Good morning!
Grains firmer overnight... Corn, soybeans and wheat firmed amid corrective buying during the overnight session. As of 6:30 a.m. CT, corn futures are trading 2 cents higher, soybeans are 2 to 6 cents higher, SRW wheat is 5 to 7 cents higher, HRW wheat is 1 to 2 cents higher and HRS wheat is 3 to 4 cents higher. Front-month crude oil futures are more than $1.00 lower and the U.S. dollar index is down nearly 150 points.
Weekly Export Sales Report out this morning... For the week ended Feb. 15, traders expect:
| 2023-24 expectations (in MT) | Last week (in MT) |
Corn | 700,000-1,500,000 | 1,306,889 |
Wheat | 300,000-550,000 | 349,286 |
Soybeans | 300,000-800,000 | 353,775 |
Soymeal | 150,000-400,000 | 203,359 |
Soyoil | (5,000)-10,000 | 0 |
Moody’s: Red Sea attacks not driving inflation... The conflict in the Red Sea escalated Thursday as U.S. forces and a coalition warship intercepted and destroyed six Houthi drones deemed a threat to coalition vessels. Concurrently, a Houthi missile struck a cargo ship, reportedly owned by the UK, in the Gulf of Aden. Earlier, the Houthis declared a ban on ships linked to Israel, the U.S., and Britain, alleging support for Gaza Palestinians, and have been targeting vessels from these countries since November. While attacks on merchant vessels in the Red Sea have delayed cargo and sent shipping costs higher, soft demand and ample ship availability are muting the impact on inflation, analysts from Moody’s Investor Service said.
French wheat crop ratings inch up... France’s ag ministry rated the country’s wheat crop 69% good or excellent as of Feb. 19, up one point from last week, though that remained the lowest rating for this date since 2020. France’s wheat crop was negatively impacted by heavy rains during planting last fall, hurting crop establishment.
Steady growth in farmland values continues... Despite a slowdown in the farm economy and rising interest rates, agricultural real estate values remained robust through the end of last year. Reports from Federal Reserve District Surveys indicate the value of nonirrigated cropland surged by up to 10% in certain regions compared to the previous year. While increased financing costs and narrower profit margins for key commodities could potentially dampen farmland values, as of the beginning of 2024, these factors had not significantly impacted land markets.
Congress faces balancing crucial must-pass items with internal strife... Funding the government is the immediate priority, with a shutdown looming if action isn’t taken by March 1 for 20% of the government (including USDA) and March 8 for the remaining 80%. While lawmakers aim to avert a shutdown, time constraints and recess schedules make another temporary funding bill likely. The possibility of breaking bills into smaller packages for voting is also being considered. Despite some progress, significant hurdles remain before the initial March 1 deadline. House Speaker Mike Johnson’s (R-La.) leadership challenges among House Republicans add complexity, impacting decision-making. Major legislation, including military aid and surveillance reform, faces uncertainty, with bipartisan bills like rail safety measures also stalled. However, a bipartisan tax package stands as a potential breakthrough amid the gridlock. Legislative efforts are expected to wind down by late spring to focus on campaigning ahead of the elections.
Goldman pushes back rate-cut timing forecast... Economists at Goldman Sachs have adjusted their prediction for when the Federal Reserve will start reducing interest rates, moving it from May to June. This change comes in response to recent statements from Fed officials indicating reduced worry about maintaining rates at higher levels for an extended period. The economists note the Fed has emphasized the necessity of concrete evidence indicating a slowdown in inflation before implementing rate cuts.
China securities regulator says penalties will be severe in market crackdown... China’s securities regulator said it would toughen penalties on fraudulent listings, accounting scams and misappropriation of funds by big shareholders, as part of a crackdown to boost confidence in the stock market. The China Securities Regulatory Commission (CSRC) also said it would target insider trading and market manipulation more precisely, removing regulatory blind spots. In the two weeks since veteran regulator Wu Qing was appointed CSRC chair, the watchdog has increased scrutiny on computer-driven quant trading and punished breaches of market rules.
China’s new home prices extend declines despite support measures... China’s new home prices declined 0.7% from year-ago in January, steeper than a 0.4% fall in the prior month. It was the seventh straight monthly decline and the steepest since March 2023, even as Beijing ramped up efforts to mitigate the impact of a prolonged property downturn and fragile economic recovery. However, there was some stabilization in the biggest cities, as home prices in tier-one cities declined 0.3%, smaller than their 0.4% drop in December, partly due to additional support measures including a reduction in down-payments.
Sharp drop in placements expected in Cattle on Feed Report... Analysts polled by Reuters expect USDA’s Cattle on Feed Report this afternoon to show the Feb. 1 feedlot inventory fractionally higher than year-ago at 11.716 million head. That would be the fifth straight month of year-over-year increases in feedlot numbers. After aggressive placements of calves into feedlots early last fall, analysts anticipate that category will be down 11.6%, which would be the third straight month with a year-over-year decline. Marketings in January are expected to be down 0.2%.
Cold Storage Report also out this afternoon... USDA will detail frozen meat stocks at the end of January. The five-year average is a 2.9-million-lb. increase in beef stocks and a 48.6-million-lb. rise in pork stocks during the month.
Predictably slow developing cash cattle market... Cash cattle negotiations remained limited Thursday, with neither packers nor feedlots in a hurry to get anything done. This week’s trade will likely come after the Cattle on Feed Report – and could be limited in volume unless packers unexpectedly become active bidders for supplies. Packers are trying to improve current poor margins and manage supplies. A strong performance in wholesale beef trade with strong price gains and active movement on Thursday will help, though packer margins remain deep in the red.
Cash hog fundamentals stay strong... The CME lean hog index rose another 81 cents to $78.78 as of Feb. 21, extending the seasonal recovery that started at the beginning of this year. The pork cutout value firmed $1.72 to $91.89 after losses the two previous days. Price action over the past week suggests the $90.00 level may have flipped from a ceiling to a price floor for the pork cutout.
Overnight demand news... Egypt purchased 60,250 MT of soyoil from unspecified origins. Tunisia purchased about 100,000 MT of soft wheat from unspecified origins.
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. Weekly Export Sales — FAS
- 8:00 a.m. Food Price Outlook — ERS
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. County Estimates - Corn, Soybeans, Sorghum — NASS
- 2:00 p.m. Peanut Prices — NASS