Good morning!
Grains under pressure overnight... Corn futures fell to contract lows overnight, while soybeans posted double-digit losses and wheat followed to the downside. As of 6:30 a.m. CT, corn futures are trading 2 to 4 cents lower, soybeans are 10 to 13 cents lower and wheat futures are 1 to 2 cents lower. Front-month crude oil futures are around 60 cents higher and the U.S. dollar index is about 125 points lower.
Best rains in central Buenos Aires since late December... Rains of 0.79 to 3.86 inches fell on central areas of Buenos Aires, Argentina, over the past two days, the best rainfall for this area since late last year. Other key crop production areas of Argentina remained dry, but World Weather Inc. says two waves of rain will move across the country over the next week, bringing widespread relief from the recent hot and dry conditions.
India considers extending rice export tax... India is considering extending the tax on parboiled rice exports beyond March, ET Now reported, citing government agency sources.
House Democrats propose farm bill principles... House Ag Committee Ranking Member David Scott (D-Ga.) and Committee Democrats released a memo outlining the essential principles the next farm bill should encompass to garner the backing of the House Democratic Caucus. The members stressed these principles focus on safeguarding historic climate investments and the Supplemental Nutrition Assistance Program (SNAP), a clear signal to Republicans who want to alter some of these programs. The Democratic principles assert that a strong, effective and bipartisan farm bill must address key objectives such as reducing hunger, supporting farmers, investing in sustainable agriculture, revitalizing rural America, lowering costs for farmers and families, promoting equity and supporting renewable and bioenergy initiatives. Comments: The partisan nature of this farm bill continues in both the House and Senate where conflicting issues over funding and farm bill policy matters have both chambers in a virtual holding pattern. The issuance of principles and “creative” ideas are what usually come near the beginning of a farm bill process, not when it should have been concluded already.
NCGA urges biofuels over EVs... The National Corn Growers Association (NCGA) is urging the Biden administration to prioritize biofuels over electric vehicles (EVs) to reduce vehicle emissions. In a letter to President Joe Biden, NCGA emphasized the immediate climate benefits of biofuels, such as corn ethanol, and cautioned that focusing solely on EVs could limit the administration’s ability to lower greenhouse gas emissions. The American Petroleum Institute (API) has joined forces with NCGA to support bipartisan legislation allowing year-round sales of E15 ethanol blends. This collaboration represents a significant shift in energy lobbying, as both groups aim to combat the rise of EVs.
Yellen wants to visit China this year... Treasury Secretary Janet Yellen plans to visit China in 2024, signaling improving ties between the two economic superpowers. U.S. officials raised concerns about China’s industrial policies during recent talks in Beijing, emphasizing the U.S. is not seeking economic decoupling. In response, China expressed worries about tariffs, investment restrictions and sanctions on its companies. These discussions mark the latest effort to re-engage after years of strained relations over various issues. The Biden administration aims to maintain communication channels with China while addressing national security concerns. Recent talks also focused on curbing fentanyl flow, demonstrating efforts to make progress on shared challenges. Additionally, Chinese Vice Commerce Minister Wang Shouwen discussed semiconductor control measures with U.S. officials, indicating a willingness to improve cooperation. Despite ongoing tensions, both sides seek to improve relations, with discussions underway for a call between presidents Joe Biden and Xi Jinping this spring.
China’s EV sales drop for first time in five months... China’s new energy vehicle (EV) sales fell 38.8% versus the previous month, the first such drop since August 2023. But EV sales, which accounted for 29.9% of total sales, grew 78.8% on an annualized basis in January. China’s total vehicle sales, including those exported, totaled 2.44 million units, up 47.9% from a year earlier but down 22.7% from December. Meanwhile, China announced plans to bolster support for its EV industry amid trade challenges from the European Union and the United States. Several government ministries, along with four other agencies, emphasized the importance of EV exports in optimizing China’s foreign trade and published guidelines to enhance international trade rules and engage with foreign governments to create a favorable environment for the EV industry.
China appoints new securities chief to head off stock market slump... China appointed Wu Qing — a capital markets veteran —to head the nation’s securities watchdog, an appointment that will place a cumulative $11 trillion in value under his supervision ($8 trillion stock market) as one of several measures laid down by Beijing to blunt a downturn. Wu, who ran the Shanghai Stock Exchange between 2016 and 2017, has been appointed chairman and party chief of the China Securities Regulatory Commission. He will succeed Yi Huiman, who had been in the position since 2019, state-run Xinhua news agency reported.
China’s forex reserves decline in January... China’s foreign exchange reserves, the world’s largest, fell to $3.219 trillion last month, down from December’s two-year peak of $3.238 trillion as the dollar strengthened against other major currencies. The yuan faded 1% against the dollar, while the dollar appreciated by 2.2% against a basket of other major currencies. China’s gold reserves increased to 72.19 million fine troy ounces at the end of January, up from 71.87 million ounces in December.
Aussie red meat exports reach record in 2023... Australia’s sheep meat exports surged to a record high and beef shipments reached to their highest since 2019 last year. Shipments of beef increased to China, South Korea and the U.S., three out of four of Australia’s main export markets. Aussie meat exports are likely to be even larger in 2024 thanks to low U.S. beef output and strong Chinese demand.
Late-week cash cattle trade likely... Packers are likely to delay cash cattle negotiations as long as possible given negative margins. We doubt feedlots will be willing sellers at steady/lower prices, despite slightly larger showlists, especially after Thursday’s surge in cattle futures. All signs point to cash cattle trade being pushed deep into the week, with feedlots having the upper hand.
February hogs now at discount to cash index... The CME lean hog index is up another 30 cents to $73.86 as of Feb. 5, extending the seasonal price rise. After losses the past four days, February lean hog futures finished Tuesday at a 38.5 cent discount to the cash index, suggesting traders sense the seasonal rally may soon pause. The premium in April hogs declined to $7.42.
Overnight demand news... Jordan tendered to buy 120,000 MT of optional origin milling wheat. Bangladesh tendered to buy 50,000 MT of optional origin milling wheat. South Korea tendered to buy 88,800 MT of rice – 55,500 MT of U.S. of non-glutinous brown medium-grain rice and 33,500 MT of Chinese non-glutinous brown medium and short-grain rice.
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
- 10:00 a.m. Highlights From the February 2024 Farm Income Forecast — ERS
- 2:00 p.m. Broiler Hatchery — NASS