Good morning!
Relatively quiet trade overnight... Corn futures pivoted around unchanged in quiet overnight trade while soybeans were supported by corrective buying and wheat pulled back from gains earlier this week. As of 6:30 a.m. CT, corn futures are trading narrowly mixed, soybeans are mostly 5 to 6 cents higher and wheat futures are 2 to 5 cents lower. Front-month crude oil futures are modestly lower after earlier trading higher and the U.S. dollar index is down around 150 points.
Financial meltdown fears ease a little – for now... The marketplace has been somewhat assuaged by news the Swiss central bank has thrown its financial support behind the troubled Credit Suisse bank. Credit Suisse’s CEO said his bank will continue its “strategic transformation to deliver value to our clients.” Credit Suisse’s stock price jumped 20% Thursday. However, many long-time market watchers are “waiting for the next shoe to drop” in the banking crisis.
Major difference between 2008 and now... According to Sevens Report: “In 2008, the assets held at banks (mortgages on homes) were hopelessly underwater. The home values were much less than the mortgages owned, which created massive losses and solvency issues. Today, the assets held at banks (Treasuries and agency backed mortgages) are worth what banks paid for them (par value) as long as they don’t have to be sold in distress. This makes this a liquidity issue (which central banks can solve) not a solvency issue (which only governments can solve). That’s an important and positive difference.”
Yellen to testify... Treasury Secretary Janet Yellen is headed up to Capitol Hill today to pitch Congress on President Joe Biden’s budget request, but senators may have other questions for the Treasury secretary regarding the failure of three U.S. banks in the span of a week. The Senate Finance Committee hearing is one of the first opportunities lawmakers will have to question a high-ranking official on the failures of Silicon Valley Bank, Signature Bank and Silvergate Capital, along with Treasury’s moves to ensure borrowers can access their funds. It also follows the decision by troubled lender Credit Suisse to open a line of credit with the Swiss central bank.
Brazil port says there are no shipping delays... Port of Paranagua authorities downplayed concerns that traffic disruptions on the main road to access the key grain export hub are delaying shipments of Brazil’s record soybean crop. A grain trader told Reuters some ships are waiting up to 35 days to load cargos at Paranagua. Currently, 56 ships await offshore to approach the port while 100 vessels are due to arrive by April 24 to load or unload various cargoes, the authority said. The port operations director said all vessels that completed check-in procedures “are mooring and loading without any delay.”
Argentina’s soy processing industry faces ‘crisis’ due to drought... Argentina’s soybean crushing plants are operating at the lowest capacity in history due to impacts from drought, the leader of the country’s top grains processing chamber said. Gustavo Idigoras, head of the CIARA oilseed and grain processing chamber, said the industry faces a “crisis” with industrial capacity idleness approaching 70%, the highest ever when there are no protests. Argentine soy crush plants may have to import soybeans from Brazil and Paraguay, Idigoras said, adding that this would not exceed 8 MMT. “It is a palliative,” he said, “but it least it leaves us breathing room so as to not shut the factories. We are making a great effort to avoid suspensions,” he added.
Blinken: Black Sea grain initiative must not lapse... Secretary of State Antony Blinken said the Black Sea grain deal must not be allowed to lapse beyond its current termination date of March 18. Speaking in Africa, Blinken said the U.S. and African countries back the extension of the Black Sea Grain Initiative, “which has brought Ukrainian grain to countries across Africa as well as lowering prices around the world.” He noted the 4 MMT of wheat that has gone to developing countries via the initiative were the “equivalent of 8 billion loaves of bread. Millions rely on the Black Sea Grain Initiative. It cannot be allowed to lapse.”
China hopes Black Sea grain deal implemented in balanced, comprehensive manner... Chinese Foreign Ministry spokesman Wang Wenbin said China was ready to strengthen cooperation with all parties as part of the Black Sea grain deal to ensure global food security. China hopes the deal will be extended and the agreement will continue to be effectively and comprehensively implemented.
China to boost corn, soybean subsidies, buy more beans for state reserves... China has issued several “supporting policies” aimed at stabilizing soybean production in 2023, Reuters reported, citing the ag ministry. The report said China would boost the subsidy for corn and soybean producers and will also increase its purchases of soybeans for state reserves. There was no indication of the size of the subsidies to be provided nor on the level of soybeans the country would purchase for state reserves. China has previously signaled it wants to boost domestic production of soybeans in particular in a bid to rely less on imports to turn the crops into feed for the livestock sector.
Weekly Export Sales Report out this morning... For the week ended March 9, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 700,000-1,500,000 | 1,412,074 |
Wheat | 75,000-500,000 | 266,685 |
Soybeans | 50,000-700,000 | (23,234) |
Soymeal | 100,000-300,000 | 319,805 |
Soyoil | 0-10,000 | 7,312 |
EPA official warns on WOTUS repeal effort... Efforts to use the Congressional Review Act (CRA) to repeal the Biden administration’s Waters of the U.S. (WOTUS) rule could end up having unintended consequences as it could remove certain protections that were in the rule, Radhika Fox, EPA assistant administrator for water, told the Senate Environment and Public Works Committee. If the repeal effort is successful, Fox warned that would put the pre-2015 definition of WOTUS back into effect without some of the updates the Biden administration included in its latest definition. Fox said it would remove the “significant nexus standard” and would remove exemptions for artificial ponds for previously converted cropland. The CRA effort also would bar EPA from pursuing future regs that are substantially similar to the one that would be removed by the action. The House has already passed its WOTUS rule resolution and it’s up for a Senate vote. The White House has pledged a veto of the measure should it reach President Joe Biden’s desk. The final say on this matter will rest with the Supreme Court, whose decision is awaited.
Minnesota law to help dairy producers may now be hurting farmers... A proposal before the Minnesota state legislature could lead to the repeal of a 56-year-old law that set a floor for grocery store milk prices in hopes of leading to more sales for the state’s dairy farmers. The current law was enacted to help farmers but has led to dairy being at a disadvantage since stores can now price non-dairy milks lower, said Sen. Jordan Rasmusson. He told the Star-Tribune that allowing stores to position dairy milk as a loss leader would help farmers and grocers make more profits in the long run.
Macro concerns derail cattle futures, cash trade... The sharp break in cattle futures on Wednesday tied to macroeconomic concerns pulled the cash market lower, with initial trade down $1 to $2. That was well below the steady to slightly higher cash prices that would likely have been seen without the outside market influence. April live cattle futures finished yesterday $3.85 below last week’s average cash price, signaling traders have built in more than this week’s cash decline amid the fear-based selloff.
Wholesale pork market weakens... The pork cutout value dropped $1.99 on Wednesday amid heavy losses in loins, picnics and hams. Despite the sharp price pressure, wholesale pork movement slowed to 244.4 loads. While the product market is struggling, the cash market continues to gradually firm, with the CME lean hog index up 4 cents to $79.93 (as of March 14).
Overnight demand news... Japan purchased 73,518 MT of milling wheat in its weekly tender, including 21,540 MT U.S., 24,430 MT Canadian and 27,548 MT Australian. Egypt tendered to buy an unspecified amount of wheat from optional origins.
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. Weekly Export Sales — FAS
- 7:30 a.m. Extended Weather Outlook — NOAA