Good morning!
Price pressure to open the week... Bears controlled price action in the grain and soy markets overnight amid ongoing macroeconomic unease. As of 6:30 a.m. CT, corn futures are trading 6 to 7 cents lower, soybeans are 8 to 12 cents lower, winter wheat futures are 8 to 12 cents lower and spring wheat is 6 to 8 cents lower. Front-month crude oil futures are around $1 lower and the U.S. dollar index is down around 175 points this morning.
Banking sector unease continues... Swiss banking firm UBS acquired Credit Suisse over the weekend to try to stabilize the European banking system following the collapse of two big U.S. banks. However, the move did little to boost trader and investor confidence and banking stocks across the globe are sinking. Investor Mark Grant told CNBC when asked about the banking crisis: “It’s going to get worse. It’s going to be messy.” The Federal Reserve and the central banks of Britain, Canada, Japan, Switzerland and the EU announced coordinated measures to boost liquidity and “ease strains in global funding markets.” In a joint announcement, the central banks said they would switch from weekly to daily dollar auctions. The policy, which was last implemented at the beginning of the Covid-19 pandemic, will help lenders around the world access dollars, the banks said.
Why farmers and others should be watching the impact of some failing banks... Smaller banks are likely to respond to recent turmoil in the sector by tightening standards and slowing lending to raise capital ratios. That could make it harder for American families and businesses to get a loan.
Black Sea grain deal extended at least two months... The Black Sea grain deal was renewed on Sunday for at least 60 days, though the actual length of the extension was uncertain. The United Nations and Turkey said the deal had been extended but did not specify for how long. Ukraine said it had been extended for 120 days. But Russia’s foreign ministry says the deal will continue under the existing parameters for 60 days and says it will long agree to an extension in May if issues around the Swift financial messaging system are resolved and other restrictions are lifted.
Ukraine’s grain and oilseed crop to decline 10%... Ukraine’s 2023 combined grain and oilseed production is seen falling to a preliminary 63 MMT from 70 MMT last year, Ukrainian Agriculture Minister Mykola Solsky told Reuters. Solsky said the area planted to winter grains appeared to be slightly higher than the ministry expected.
Rains in Argentina, drier conditions in Brazil... Significant rain fell in southern Argentina during the weekend and central Argentina will get significant rain during the middle of this week, according to World Weather Inc. However, the rains will be too late for much of the country’s crops after prolonged drought. In Brazil, soybean harvest and safrinha corn planting are likely to advance amid drier conditions from northern Rio Grande do Sul and southern Mato Grosso do Sul through Parana and Sao Paulo to southern Minas Gerais.
China keeps rates unchanged... The People’s Bank of China kept its benchmark lending rates unchanged for the seventh straight month in March. The one-year loan prime rate (LPR) was kept at 3.65%, while the five-year LPR was unchanged at 4.30%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
The week ahead in Washington... The Biden EPA’s new definition of Waters of the U.S. (WOTUS) takes effect today. It will be a key topic Wednesday when EPA Administrator Michael Regan appears before the Senate Environment and Public Works Committee. Hearings on a new farm bill continue this week with the House Agriculture Committee holding a subcommittee hearing on research programs on Thursday. The economic focus will be Wednesday’s Fed decision on interest rates. Markets are currently pricing in slightly greater odds of a 25-basis-point increase over holding rates steady. Key ag data includes Thursday’s Cold Storage Report and Friday’s updated food price outlook forecasts.
CFTC again delays COT report... After issuing several reports over the past few weeks in a delayed fashion following a cyberattack at ION that prevented the submission of timely and accurate data to the Commodity Futures Trading Commission (CFTC), expectations were CFTC would release the Commitments of Traders (COT) report on March 17 which would have returned the agency to a regular publishing schedule. However, CFTC announced Friday that “staff will not issue the Commitments of Traders report as data for this week will need to be reviewed and validated. CFTC intends to sequentially issue the missed COT reports, subject to reporting firms submitting accurate and complete data.”
China sells nearly all wheat put up for auction... China sold 136,815 MT of state-owned wheat reserves put up for auction – 96.9% of the total offered for sale. The average selling price was 2,799 yuan ($406.75) per metric ton.
China’s pork imports stay strong to start 2023... China imported 380,000 MT of pork in January and February combined, up 35.8% from the same period in 2022. China’s pork imports increased late last year and are expected to climb this year, especially with the country reportedly fighting a new outbreak of African swine fever.
Neutral Cattle on Feed Report... Last Friday’s Cattle on Feed Report showed the March 1 feedlot inventory down 4.5% from year-ago, which was in line with expectations. However, both placements and marketings in February were a little shy of the average pre-report expectations at 7.2% and 4.9% under year-ago levels, respectively. Market reaction should be limited.
Wholesale pork weakness continues... The pork cutout value fell $3.54 on Friday and movement totaled only 245.6 loads. While the cash market continues its slow-and-steady climb and April lean hog futures finished last Friday below today’s cash index quote, buyer interest will be limited until the product market stabilizes.
Weekend demand news... Taiwan tendered to buy 56,300 MT of U.S. 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
- 10:00 a.m. Export Inspections — AMS
- 2:00 p.m. Milk Production — NASS