First Thing Today | March 1, 2023

Modest corrective buying was seen in the corn, soybean and winter wheat markets overnight following recent, sharp price losses.

Pro Farmer's First Thing Today
Pro Farmer’s First Thing Today
(Pro Farmer)

Good morning!

Mostly firmer tone overnight... Modest corrective buying was seen in the corn, soybean and winter wheat markets overnight following recent, sharp price losses. As of 6:30 a.m. CT, corn futures are trading fractionally higher, soybeans are 6 to 10 cents higher, SRW and HRW futures are 1 to 2 cents higher and HRS wheat is steady to a penny lower. Front-month crude oil futures are around 50 cents lower and the U.S. dollar index is about 700 points lower.

Soy crush, ethanol use expected to rise from December but decline from year-ago... USDA is expected to report January soybean crush totaled 189.6 million bu. in January, according to a Bloomberg survey. That would be up from 187.4 million bu. in December but below last year’s 194.3 million bu. tally. Corn-for-ethanol use is expected to total 436.8 million bu., up from 425.3 million bu. in December but below 463.5 million bu. in January 2022.

Spring crop insurance prices set... The average closing levels for December corn futures and November soybeans during February set the spring crop insurance prices for those crops. The spring crop insurance price is $5.91 for corn (up a penny from last year) and $13.76 for soybeans (down 57 cents). That’s the second highest spring price for both crops.

Ukraine’s February grain exports top year-ago... Ukraine exported 5.2 MMT of grain in February, topping the year-ago total of 5.05 MMT. Through the first eight months of 2022-23, Ukraine exported 32.3 MMT of grain, down 26% from the same period last year. That total included 18.6 MMT of corn, 11.3 MMT of wheat and about 2 MMT of barley.

Ukraine traders union seeks transparent rules for cargo queue under grain export deal... Ukrainian grain traders union UGA asked the government on Wednesday to provide transparent rules on how cargo ships should queue before loading at Ukrainian Black Sea ports under a grain export deal. UGA proposed changing the system for queues of ships, so that it is organized on a monthly basis by stevedores or terminals rather than by vessels. The priority should go to vessels registered in the queue as of Feb. 9, it said. The union also said terminals should provide the Ukrainian seaport authority every two weeks with a detailed plan of ships movements for passing on to the Joint Coordination Center in Turkey that oversees implementation of the deal. UGA also proposed allocating a ship quota for each operator, making it public in advance and prohibiting any changes to the established queue in terms of quota distribution to terminals.

La Niña likely nearing its end... La Niña has weakened in the tropical Pacific Ocean and is likely near its end, according to the Australian Bureau of Meteorology. It says, ocean indicators of La Niña have returned to neutral levels, while atmospheric indicators that remain at La Niña levels have started to weaken. The bureau expects neutral conditions through May, with the chance of El Niño developing by the second half of the year. El Niño patterns are associated with below-normal rainfall for Australia.

China’s manufacturing activity expands at fastest pace in more than a decade... China’s manufacturing purchasing managers index (PMI) shot up to 52.6 in February from 50.1 the previous month, marking the second straight month of expansion in the factory sector. The PMI reading far exceeded expectations and was the highest reading since April 2012. The Caixin manufacturing PMI, which gauges smaller, privately owned factories, increased to 51.6 last month, the first expansion in factory activity since July 2022.

It’s not all positive news for China... For the first time in about 25 years, China is not a top three investment priority for a majority of U.S. firms. Geopolitical tensions and domestic economic issues are driving businesses to increasingly focus elsewhere, according to a new report.

USTR Tai to discuss trade agenda with FTAs a potential topic... We alerted you on Tuesday U.S. Trade Representative Katherine Tai will have a discussion with Foreign Policy Editor in Chief Ravi Agrawal today to discuss the Biden administration’s trade agenda. Tai is expected to signal that Free Trade Agreements (FTAs) are not permanently removed from the Biden administration’s trade plans based on comments she made to Politico in an interview. Tai continues to try to defend the Biden administration’s trade policy approach that has even come under criticism from some Democrats. Tai also said she was “open minded” on FTA talks with the United Kingdom, but no decision has been made, commenting that “nothing is off the table.” Regarding tariffs imposed by the Trump administration on China, Tai simply said, “If you take a couple steps back and you look at the policy landscape, I think that better question is, What has China done to deserve our dialing back the tariffs?”

Argentina halts poultry exports after case of HPAI... Argentine on Tuesday suspended poultry product exports after the first case of highly pathogenic avian influenza (HPAI) was confirmed in an industrial flock in the province of Río Negro. The country’s ag ministry said that’s an area with low poultry density. Argentina has confirmed about 25 cases of HPAI, mainly in wild birds. About 10% of Argentina’s poultry production is exported, with China being its top market taking roughly three-quarters of all shipments.

China’s sow herd contracts a little... China’s sow herd shrank 0.5% at the end of January compared with the prior month, according to ag ministry data. However, the herd at 43.67 million head was 1.8% bigger than January 2022.

April live cattle hold modest premium to cash... February live cattle futures expired at $167.50 on Tuesday, just over $2 above the April contract. The new lead-month contract finished yesterday $1.755 above last week’s average cash cattle prices. Cash sources are expecting cash cattle trade to be at least $1 higher again this week, so the current premium is rather modest.

Pork prices cheap compared to beef... The pork cutout value dropped $1.58 on Tuesday, driven largely by a nearly $12 decline in primal belly prices. Meanwhile, Choice boxed beef prices firmed 61 cents. That pushed the wholesale beef/pork ratio to 3.43, which is extremely high, signaling pork is cheap compared to beef. We anticipate this will lead to retailers actively featuring pork after Easter, especially if they continue to struggle to get beef orders filled.

Overnight demand news... Taiwan purchased 48,975 MT of U.S. milling wheat. Thailand purchased 30,000 MT of feed wheat expected to be sourced from Australia. Japan is seeking 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