Good morning!
Weaker tone overnight... Corn and soybeans faced followthrough selling overnight, while the wheat market pulled back from Monday’s corrective gains. As of 6:30 a.m. CT, corn futures are trading mostly around 2 cents lower, soybeans are 2 to 3 cents lower, SRW and HRS wheat are 5 to 7 cents lower and HRW wheat is 2 to 4 cents lower. Front-month crude oil futures are around $1.50 lower and the U.S. dollar index is about 175 points higher.
Russia says grain deal extended 60 days, others say agreement not finalized yet... A Russian official said the deal allowing Ukraine to export grain through its Black Sea ports has been extended for 60 days, though Kyiv said it was still seeking a 120-day extension and others said talks were ongoing. “Indeed, the deal has been extended – it has been agreed that it has been extended for 60 days,” TASS news agency cited Russia’s Deputy Foreign Minister Alexander Grushko as saying. Asked why Russia had extended the deal for 60 days as opposed to the 120-day extension period set out in the agreement, a Kremlin spokesperson said Moscow’s decision was “a gesture of goodwill... in the hope that after such a long time, the obligations that have been assumed will be fulfilled.” The Kremlin said the deal could not “stand on one leg,” while criticizing the West for not doing enough to remove obstacles to its grain and fertilizer exports. Meanwhile, UN and Turkish officials said while Russia agreed to extend the deal 60 days, negotiations were ongoing.
Consultant takes bigger cut out of Argentine crop estimates... Recent high temperatures have caused greater crop damage in Argentina. As a result, South American crop consultant Dr. Michael Cordonnier cut another 3 MMT each from his Argentine soybean and corn crop estimates. He now forecasts the soybean crop at 28 MMT and the corn crop at 37 MMT. His minimum forecasts were lowered to 25 MMT for soybeans and 22 MMT for corn. Cordonnier left his Brazilian crop estimates at 151 MMT for soybeans and 121 MMT for corn.
CPI data in focus later this morning... Economists forecast the U.S. consumer price index (CPI) will show an annual increase of 6% in February, compared with 6.4% in January. Core CPI, which excludes volatile food and energy prices, is expected to rise 5.5%, down from 5.6% in January. Traders will focus on what the inflation data could imply for next week’s Fed decision on interest rates, though the banking system concerns increase uncertainty over monetary policy moves. Fed fund futures currently signal 75% odds the Fed will raise rates 25 basis points hike, while there are 25% chances for no change.
Morgan Stanley: SVB a ‘battle between fire and ice’ with inflation... The collapse of Silicon Valley Bank (SVB) and the market turmoil it unleashed is part of the “battle between fire and ice” in global efforts to curb inflation after years of cheap money, Morgan Stanley co-president Edward Pick said. “This is part of the process of the knob being turned to tighten financial conditions to make sure that we are on our way to normalizing a higher interest rate world,” Pick said. “But there might well be surprises, there might well be reactions,” he said, adding the market was around halfway through a fight to “slay inflation” that would be waged over 12 to 18 months.
Japan to raise domestic wheat price 5.8%... Japan will raise the price at which it sells imported wheat to domestic flour mills by an average of 5.8% to reflect higher import prices over the past six months, the country’s ag ministry said. The price rise would have been 13.1% if calculated according to the standard formula, but it was lowered to soften the burden on households suffering from higher commodity prices, the ministry said. For the six months starting April 1, the ministry’s wheat selling price to local millers will average 76,750 yen ($575) per metric ton, up from 72,530 yen the previous year.
Very little change again in USDA aid payments... Payouts under USDA’s aid efforts increased slightly over the past week, with data as of March 12 indicating Emergency Relief Program (ERP) payments were essentially unchanged at $7.41 billion for total payments, which included $6.29 billion for non-specialty crops and $1.12 billion for specialty crops under Phase 1 of the effort, with a single Phase 2 payment of $2,000 listed. For the Coronavirus Food Assistance Program 1 (CFAP 1), USDA data showed total payments at $11.83 billion, up from $11.82 billion the prior week, even though the breakdown of original CFAP 1 payments remained at $10.63 billion and top-up payments at $1.19 billion. CFAP 2 payouts were steady with the prior week at $19.44 billion for total payments, including $14.53 billion in original CFAP 2 payments and $4.91 billion in top-up payments.
PETA using bird flu as reason not use real eggs for the Easter egg roll... People for the Ethical Treatment of Animals (PETA) has issued its annual call for the White House not to use real eggs in the Easter egg roll, but this year the group is using bird flu as a reason. The group called on First Lady Jill Biden to use plastic or wooden eggs or even painted rocks “while families are shelling out nearly 70% more for eggs amid the deadliest avian flu outbreak on record,” and so the event does not “prop up the cruel egg industry.” PETA has for years advocated the event not use real eggs.
Cattle futures extend discount to cash market... Live cattle futures faced pressure from macroeconomic concerns on Monday, which extended the April contract’s discount to the cash market. Last week’s average cash cattle price rose 38 cents to $165.40, while April live cattle futures ended Monday at $163.55. After buying more cattle than anticipated last week, packers will try to get feedlots to move animals at weaker prices this week, but we anticipate they will be no worse than steady values.
Pork cutout firms... The pork cutout value rose $1.00 on Monday as all cuts except bellies firmed. At $88.80, the cutout value is at levels where retailers have been slower buyers in the recent past, which has capped price advances. Movement was moderate at 252.2 loads on Monday, suggesting retailers may again be showing resistance to further price advances.
Overnight demand news... South Korea purchased 135,000 MT of optional origin corn. Algeria purchased around 540,000 MT of wheat expected to be mostly sourced from the Black Sea region and tendered to buy 35,000 MT of Argentine corn. Japan is seeking 73,518 MT of milling wheat in its weekly tender.
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
- 11:00 a.m. Meat Price Spreads — ERS
- 2:00 p.m. Dairy Monthly Tables — ERS
- 2:00 p.m. Livestock, Dairy, and Poultry Outlook: March 2023 — ERS
- 2:00 p.m. Sugar and Sweeteners Outlook: March 2023 — ERS