Good morning!
Soybeans, soymeal lead overnight gains... Soybean and soymeal futures traded sharply higher on Argentine crop concerns coming out of the extended holiday weekend, while corn and wheat followed to the upside. As of 6:30 a.m. CT, corn futures are trading mostly 2 to 3 cents higher, soybeans are mostly 10 to 13 cents higher, SRW wheat futures are fractionally higher, HRW wheat is 1 to 2 cents higher and HRS wheat is 3 to 4 cents higher. Front-month crude oil futures are around 75 cents higher and the U.S. dollar index is more than 200 points higher this morning.
Frost nips Argentine crops... Frost occurred Saturday morning in Argentina’s summer grain and oilseed production areas. “Most of the frost was soft and did not have a big impact on crops, but there may have been a few exceptions,” according to World Weather Inc. South American crop consultant Dr. Michael Cordonnier said, “The extent of the damage from the frost will not be known for several more days, but it certainly is going to hurt the crop.”
Consultant makes additional cut to Argentine soybean crop forecast... Cordonnier cut his Argentine soybean crop estimate another 2 MMT to 34 MMT. He noted, “Everything that could go wrong with the 2022-23 soybean crop in Argentina did go wrong – from the worst drought in 60 years to record-high temperatures and now light to moderate frost in what is essentially the middle of summer.” Cordonnier left his Argentine corn crop estimate at 43 MMT, indicating “the weekend frost appeared to hurt soybeans more than corn.” He also left his Brazilian crop estimates unchanged at 151 MMT for soybeans and 123 MMT for corn.
Status quo weather for South America... Northern Argentina is forecast to get some needed rain this week, while southern areas of the country will remain drier than normal for the next 10 days. Brazil will continue to see waves of rain that will disrupt soybean harvest and safrinha corn planting.
Russia, Turkey to discuss Black Sea grain deal soon... Leaders from Russia and Turkey will discuss the Black Sea grain export initiative “in the near future,” though there has been no exact date set, RIA Novosti reported, citing a source familiar with the situation. Last week, Ukrainian officials said they expected a meeting on the grain export deal to occur this week.
Russia to export 55 MMT to 60 MMT of grain in 2022-23... President Vladimir Putin said Russia will export between 55 MMT and 60 MMT of grain in 2022-23. He noted Russia has all the financial resources it needs to guarantee its national security and development despite Western economic sanctions. Putin said Russian firms had rebuilt their supply chains and that Moscow was working with other countries to build new payments systems and financial architecture.
India offers wheat to cool domestic prices... India will sell 2 MMT of wheat to the domestic market to ease prices. Previously, India sold 3 MMT of wheat from state reserves.
The week ahead in Washington... It will be relatively quiet in Washington with both chambers of Congress on recess. The U.S. will closely monitor China to see if it provides Russia with “lethal assistance” in its war with Ukraine, which Washington has warned Beijing against doing. made a secret trip to Kyiv Monday and met with Ukrainian President Volodymyr Zelenskyy ahead of the Feb. 24 anniversary of Russia’s invasion. The trip came during a diplomatic visit to Poland to affirm U.S. support for Ukraine. Biden is scheduled to meet Poland’s President Andrzej Duda on this morning and deliver a speech from Warsaw Castle today. The speech is expected to pledge further support for Ukraine and reinforce the NATO alliance. On the economic front, minutes from the latest Federal Open Market Committee meeting will be released on Wednesday. On Thursday, the second estimate of U.S. fourth quarter GDP will be released. And on Friday, the personal consumption expenditures index, the Fed’s preferred inflation gauge, will be released. The focus for agriculture will be USDA’s Ag Outlook Forum on Thursday and Friday, at which the agency will issue preliminary balance sheet projections for 2023-24.
Summers: Rate hikes aren’t doing the job... “The Fed’s been trying to put the brakes on, and it doesn’t look like the brakes are getting much traction,” former Treasury Secretary Larry Summers said. That could set the U.S. economy up for a “collision or crash,” he said.
China again keeps rates unchanged... The People’s Bank of China (PBOC) kept its key lending rates steady for the sixth straight month, as widely expected. The one-year loan prime rate (LPR), which the medium-term lending facility uses for corporate and household loans, was left unchanged at 3.65%; the five-year rate, a reference for mortgages, was maintained at 4.3%. PBOC held its medium-term policy rate at 2.75% last week while adding more cash into the financial system to meet a rebound in loan demand after the country eased its strict Covid measures.
Euro zone business activity grew again in February... S&P Global’s flash composite purchasing managers’ index rose to 52.3 this month, compared with January’s reading of 50.3. Activity in the service sector increased at its fastest rate since June. The data bolsters hopes the bloc’s economy will avoid recession.
China to maintain breeding herd size at reasonable size... China will keep the country’s breeding sow herd at a reasonable level of around 41 million, the country’s ag ministry said.
Bullish cash cattle expectations... Cash cattle averaged $161.17 last week, up $1.55 from the previous week. Given tightening market-ready supplies, traders expect cash cattle to trade higher again this week, though packers are likely to stretch out cash negotiations in hopes of getting feedlots to sell at steady/weaker prices.
Cautious buying in hog futures... The CME lean hog index continues to firm, but buyers are likely to remain cautious in lean hog futures given bigger-than-normal premiums built into nearby contracts. Now that the cash market has put in a low, the strengthening of cash hog prices should continue as market-ready supplies tighten seasonally.
Weekend demand news... Japan is seeking 94,387 MT of milling wheat in its weekly tender. Egypt tendered to buy up to 60,000 MT of wheat funded by the World Food Bank.
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
- 10:00 a.m. Export Inspections — AMS
- 10:00 a.m. Fruit and Tree Nuts Data — ERS
- 10:00 a.m. Vegetables and Pulses Data — ERS
- 2:00 p.m. Chickens and Eggs - Ann. — NASS