Good morning!
New advice – Cotton producers: Increase old- and new-crop sales... Cotton futures surged to the highest level since mid-September 2022 on the continuation chart during overnight trade. While futures have gone parabolic and there could be more near-term upside potential, prices have only reached these levels three other times previously. We advise cotton hedgers and cash-only marketers to sell another 10% of 2023-crop to get to 90% sold. The remaining 10% of unsold old-crop inventory will be gambling stocks in case prices continue to surge. We also advise selling another 15% of expected 2024-crop production to get to 25% forward sold for harvest delivery.
Grains mixed this morning... Corn and soybeans are trading near unchanged this morning after light two-sided trade overnight, while wheat futures have weakened. As of 6:30 a.m. CT, corn futures are trading fractionally on either side of unchanged, soybeans are steady to a penny higher, SRW wheat is 4 to 5 cents lower, HRW wheat is 7 to 9 cents lower and HRS wheat is 3 to 5 cents lower. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is about 275 points higher.
RINs fall to three-year lows... U.S. biomass-based diesel and ethanol compliance credit prices have slumped to three-year lows on declining feedstock costs and are set to stay low as renewable diesel output rises, the Energy Information Administration (EIA) said. Renewable Identification Numbers (RINs) generated from renewable diesel and biodiesel output (D4) and from ethanol production (D6) are both trading at their lowest since 2020. Declining prices of soybean oil, a widely used feedstock for renewable diesel and biodiesel production, are a primary driver behind the slump in RINs, EIA said. Rising global production and lower demand in China have boosted soybean stockpiles, while increasing exports from Brazil have put more pressure on soyoil prices, the agency noted.
Spending measure update... Despite the looming deadlines of March 1 and March 8, congressional negotiators have yet to release the text of a spending agreement for the initial batch that covers around 20% of government funding, including USDA. Talks have continued while the House is on a 12-day recess that ends today. Bottom line: If the House and Senate can’t finish the combination bill by the end of the day Friday, lawmakers will need to pass a stopgap of several days to avoid a weekend shutdown. Thursday is the earliest the initial funding bills could be posted, sources advise. That would put House consideration on Sunday due to the 72-hour rule. That’s two days into a partial shutdown and would push Senate action into next week.
Stabenow threatens to block new farm bill over House GOP proposals... Senate Ag Chair Debbie Stabenow (D-Mich.) during a White House event on anti-hunger said she would rather forego a new farm bill than strike a deal with Republicans on their priorities, Politico reported. House Republicans insist they need to repurpose billions of funding from the Inflation Reduction Act’s climate-smart ag funding and limit new updates via the Thrifty Food Plan to increase reference prices for Title I farmer safety net programs. “I’m not going to do it. So, if that means we continue the policies of the 2018 Farm Bill, which were pretty good if I do say so myself, then that’s OK,” Stabenow said. “... we’re not going to go backwards on feeding people, and we’re not going to go backwards, by the way, on the climate conservation money that we also have there that is so critical.” USDA Secretary Tom Vilsack nodded in agreement as he sat next to Stabenow, Politico reported. “God, you’re tough. That’s great,” Vilsack said after Stabenow spoke. Vilsack has repeatedly suggested using USDA funding from the Commodity Credit Corporation to help pay for some programs to overcome the impasse in farm bill negotiations. Vilsack could make similar comments when he testifies this afternoon before the Senate Ag Committee.
Red Sea update... The dry-bulk vessel Rubymar is stranded in the Red Sea and taking on water after an attack by Houthi rebels in Yemen. The ship is holding a load of fertilizer that officials say poses a serious environmental danger to the region. The cargo vessel, owned by Blue Fleet Group, was hit on Feb. 18 and has already left an 18-mile oil slick in its wake. Meanwhile, the U.S. has struck 230 targets in Yemen following Houthi-led attacks against shipping in the Red Sea, a top Pentagon official announced, offering the most detailed public accounting of the strikes to this point.
Ukraine grain exports jump in February... Ukraine’s grain exports through Feb. 27 exceeded last year’s level by almost 12%, reaching 5.3 MMT, according to ag ministry data. Since July 1, 2023-24 grain exports totaled 29.1 MMT, down 2.7 MMT (8.5%) from the same period last year. Ukraine’s 2023-24 grain exports included 15.8 MMT of corn, 11.5 MMT of wheat and 1.6 MMT of barley.
Biden to crack down on U.S. data flows to China, Russia and others... President Joe Biden unveiled an executive order aimed at protecting American personal data by restricting its transfer to China, Russia and other countries, senior U.S. officials said, citing national security concerns. The order will curb bulk transfers of Americans’ geolocation, biometric, health and financial information by data brokers and others to specific “countries of concern,” the officials said. It will also bar the transfer of any volume of data on U.S. government personnel, they added, to such countries, which also include Iran, North Korea, Cuba and Venezuela. Meanwhile, Chinese lawmakers expanded Beijing’s state secrets law for the first time since 2010, widening the scope of restricted sensitive information to “work secrets,” further evidence of Chinese President Xi Jinping’s increased focus on national security.
China’s property woes worsen with Country Garden petition... Chinese developer Country Garden said on Wednesday a liquidation petition has been filed against it for non-payment of a $205 million loan, clouding its debt revamp prospects and undermining Beijing’s effort to restore confidence in the property sector. Country Garden said in a regulatory filing to the Hong Kong Stock Exchange it would
“resolutely” oppose the petition, which was filed by a creditor, Ever Credit Limited, a unit of Hong Kong-listed Kingboard Holdings. A court hearing had been set for May 17. The petition comes a month after China Evergrande Group was ordered to be liquidated by a Hong Kong court.
Euro zone economic sentiment deteriorates in February... The euro zone economic sentiment indicator declined to 95.4 in February from January’s revised figure of 96.1. Sentiment remained subdued as businesses grappled with still-high inflation, rising borrowing costs and weak external demand. Confidence deteriorated among manufacturers, service providers, retailers and constructors, but improved slightly among consumers. The euro zone consumer inflation expectations index increased 3.5 points to 15.5 in February, while the gauge for selling price expectations among manufacturers fell 0.6 points to 3.8. The consumer confidence indicator rose 0.6 points to -15.5 in February.
China scraps Brazilian poultry tariff... China has opted to not renew a tariff on imports of Brazilian poultry products, Brazil’s foreign ministry said. China hit Brazil with a tariff of between 17.8% and 34.2% in 2019 on its poultry in a bid to prevent dumping of cheap product into its market. The tariff expired on Feb. 17, according to the ministry. Brazil is the world’s largest poultry exporter, while China is the second-biggest consumer of poultry products and the top buyer of Brazil’s poultry.
China authorizes pork imports from three Russian enterprises... China’s customs service authorized three Russian enterprises to ship pork to the country from Feb. 28, Russian agricultural watchdog Rosselkhoznadzor said. Pork products packaged after that date of registration will be allowed for delivery into China.
Packers continue to reduce cattle slaughter... Estimated cattle slaughter was only 247,000 head through the first two days this week, 2,930 head behind last year. With plants running 32-hour shifts and little to no Saturday kills, this week’s tally could fall as low as 580,000 head. Packers continue to reduce slaughter runs as a means of managing tight market-ready supplies amid deeply red margins. The reduced beef supply is supporting wholesale beef prices. While Choice beef slipped a nickel on Tuesday, prices are solidly back above $300.00 and Select is notably above $285.00 – both of which have acted as recent price ceilings.
Pork cutout rebounds... After declining the two previous days, the pork cutout value firmed 88 cents on Tuesday to $91.87. While the cash hog market continues to strengthen seasonally, gains in the pork cutout have risen enough to keep packer margins solidly in the black.
Overnight demand news... Thailand purchased 60,000 MT of European Union feed wheat. Jordan tendered to buy up to 120,000 MT of optional origin 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
- 9:30 a.m. Weekly ethanol production — EIA
- 2:00 p.m. Agricultural Exchange Rate Data Set — ERS
- 2:00 p.m. Livestock and Meat Domestic Data — ERS
- 2:00 p.m. Outlook for U.S. Agricultural Trade: February 2024 — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Egg Products — NASS
- 2:00 p.m. Poultry Slaughter - Annual Summary — NASS