Good morning!
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Price pressure on grains building this morning... Soybean futures retreated from Tuesday’s gains during overnight trade, while the corn and wheat markets have weakened after two-sided price action earlier in the session. As of 6:30 a.m. CT, corn futures are trading mostly 2 cents lower, soybeans are 11 to 12 cents lower, SRW wheat is 2 cents lower, HRW wheat is 4 to 6 cents lower and HRS wheat is 4 to 5 cents lower. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is trading just below unchanged.
Ukraine ag exports expected to decline this month... Ukrainian maritime agricultural exports are expected to decline by 20% in March compared to February levels, according to a Reuters report citing information from Spike Brokers. Although specific tonnage figures were not provided, the firm stated the pace of maritime exports is slowing down compared to February. Railway transit of agricultural products out of Ukraine has also decreased, with an average daily rate of 299 wagons this month compared to 374 in February, marking the lowest figure since the beginning of the war. Additionally, exports via roads have declined to 132,000 MT from March 1-11, compared to 172,000 MT for the same period in February.
France cuts wheat export forecast... France’s ag ministry cut the country’s wheat export outlook for 2023-24. It now forecasts wheat exports outside the EU at 10.15 MMT, down 100,000 MT from last month. Exports within the bloc are forecast at 6.19 MMT, down 130,000 MT from last month. As a result, French wheat stocks at the end of the 2023-24 marketing year are now projected at 3.74 MMT, nearly 47% above 2022-23 and a 19-year high.
Rains boost Aussie cotton prospects... Cotton Australia raised its estimate for Australian production this year to “at least” 4.5 million bales after widespread rainfall boosted yields. “Our growers were expecting a long, hot and dry summer forcing a crop revision below 4 million bales,” said Adam Kay, CEO of industry group Cotton Australia. “The rains across our largest growing areas were very welcome and now we are expecting at least 4.5 million bales,” he said.
PBOC advisor calls for structural reform to spur growth... China should rely more on structural reforms and less on economic stimulus to drive economic growth this year, Liu Shijin, a policy adviser to the People’s Bank of China (PBOC) said. Liu said the economy can achieve its growth target of around 5% this year but that more effort is needed on both stimulus and structural reforms. “There is no issue with macroeconomic policies becoming moderately loose and more proactive, but there is a tendency to focus solely on macroeconomic policies and not even remember how to promote some structural reforms,” Liu said. “The relationship between macro policies and structural reforms may need to be straightened out.” Liu has been calling for reforms to widen migrant workers’ access to public services enjoyed by city dwellers, as well as policies that bolster private entrepreneurship.
Yuan unlikely to overtake dollar, but… Experts gathered at a discussion hosted by the Official Monetary and Financial Institutions Forum (OMFIF) agree the Chinese yuan is unlikely to overthrow the dominance of the dollar in the global financial system. However, rather than focusing on dethroning the dollar, China may opt to establish an alternative institutional arrangement alongside the existing financial system, with the yuan at its center. OMFIF senior economist Taylor Pearce highlighted in a summary of the analysis that China’s strategy could resemble how the U.S. championed the Bretton Woods system after World War II, disregarding the Soviet Union and its allies. In this scenario, the U.S. might be marginalized rather than entirely excluded, and the dollar would likely remain outside of China’s regional or geopolitical sphere of influence. In a more extreme scenario, the alternative system could be explicitly designed to exclude the U.S., indicating a shift toward a new geoeconomic orientation.
Chinese property sector woes continue as Country Gardens misses payment... Chinese property developer Country Garden Holdings said funds for a 96 million yuan ($13 million) coupon payment due Tuesday were not fully in place. It plans to raise funds for the missed onshore coupon payment within a 30-day grace period, but the missed payment sparked more concerns with the beleaguered developer.
Euro zone industrial production plunges... Euro zone industrial production decreased 3.2% in January from the previous month and 6.7% annually. That matched September 2023 for the lowest level since June 2020 across the bloc.
UK economy returns to modest growth at start of 2024... Britain’s economy returned to growth in January after entering a shallow recession in the second half of 2023. UK’s gross domestic product grew by 0.2% on a monthly basis in January after a 0.1% decline in December.
GOP margin in the House gets smaller... After saying last fall he wouldn’t seek re-election, Rep. Ken Buck (R-Colo.) announced on Tuesday he would leave Congress March 22, further shrinking the GOP’s already razor-thin majority. Buck didn’t give a reason for resigning early. His departure will cut the House Republican margin to 218-213; Speaker Mike Johnson (R-La.), will still have two votes to spare before needing Democrats to govern. But an April 30 special election in a Democratic-leaning Buffalo, New York-area district could cut that to a one-defection margin, since a tie vote loses in the House. A special election to replace former House Speaker Kevin McCarthy in a safely Republican California district follows just over three weeks later. U.S. Rep. Lauren Boebert, currently representing Colorado’s 3rd District, is running to replace Buck in the 4th District. She would have to resign her current seat if she is elected to replace Buck in a special election to fill the seat later this year, or risk running against an incumbent.
Wholesale beef prices continue to charge higher... Wholesale beef prices weren’t able to sustain all of their gains from Tuesday morning but still ended the day $1.71 higher for Choice and up 72 cents for Select. Choice boxes pushed above $310.00 and Select is nearing $300.00. While movement has slowed, the strengthening wholesale prices are boosting packer margins.
Wholesale pork price drop... Wholesale pork prices were unable to sustain Tuesday morning’s strength, as bellies and hams posted sharp losses, pulling the cutout $1.04 lower for the day. While prices dropped, movement improved to 302.2 loads, signaling there’s solid retailer demand under the market. That should help limit near-term price pressure unless there’s a collapse in belly and ham prices.
Overnight demand news... Thailand purchased 120,000 MT of optional origin feed 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
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. North American Grain and Oilseed Crushings — NASS
- 2:00 p.m. Turkey Hatchery — NASS