Good morning!
Corn and wheat rise, soybeans fall overnight... Corn and wheat futures were supported by followthrough buying overnight after strong gains on Tuesday, while the soybean market extended yesterday’s declines. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are 5 to 8 cents lower and wheat futures are 6 to 10 cents higher. Front-month crude oil futures are just above unchanged, while the U.S. dollar index is around 125 points higher.
Argentine rains heavier than forecast but uneven coverage... Recent rains across Argentina surpassed the “most optimistic” forecasts, the Rosario Grain Exchange said in a report on Tuesday, bringing relief to drought-parched crops. “Argentina, undergoing the most significant drought in the last 60 years, received higher rainfall volumes than expected,” the exchange said. “The variability was extreme. There are locations with more than 100 mm (3.9 inches) and others where it did not rain. To reverse the state of drought and move to optimal reserves in the soil, the (regions) would need precipitation values of 160 to 180 millimeters (6.3 to 7.1 inches).” The exchange says rainfall above the key level of 45 mm (1.8 inches) was received across 15% of the Pampas region, 15% of Buenos Aires, 10% of La Pampa, 5% of Sante Fe and 3% of Cordoba, while some areas got none.
Germany to send tanks to Ukraine... Germany confirmed it will dispatch 14 of its Leopard tanks to Ukraine, following much dithering and pressure from allies. The U-turn, which will also allow Poland and other countries to export their German-made Leopards, was announced by Chancellor Olaf Scholz at a cabinet meeting on Wednesday. The U.S. is similarly poised to send its Abrams tanks. Russia’s ambassador to America said giving tanks to Ukraine would be a “blatant provocation.” Its ambassador to Germany said such a move would take the conflict to “a new level.”
German sentiment grows, will avoid recession... Germany reported its business sentiment hit a seven-month high in January. Consumer sentiment is expected to improve for a fourth consecutive month in February as energy prices fall, a GfK institute survey showed on Tuesday. Meanwhile, the German economy is expected to grow 0.2% this year, narrowly avoiding a recession, according to the annual government economic report published on Wednesday. This was revised up from last fall’s forecast for a 0.4% decline this year.
India to sell wheat to ease prices... India will sell up to 3 MMT of wheat from government stocks to bulk consumers such as flour millers, as part of efforts to bring down prices, a government official told Reuters. On Wednesday, wheat prices in the Indore market jumped to a record 29,821 rupees ($365.61) per metric ton, up nearly 9% so far this month after rising 37% in 2022. In New Delhi, wheat prices rose nearly 1.5% to a record 32,500 rupees. The allocation is more than the 2 MMT traders expected.
Indonesia lowers palm oil reference price... Indonesia will set its crude palm oil (CPO) reference price at $879.31 per metric ton for the Feb. 1-15 period, down from $920.57 in the Jan. 16-31 period, the deputy coordinating minister of economic affairs said. The reference price would put the CPO export tax at $52 per metric ton and levy at $90 per metric ton.
Treasury takes measures to ease debt-ceiling woes... The Treasury Department will stop fully investing in a government investment vehicle for federal employees as the U.S. bumps up against its debt ceiling, Secretary Janet Yellen said Tuesday in a letter to congressional leaders. The step is the latest in a series of so-called extraordinary measures, or accounting maneuvers, the Treasury Department is taking to keep paying the government’s bills.
Biden, McCarthy meeting before Feb. 7 SOTU address... The White House plans to invite House Speaker Kevin McCarthy (R-Calif.) to meet with President Joe Biden before the Feb. 7 State of the Union (SOTU) address, though the meeting hasn’t been scheduled yet. House Republicans continue to insist spending cuts must be part of any deal, but Biden and congressional Democrats continue to balk.
Lawmaker urges FTC to probe egg companies for price gouging... Sen. Jake Reed (D-R.I.) asked the Federal Trade Commission (FTC) to launch an investigation into major U.S. egg producers for potential “price gouging and other deceptive practices” due to volatile egg prices. Citing U.S. inflation data and other data for egg prices in Rhode Island, Reed noted egg prices were up 138% in December compared with the previous year while the largest egg producer in the U.S. — Cal-Maine Foods — reported record profits of $323 million in their most recent quarter, a shift from a loss of $16.8 million during the same period one year ago. The company’s profit margin shifting from negative 2.4% to 22.3% from the prior quarter “could be an indication of gouging.” While highly pathogenic avian influenza (HPAI) has hit the U.S egg laying flock, Reed said USDA data shows the layer flock is only 6% below normal levels. He also noted small producers have kept their prices “under control.” A group called Farm Action also called on FTC to investigate the situation and testified at an open FTC meeting.
Cold Storage Report out this afternoon... USDA will detail frozen meat stocks at the end of December. The five-year average is a 4.7-million-lb. increase in beef stocks and a 3.2-million-lb. decline in pork stocks during the month.
Heavy pressure on wholesale beef prices... Choice boxed beef prices fell $1.80 on Tuesday, while Select dropped $2.10. The weaker prices attracted increased retailer demand, with movement rising to 138 loads on the day. If boxed beef prices fall further, it could cause packers to remain unwilling to raise cash cattle bids as they work to improve their margins.
Pork cutout finds resistance above $81... The pork cutout value firmed 68 cents to $81.60 during morning trade on Tuesday but finished the day 86 cents lower at $80.60. While retailers showed resistance above $81.00 in the cutout value, movement stayed strong at 360.3 loads. Strong underlying support should limit the downside in wholesale pork prices.
Overnight demand news... Japan received no offers in its tender to buy 70,000 MT of feed wheat and 40,000 MT of feed barley.
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
- 8:00 a.m. Food Price Outlook — ERS
- 9:30 a.m. Weekly Ethanol Production — EIA
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Cold Storage — NASS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Poultry Slaughter — NASS