Good morning!
Price pressure overnight... Corn and soybean futures pulled back from Tuesday’s gains during overnight trade, while the wheat market extended yesterday’s losses. As of 6:30 a.m. CT, corn futures are trading around 2 cents lower, soybeans are 4 to 5 cents lower, SRW wheat is 7 to 8 cents lower, HRW wheat is mostly 10 to 15 cents lower and spring wheat is mostly 1 to 2 cents lower. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is near unchanged.
Ukraine seeking one-year extension of grain deal to include more ports... Ukraine will ask Turkey and the United Nations this week to start talks to roll over the Black Sea grain deal, seeking an extension of at least one year that would include the ports of Mykolaiv, a senior Ukrainian official said. “A formal proposal will come out from us this week on the need to work on an extension,” Yuriy Vaskov, Ukraine’s deputy minister of restoration, told Reuters. “We will request ... to extend it not for 120 days but for at least one year because the Ukrainian and global agricultural market needs to be able to plan these volumes (of exports) in the long term,” he said. Ukraine will also insist on an increase in the number of inspection teams “in order to eliminate the accumulation of vessels waiting for inspections.” Vaskov said Mykolaiv’s ports, which accounted for 35% of Ukrainian ag exports before the Russian invasion, would need a maximum of two weeks to start operations.
Biden calls on Congress to implement rail safety measures... “We’ll continue to hold rail companies accountable when they fail to put safety first. But first, we’ve got Norfolk Southern’s mess to clean,” President Joe Biden said in a tweet. Meanwhile, Transportation Secretary Pete Buttigieg wants tougher regulation of high-hazard flammable trains and stiffer penalties for violations in the aftermath of the chemical train derailment in Ohio. The Transportation Department is pushing freight rail companies to accelerate their phase-in of safer tank cars and opt into a reporting system with the agency that protects whistleblowers who spot safety problems, the agency announced Tuesday.
FOMC minutes in focus today... Traders today will closely monitor the contents of the minutes from the latest Federal Open Market Committee (FOMC) meeting. The readout of the gathering could offer insight on whether two hawkish policymakers, Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard, who do not vote in monetary policy decisions this year, were alone in seeing the case for doing another 50 basis-point hike or if others shared their view. Says ING Economics: “We must remember that the 1 February meeting was held before the strong jobs and inflation figures, and crucially before the hawkish repricing in Fed expectations. With markets pricing in close to a 5.50% peak rate, we would essentially need to see evidence that multiple members voiced the desire to hike by 50bp at the start of February. That would back the cause for a 50bp move in March, and likely lift the dollar. However, the bar is set quite high after the recent hawkish comments, and we don’t see a very high chance of a hawkish surprise today.” Meanwhile, exiting World Bank President David Malpass told CNBC central banks need to look at more than interest rates to tame inflation.
Malaysia keeps March crude palm oil export duty at 8%... Malaysia will maintain its export tax for crude palm oil at 8% in March. The country calculated a reference price of 3,710.35 ringgit ($835.85) per metric ton for March, down from 3,893.25 ringgit this month. The maximum export tax rate is set at 8% when prices exceed 3,450 ringgit per metric ton.
EU slashes gas demand more than targeted... The European Union slashed its gas demand this winter by almost a fifth, beating a voluntary 15% goal that was made to help it survive the heating season with much lower Russian flows. The bloc’s consumption between August and January was 19% below the average of the previous five years, according to data published by Eurostat on Tuesday. Finland saw the biggest drop — with its usage more than halving — with demand rising in only Malta and Slovakia.
Biden administration proposed tougher border restrictions... The U.S. would deny asylum to those who have not sought protection elsewhere on their journey, a rule first proposed under the Trump administration. But there are some Biden differences with Trump’s approach. The rule could enter into force in May and last two years. President Joe Biden is keen to avoid a surge of asylum-seekers when Title 42, a different rule allowing for migrants’ rapid expulsion from America, expires in May.
SCOTUS may announce decision on Prop 12 relatively soon... The Supreme Court may announce a decision relatively soon on the controversial Proposition 12 case that deals with California trying to dictate how hogs are raised. The California law being challenged bans the sale of pork within the state unless pregnant pigs are allowed at least 24 square feet of space and the ability to stand up and turn around in their pens. The National Pork Producers Council and the American Farm Bureau Federation, which sued in 2019, say the measure violates the so-called dormant commerce clause, a doctrine that says the U.S. Constitution limits the power of states to regulate commerce outside their borders without congressional authorization.
Argentina tightens protocols to control bird flu... Argentina’s government adopted new measures on Tuesday to prevent spread of bird flu and limit potential damage to exports as cases rise in the region. Authorities tightened sanitary controls on imports of poultry products to avoid the virus spreading. Argentina last week confirmed its first cases of avian influenza in wild birds, prompting the government to declare a health emergency.
U.S. may be facing a new problem: Canadian wild ‘super pigs’... Canadian “super pigs” a giant, “incredibly intelligent, highly elusive” wild hog capable of surviving cold climates by tunneling under snow, are poised to infiltrate the northern United States. The United States estimates that wild pigs already cause $1.5 billion in damage each year already.
Wholesale beef prices continue to climb... Wholesale beef prices firmed another $4.31 in Choice boxes and $2.79 for Select on Tuesday. At $287.20, the Choice cutout value reached the highest level since Jan. 31, 2021. Surging wholesale beef prices are keeping packer margins solidly in the black and giving them incentive to actively compete for a tightening supply of market-ready cattle.
Cash hog index continues to strengthen, pork cutout reverses... The CME lean hog index is up another 35 cents to $76.76 (as of Feb. 18), extending the string of recent price gains. The cash index is now $4.65 off its Jan. 23 low. The pork cutout value fell $4.71 on Tuesday, nearly erasing all of Monday’s strong gains as all cuts except hams and pics declined.
Overnight demand news... Japan purchased 94,387 MT of milling wheat in its weekly tender, including 35,564 MT U.S. 35,293 MT Canadian and 23,530 MT Australian. Iraq tendered to buy 200,000 MT of milling wheat to 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
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Poultry Slaughter — NASS