Good morning!
Modest followthrough buying overnight... Corn, soybean and wheat futures built on yesterday’s corrective gains during the overnight session. As of 6:30 a.m. CT, corn futures are trading mostly 2 to 4 cents higher, soybeans are 1 to 3 cents higher, SRW wheat is 5 to 7 cents higher, HRW wheat is 3 to 4 cents higher and HRS wheat is 2 to 3 cents higher. Front-month crude oil futures are posting modest gains, while the U.S. dollar index is more than 300 points higher.
Russia says West is ‘burying’ Black Sea grain deal... Russian Foreign Minister Sergei Lavrov on Thursday accused the West of “shamelessly burying” the Black Sea grain initiative, RIA Novosti news agency reported. Russia has repeatedly attacked the West’s approach to the deal, saying countries that have imposed sanctions on Moscow are not doing enough to ease restrictions on its exports, especially fertilizer. Meanwhile, U.S. Secretary of State Antony Blinken said Russia had in the past few months “deliberately and systematically” created a backlog of grain shipments while its own food, grain and fertilizer exports are ongoing. Ukraine is seeking a one-year extension of the Black Sea grain deal, which is set to expire March 18.
Weekly Export Sales Report out this morning... For the week ended Feb. 23, traders expect:
| 2022-23 expectations (in MT) | Last week (in MT) |
Corn | 500,000-1,000,000 | 823,177 |
Wheat | 150,000-600,000 | 338,828 |
Soybeans | 300,000-850,000 | 544,915 |
Soymeal | 50,000-300,000 | 65,574 |
Soyoil | 0-12,000 | (785) |
Attaché leaves Brazilian soybean crop, export forecasts unchanged... USDA’s attaché in Brazil maintained its crop estimate of 153 MMT but signaled continued rains could impact crop quality. The post also maintained its 2022-23 soybeans export forecast at 97 MMT. Soybean exports are off to a slow start, with the January-February combined total down 31% from year-ago at an estimated 6 MMT, according to AgRural.
India exporting more corn to Asia... Feed millers in Asia are boosting corn purchases from India, as a severe drought has reduced production in traditional supplier Argentina, two traders told Reuters. Importers in Malaysia and Vietnam are booking around 200,000 MT of Indian corn a month, they said. Indian corn is quoted around $310 to $315 per metric ton, including cost and freight to Southeast Asia, compared with South American corn being offered around $330 per metric ton, traders said.
Euro zone headline inflation eases, but core prices surge... Consumer inflation in the euro zone eased to 8.5% annually in February – the lowest since May 2022 – as a big fall in energy costs offset a price surge in nearly all other areas. Core inflation, which removes food and energy costs, jumped for a third straight month to 5.6% annually from 5.3% the previous month. It’s apparent the European Central Bank still has more work to do to defeat high inflation in the euro zone.
China to set ambitious economic growth target... China is becoming increasingly ambitious with its 2023 economic growth target, aiming potentially as high as 6%, in a bid to boost investor and consumer confidence amid the post-pandemic recovery, sources involved in policy discussions told Reuters. Four of the sources said China was likely to aim for growth up to 6%, while three others said China was targeting 5% to 5.5%. In November, government advisers recommended more modest targets ranging from 4.5% to 5.5%. The final growth target will be announced on March 5 at the start of the National People’s Congress.
U.S. Treasury to head new working group looking at digital dollar... The Treasury Department will lead a new senior-level working group that will soon start regular talks on the possible launch of a digital dollar. The group will include leaders from the Treasury, Federal Reserve, National Security Council and other agencies, Nellie Liang, Treasury undersecretary for domestic finance, said Wednesday.
Indonesia to route CPO exports through exchange... Indonesia plans to require crude palm oil (CPO) exports go through a futures exchange to create the country’s own benchmark price, the head of its commodity futures regulator said. Authorities are developing a trading scheme for crude palm oil which aims to launch in June, said Didid Noordiatmoko, head of the regulator, BAPPEBTI. Most Indonesian palm oil exporters currently conduct sales directly with buyers without going through an exchange, while auctions held by state trading company KPB Nusantara only offer physical palm oil and not futures contracts. Refined palm products would be allowed to be exported directly, Didid said.
China continues wheat auctions... China will auction another 140,000 MT of wheat reserves on March 8. China has been regularly selling wheat from state reserves into the domestic market since October.
Cattle traders remain cautious... Live cattle futures faced light pressure on Wednesday, narrowing the premium the front-month April contract holds to last week’s average cash price, despite expectations the cash market will strengthen. So far, only light cash trade at about $1 higher prices has been reported in Iowa. The lack of cash activity has allowed cattle futures to pause as traders wait on confirmation of higher prices in other states. With futures at such lofty levels, we expect traders to remain cautious buyers despite bullish fundamentals.
Hog futures premium to cash continues to narrow... The CME lean hog index is up 7 cents to $78.58 (as of Feb. 28). April lean hog futures finished $6.37 above that level on Wednesday. With the futures/cash relationship now reflecting about the normal seasonal rise from now until mid-April, traders shouldn’t look to narrow the premium much more.
Overnight demand news... Japan purchased 70,065 MT of milling wheat, including 35,081 MT U.S. and 34,984 MT Canadian. South Korea passed on a tender to buy up to 138,000 MT of optional origin corn. Jordan tendered to buy up to 120,000 MT of optional origin milling 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
- 7:30 a.m. Weekly Export Sales — FAS