First Thing Today | February 28, 2023

Soybeans faced followthrough selling overnight. Corn and wheat posted two-sided trade but have weakened early this morning.

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Pro Farmer’s First Thing Today
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Soybeans weaker, corn and wheat choppy... Soybeans faced followthrough selling overnight. Corn and wheat posted two-sided trade but have softened early this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents lower, soybeans are 8 to 10 cents lower, SRW wheat is steady to a penny lower, HRW wheat is mostly 2 to 4 cents lower and HRS wheat is 1 to 3 cents lower. Front-month crude oil futures are more than $1 higher and the U.S. dollar index is trading just above unchanged.

Consultants makes more cuts to Argentine crop estimates, Brazil corn crop... South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean and corn crop estimates another 2 MMT each to 32 MMT and 41 MMT, respectively, amid persistent weather stress. While he believes the Argentine soybean crop is close to a low, he noted “it’s hard to pick the bottom given the multitude of problems the crop has faced,” and his minimum estimate is 30 MMT. Cordonnier also cut his Brazilian corn crop estimate 2 MMT to 121 MMT, noting “20% to 30% of the safrinha corn will be planted late or extra late.” He left his Brazilian soybean crop estimate at 151 MMT.

Mexico: U.S. disagreement on GMO corn politically motivated... The United States’ disagreement with Mexico over its plan to limit imports of GMO corn is “politically motivated,” Mexico’s economy ministry said on Monday. The U.S. has threatened a trade dispute panel under the U.S.-Mexico-Canada Agreement (USMCA), which would ban GMO corn for human consumption. Mexico’s economy ministry said in a statement its position was compatible with the deal’s rules and if the U.S. were to want to open a dispute panel, “it would have to quantitatively show something that has not happened: that the corn decree affects its trade imports.”

HRW conditions decline further in February... Individual state crop conditions ratings showed further deterioration of the HRW wheat crop during February, due largely to a decline in top producer Kansas. The “good” to “excellent” ratings for HRW wheat stood at 19% in Kansas (down two points from the end of January), 36% in Oklahoma (up 19 points), 19% in Texas (up five points), 29% in Colorado (down nine points), 19% in Nebraska (down three points), 23% in South Dakota (up one point) and 21% in Montana (up five points). When the updated crop condition ratings were plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the HRW crop dropped 5.0 points from the end of January to a rating of 264.1. The HRW crop went into dormancy with the lowest fall CCI rating on record of 280.3. Click here for details.

Ukraine urges UN and Turkey to start talks to extend grain deal... Ukraine has sent an appeal to the UN and Turkey to start negotiations on extending a grain export deal, but so far there has been no response, a Ukrainian government source told Reuters. “We have sent a letter requesting that we start dealing with this issue as March 18 is very soon, but we have not had any feedback so far,” the source said. Yuriy Vaskov, Ukraine’s deputy minister of restoration, told Reuters last week Kyiv would ask all sides to start talks to roll over the deal, seeking an extension of at least one year that would include the ports of Mykolaiv.

Russia turning to yuan as alternative to U.S. dollar... The Chinese currency’s rise inside Russia deepens ties between the two countries that have long rivaled each other for global influence but have grown closer amid shared discontent with the West. It also serves China’s long- standing but mostly frustrated campaign to make the yuan a more prominent feature of global finance and commerce, the Wall Street Journal reports.

New farm bill talk is just that for now: talk and requests... Until a firm decision is made regarding funding levels for the new bill, wheels are just turning. And it could take months for the final money tally to be announced. Meanwhile, farm-state lawmakers are ramping up their legislative requests, as usual, and various farm groups are doing the same. But until more is known about how much to spend, and how much the various proposals being thrown out cost, there will be little movement.

Explaining the Biden administration’s trade policy is still an unanswered topic... We may find out more when U.S. Trade Representative (USTR) Katherine Tai and Foreign Policy Editor-in-Chief Ravi Agrawal have a conversation on Wednesday regarding the Biden administration’s trade and economic policies and their global impacts. Meanwhile, USTR official Jayme White will participate in an event today hosted by the Brookings Institution titled “USMCA: Building more integrated, resilient, and secure North American supply chains.” The ag industry wonders if the ongoing GMO corn trade flap with Mexico will be raised.

Small initial ERP Phase 2 payment... As of Feb. 26, there was just one payment for Phase 2 of USDA’s Emergency Relief Program (ERP) totaling $2,000 in Georgia for revenue — specialty and high-value crops. Payments under Phase 1 of ERP totaled $7.40 billion, steady with the prior week, which included non-specialty crop payments of $6.29 billion ($6.28 billion prior) and $1.12 billion for specialty crops ($1.11 billion prior). There was little change in Coronavirus Food Assistance Program 2 (CFAP 2) payments that now totaled $19.44 billion, up from $19.43 billion previously. The total included original CFAP 2 payments of $14.53 billion (unchanged from prior) and $4.91 billion (unchanged).

European bond yields rise... European bond yields climbed after hotter-than-expected inflation reports from France and Spain. France’s annual inflation rate reached a record high of 7.2% in February, up from 7% in January. Soaring food and service costs in particular pushed prices up. Spain’s inflation rate ticked up to 6.1% in February from 5.9% last month. The European Central Bank (ECB) deposit rate hit 4% for the first time, sending the yield on two-year German debt to the highest since 2008. There’s growing pressure for ECB to further raise interest rates.

USDA confirms HPAI in Illinois commercial turkey flock... USDA’s Animal and Plant Health Inspection Service confirmed highly pathogenic avian influenza (HPAI) in a commercial turkey meat bird flock with 18,200 birds in Wayne County, Illinois. This is the first HPAI case in a commercial operation in Illinois as prior cases in 2022 were all in either non-poultry or backyard flocks. In the last 30 days, there have been 29 flocks confirmed with HPAI in 14 states. Farm-state lawmakers and the Biden administration are increasingly being criticized for not aiding the poultry sector, which has been negatively impacted by HPAI.

Germany, Poland report ASF cases... Another case of African swine fever (ASF) was confirmed on a small domestic hog farm in the eastern state of Brandenburg, Germany. Poland discovered ASF in five wild boars in the northern part of the country.

Wholesale beef prices continue to charge higher... Choice boxed beef prices firmed $1.06 on Monday, extending the recent strong price rally, while Select gained $2.17. Last week’s average cash cattle price of $163.72 was the highest since April 2015. While packers have actively raised cash prices, their margins have remained solidly in the black due to the strong wholesale beef price gains. Packers have access to fresh contract supplies for March this week, which may slow down the recent price advance, but cash sources still anticipate another week of strength in the cash market.

Cash hog index resumes uptrend... A 24-cent decline on Monday snapped a 15-day string of gains in the CME lean hog index, but the rebound from the seasonal low resumed with a 73-cent gain today (as of Feb. 24). April lean hog futures finished Monday $6.505 above today’s cash quote, which is close to the five-year average gain in the cash index from now until mid-April.

Overnight demand news... South Korea purchased a total of 131,000 MT of corn – 65,000 MT expected to be sourced from the U.S. or South America and 66,000 MT optional origin. South Korea also tendered to buy up to another 70,000 MT of optional origin corn. Turkey provisionally purchased about 445,000 MT of wheat expected to be sourced mostly from Russia, with more purchases likely. Japan is seeking 70,065 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