Good morning!
Selloff in soybeans continues... Soybeans’ attempt at a corrective rebound overnight proved futile and the market is under solid pressure this morning. Corn futures traded both sides of unchanged, while wheat firmed overnight. As of 6:30 a.m. CT, corn futures are trading 1 cent lower to 1 cent higher, soybeans are mostly 8 to 10 cents lower and wheat futures are 6 to 9 cents higher. Front-month crude oil futures are around $2.75 lower and the U.S. dollar index is more than 600 points higher this morning.
Russia may temporarily halt wheat, sunflower exports... Russia could recommend a temporary halt in wheat and sunflower exports after a sharp drop in global prices in recent weeks, the Vedomosti newspaper reported, citing two sources who attended a government meeting. The newspaper said Russia’s ag ministry would meet industry representatives soon to discuss the idea of a temporary curb on exports. Russia said earlier this week it would look to more than triple purchases of grain for the state reserve fund to 10 MMT.
Black Sea grain shipments ensured but there are risks... Ships carrying cargoes from Ukraine’s three Black Sea ports covered under the grain export deal continued to be insured. But the shorter renewal term raises concerns over forward shipments beyond the 60-day period, according to Lloyd’s of London. An official with the insurer told Reuters, “There is clearly underlying risk that if events change and somebody wanted to sink a ship to make a point, that clearly our appetite for continuing with those kind of risks might change.”
Zeihan: Russia will target Ukraine agriculture next... Peter Zeihan, a geopolitical strategist, speaker, and author who specializes in global energy, demographics, and security, said: “With winter on the way out and summer just around the corner, the Russians are revaluating their strategy. Targeting power infrastructure may have worked during the winter, but it doesn’t make much sense for the warmer months... it appears the new target will likely be Ukrainian agriculture. We’ve already seen the Russians change the renegotiation period of the grain deal from 120 days to 60 days, and I wouldn’t be surprised if March is the last time the Russians resign. So Ukrainian exports might fall off very soon, but can the rest of the world’s (already struggling) agriculture industry pick up the slack?”
Deutsche Bank the latest banking concern... Deutsche Bank’s shares and bonds are selling off, as investors turn wary on other European banks in the aftermath of Credit Suisse’s troubles. Deutsche Bank’s 5-year credit-default swaps widened on Thursday, in what Reuters reported was the largest one-day rise in its history. But Deutsche Bank’s 5-year credit-default swap, which was 222 this morning, is nowhere near the peak for Credit Suisse, which was 1,194, according to S&P Global data. The higher the value of the CDS, the more likely the market sees the issuer defaulting.
Senators call on failed bank CEOs to testify... In a letter to the CEOs of Silicon Valley Bank and Signature Bank, Senate Banking Committee Chair Sherrod Brown (D-Ohio) and top Republican Sen. Tim Scott (S.C.) called on them to answer questions before the committee and rejected claims that doing so would reveal confidential details. Brown announced a March 28 hearing on the banks’ collapse with officials from Treasury, FDIC and the Federal Reserve. The CEOs previously declined to testify.
Yellen: IRS plan on $80 billion out shortly... More details about the IRS’s efforts are expected to be detailed in the agency’s forthcoming plan for spending $80 billion in funding from the massive climate and tax law. Yellen said at a Senate Appropriations Committee hearing the plan isn’t final yet but should be released in short order. National Taxpayer Advocate Erin Collins said she hopes the IRS’s spending plan is made public in April.
Japan’s consumer inflation eases... Japan’s core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 3.1% in February from a year earlier, slowing sharply from a 41-year high of 4.2% in January. The “core-core” index that strips out both fresh food and fuel costs rose 3.5% in February, up from a 3.2% gain in January.
ESG rule survives override... House Republicans failed in their effort to reverse President Joe Biden’s veto of legislation that would have blocked a U.S. Labor Department Labor rule that permits socially conscious retirement investing (ESG). The override attempt came up short with a 219-200 vote Thursday, with Rep. Jared Golden (Maine) being the sole Democratic defection. The vote didn’t reach the two-thirds majority threshold necessary to overturn a presidential veto.
Traders likely to ignore Cold Storage data... Thursday’s Cold Storage Report was favorable as it showed beef stocks declined more than average in February, while pork stocks rose last month though less than normal. The data reflected reduced meat production but also solid beef demand. With cattle and hog traders focused on factors aside from fundamentals, however, the report data isn’t likely to have much if any market impact.
Choice beef firms again... Choice boxed beef prices backed up Wednesday’s $1.38 gain with a $1.48 increase yesterday. Just as importantly, packers moved 266 loads the past two days. That suggests prices got low enough to spark active retailer buying. Retailers are likely starting their seasonal purchases for the end of Lent and beginning of the grilling season.
Another decline in cash hog index... The CME lean hog index is down another 44 cents to $77.39 (as of March 22) and has fallen $2.62 the last four days. April futures finished Thursday $1.64 below today’s cash quote, signaling traders still have bearish attitudes toward the cash market. The contract is also sharply oversold based on short-term momentum indicators.
Overnight demand news... Taiwan purchased 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
- 8:00 a.m. Food Price Outlook — ERS
- 2:00 p.m. Peanut Prices — NASS
- 2:00 p.m. Poultry Slaughter — NASS
- 2:30 p.m. Commitments of Traders — CFTC