Good morning!
Beans weaker, corn and wheat mixed... Soybeans traded higher on corrective buying early in the overnight session but are weaker this morning, while corn and wheat pivoted around unchanged. As of 6:30 a.m. CT, corn futures are trading fractionally to a penny higher, soybeans are 3 to 6 cents lower, winter wheat futures are 1 to 3 cents higher and spring wheat is steady to 2 cents lower. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is down about 100 points.
Sharp slowdown in jobs growth expected... Economists polled by Reuters expect the Labor Department to report non-farm payrolls rose 205,000 in February, which would be down sharply from the surprising 517,000-jobs increase the previous month. The unemployment rate is expected to hold at 3.4%.
Small decline in Russian wheat export tax... Russia’s wheat export tax for March 15-21 will be 5,344.0 rubles ($70.40) per metric ton based on an indicative price of $300.10. That’s down from a rate of 5,371.6 rubles per metric ton the previous week.
Highlights of Biden’s DOA budget plan... President Joe Biden’s budget is dead on arrival and has no chance of being approved. But it lays out his policy priorities for the second half of his term and could text some themes of his expected re-election campaign. The budget proposals call for a $6.8 trillion budget plan to increase spending on the military and a wide range of new social programs while also reducing future budget deficits. Some ag-related tax items:
- Strengthen the tax rules governing estate and gift taxes, making the system more difficult for wealthy individuals and trusts to avoid taxes. He stops short of calling for a reversal of Trump’s estate tax changes, which drastically reduced the number of people who have to pay the levy.
- Increase the capital-gains rate to 39.6% from 20% for people earning at least $1 million to equalize the taxation of investment and wage income.
- Tax assets when an owner dies, ending a tax benefit that allowed the unrealized appreciation to go untaxed when transferred to an heir.
Biden’s FY 2024 USDA budget... Biden wants to expand USDA lending programs making the agency the “lender of first opportunity.” Biden/USDA also wants to make the cover crop payment program permanent. But those need legislation and that may be a bigger task than building up the climate portion of the agenda. For a budget document, a lot of time was spent offering advice to Congress on what to do in the farm bill when members of the House and Senate typically make clear they — not the administration —write the bill. It is USDA’s job to implement, not legislate. Click here for more details.
Biden meets von der Leyen... President Biden will host European Commission President Ursula von der Leyen at the White House today. They are expected to discuss the war in Ukraine and joint cooperation in climate policy, energy security and critical supply chains. Biden’s Inflation Reduction Act has been a key sticking point. Today’s confab follows von der Leyen’s trip to Canada, during which she and Canadian Prime Minister Justin Trudeau discussed forging a “green alliance.”
Granholm extends olive branch to oil industry... Energy Secretary Jennifer Granholm made a conciliatory gesture toward oil executives during her appearance at the CERAWeek conference, commending the industry for increasing production and acknowledging that “oil and gas is going to remain a part of our energy mix for years to come.” Granholm also emphasized that any future withdrawals from the Strategic Petroleum Reserve would be limited to situations of major disruption, such as the Ukraine war.
Xi officially starts third term... Xi Jinping formally began a precedent-breaking third term as China’s president after his re-appointment was unanimously rubber-stamped by nearly 3,000 lawmakers in the country’s parliament. The confirmation means he will lead the country until at least 2028. Over the next two days, China’s parliament is expected to formally appoint other senior officials — all Xi loyalists.
China’s new bank loans fall but beat expectations... Chinese banks extended 1.81 trillion yuan ($260 billion) in new yuan loans in February, down from January’s record but higher than economists expected. Chinese banks tend to front-load loans at the beginning of the year to get higher-quality customers and win market share, so a pullback from January’s record levels was expected. Outstanding yuan loans grew 11.6% in February from a year earlier compared with 11.3% growth in January. Broad M2 money supply grew 12.9% from a year earlier.
Chicken industry may stand in way of vaccinating for HPAI... As the Biden administration mulls vaccinating poultry for highly pathogenic avian influenza (HPAI), the chicken industry could stand in the way. Broiler producers are concerned about trade implications but fears that the virus will mutate or spread to humans may spur a new plan of action, according to a FoodDive article. The U.S. egg industry is more receptive to the idea of vaccinating birds.
Slow developing cash cattle market... After buying a lot of cattle last week, packers have slow played cash negotiations this week. Unless packers actively raise cash cattle prices for a sixth straight week, sales volume could be limited, as feedlots are current and don’t need to move a lot of cattle.
Hog traders remain cautious... April lean hog futures faced pressure yesterday as traders felt the lead contract was too far out in front of the slow-climbing cash index. April hogs finished Thursday $5.685 above today’s cash index quote (as of March 8). Traders have shown no willingness to push the premium much above that level given the small daily gains in the cash index.
Overnight demand news... South Korea purchased 68,000 MT of corn to be sourced from the U.S., South America or Black Sea.
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
- 7:30 a.m. Employment Report — BLS
- 11:00 a.m. Cotton and Wool Outlook: March 2023 — ERS
- 11:00 a.m. Oil Crops Outlook: March 2023 — ERS
- 2:00 p.m. Feed Outlook: March 2023 — ERS
- 2:00 p.m. U.S. Agricultural Trade Data Update — ERS
- 2:00 p.m. Wheat Outlook: March 2023 — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Price Reactions after USDA Crop Reports — NASS
- 2:00 p.m. Price Reactions After USDA Livestock Reports — NASS
- 2:30 p.m. Commitments of Traders — CFTC