’s executive director for China, urging the organization to carry out a more appropriate assessment of the nation’s prospects to help “stabilize” confidence.
More grain cargoes diverted from Red Sea... More ships carrying grain were diverted from the Suez Canal to routes around the Cape of Good Hope this week as attacks on shipping in the Red Sea continued. Shipping analytics firm Kpler told Reuters another 12 vessels carrying about 700,000 MT of grain were diverted from the Red Sea this week, bringing the total to 4.5 MMT to 4.6 MMT since December. But Kpler also noted many bulk carriers are still transporting grain through the region, especially shipment originating from the Black Sea.
Attaché projects bigger Argentine corn, wheat crops than USDA... The U.S. ag attaché in Argentina projects the country’s corn crop at 57 MMT, 2 MMT more than USDA’s forecast last month, due mostly to larger planted area. The attaché forecasts the Argentine wheat crop at 15.4 MMT, 400,000 MMT higher than USDA, as yields were stronger than expected.
India has no plans to end rice export restrictions... India’s rice situation is comfortable, but the country has no plans to revisit rice export restrictions until prices fall, the food secretary said. He reiterated the government is committed to bringing rice prices down.
Pakistan bans state purchases of wheat... Pakistan’s federal government has banned state-level imports of wheat, broadcaster ARY news reported. The decision was made as flour prices are stable and the country has plentiful wheat reserves.
Fate of tax package rests in Senate... The $79 billion tax bill that easily cleared the House this week faces rougher waters in the Senate. Despite headwinds, a growing number of our sources signal the big House vote in favor of the package increases odds it could eventually become law. However, some Senate Republicans think the issue is better addressed in a new Congress, perhaps with GOP in control, including the White House. The proposed tax package would extend 100% bonus depreciation through 2025, retroactively covering 2023. It would reduce to 20% in 2026 and end in 2027. The proposal also includes a slightly higher Section 179 expensing cap for 2024, raising it from $1,220,000 to $1,290,000 and adjusting it annually for inflation.
Drive to produce SAF will help lower meat prices... Americans can expect a decrease in meat prices, thanks to the emerging renewable fuel industry, according to a Bloomberg article. The process of producing sustainable aviation fuel (SAF), aimed at reducing U.S. emissions, will generate a surplus of soymeal, commonly used in animal feed. As meatpackers can now feed their animals more affordably, they are likely to increase meat production, leading to lower prices for consumers at the grocery store. It will take months or even years for the cost savings to work their way down the supply chain, but the broiler chicken industry will be able to capitalize on the lower feed costs before pork, given the shorter cycle of production. Beef prices are unlikely to be directly impacted.
Cash cattle trade sharply higher... Cash cattle trade turned active Thursday as packers raised bids $2 to $4 from last week, depending on location. After weeks of holiday- and weather-related slowdowns, packers are planning for bigger kills – and they were short-bought on needs. Severe weather caused a dramatic decline in carcass weights, leaving packers needing to actively increase cattle purchases.
Hog futures pull back... Thursday’s losses alleviated the short-term overbought condition for April lean hog futures, though summer-month contracts would still need to correct a little more. With futures ending midrange, yesterday’s lows stand as key near-term support. If that support is violated, a sharper corrective pullback would be likely.
Overnight demand news... Taiwan purchased 89,650 MT of U.S. 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
- 7:30 a.m. Employment Situation — BLS
- 2:00 p.m. Milk Cows and Production - Statistical Bulletin — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Sheep and Goats - Statistical Bulletin — NASS
- 2:30 p.m. Commitments of Traders — CFTC