Good morning!
Two-sided trade overnight... Corn, soybeans and wheat traded on both sides of unchanged overnight in relatively quiet price action. As of 6:30 a.m. CT, corn and soybean futures are narrowly mixed, SRW wheat futures are 4 to 5 cents lower, HRW wheat is 7 to 10 cents lower and HRS wheat is steady to 2 cents higher. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is around 100 points lower this morning.
Argentina to remain mostly dry, Brazil stays wet... Argentina will see restricted rainfall during the next 10 days in central and southern areas while rain is expected later this week in northern locations, according to World Weather Inc. The forecaster says Brazil will see rain periodically in all crop areas during the next couple of weeks except in Bahia, northeastern Minas Gerais and Espirito Santo.
Brazil soybean harvest, safrinha corn planting remain delayed... As of last Thursday, Brazil had harvested 33% of its soybean crop, according to AgRural, 10 percentage points behind last year. Safrinha corn planting advanced to 55%, though that was eight points behind last year. AgRural says the main areas of concern with soybean harvest and safrinha corn planting are in Paraná and Mato Grosso do Sul.
HRW areas receive rains... Thunderstorms occurred overnight in western hard red winter wheat areas of the Plains, with beneficial rains from western Kansas southward into the Texas Panhandle. The heaviest amounts were seen across eastern HRW areas. West Texas will receive some rains this week but will stay mostly dry over the next 10 days.
Ukraine grain exports drop 27%... So far in 2022-23, Ukraine exported 31.8 MMT of grain, down 27% from the same period last year, according to the country’s ag ministry. The total included 18 MMT of corn, 11.2 MMT of wheat and 2 MMT of barley.
U.S. warns China of ‘real costs’ if it provides Russia with arms... The U.S. again warned China it would face “real costs” if it provided arms to support Russia’s invasion of Ukraine. Jake Sullivan, the White House’s national-security adviser, told ABC News while China had not yet moved forward in sending weapons, it could not be ruled out. Meanwhile, Michael McCaul, a senior Republican legislator, said he had seen reports that China was “contemplating sending 100 drones into Russia.”
The week ahead in Washington... Lawmakers are back in session and will focus on: 1) Eventual need to either hike or postpone the debt limit; 2) Work on fiscal year 2024 appropriations bills; and 3) continue hearings and behind-the-scenes work on a new farm bill. Food stamps/SNAP will be back in the news this week, and not just because of the traditional new farm bill debate about its funding. As of March 1, the emergency allotment for individuals and households enrolled in the federal Supplemental Nutrition Assistance Program, or SNAP, will end in 32 states, the District of Columbia, Guam and the U.S. Virgin Islands. On the economic front, markets will closely monitor comments from several Fed officials in their speeches this week.
Inflation may linger, be more painful than many think... A paper presented Friday at the Booth School of Business Monetary Policy Forum in New York argued that disinflation will likely be slower and more painful than markets anticipate. “Significant disinflations induced by monetary policy tightening are associated with recessions,” said the paper. “An ‘immaculate disinflation’ would be unprecedented.” (Immaculate, in this instance, refers to the possibility of inflation falling quickly to the Fed’s 2% goal without any serious economic damage). Several Fed presidents, governors and top economists were on hand at the Booth School forum to discuss the paper and monetary policy. The majority of those speaking expressed deep concern about the stubbornness of inflation and general market reaction.
Three NATO nations float defense pact... With Russia’s invasion into its second year, NATO’s largest European members — the U.K., France and Germany — are floating a defense pact with Ukraine as a way to prod Kyiv toward peace talks with Moscow, the Wall Street Journal reports.
China again sells all wheat put up for auction... China sold all 141,751 MT of state-owned wheat reserves put up for auction last week. The average sales price was 2,848 yuan ($409.50) per metric tons.
U.S. regains its energy clout... A year of war in Ukraine has highlighted the return of oil as a source of U.S. financial influence and geopolitical power. As the West has shunned most Russian energy, unleashing a pressure campaign against the Kremlin’s petroleum revenues, record U.S. crude exports have helped fill the gap in Europe with the oil needed to produce gasoline, diesel and jet fuel, the Wall Street Journal reports. Meanwhile, the White House says U.S. natural gas shipments to Europe more than doubled last year. The result is that booming trans-Atlantic shipments are attracting oil speculators and Gulf Coast ports are expanding infrastructure to service demand. “America is back in the most predominant position it has been in world energy since the 1950s,” says Daniel Yergin, an energy historian and vice chairman of S&P Global.
Mildly bullish COF data... Last Friday’s Cattle on Feed Report showed all three categories on the bullish side of the average pre-report estimates. USDA reported the Feb. 1 feedlot inventory at 95.9%, January placements at 96.4% and last month’s marketings at 104.2% of year-ago levels. While the report data was mildly friendly compared to the pre-report expectations, the underlying numbers are fully bullish as feedlot supplies and available calves for placement on feed continue to tighten.
Cold Storage data supportive for beef... USDA’s Cold Storage Report showed beef stocks dropped contra-seasonally during January, while pork inventories climbed slightly more than average. Beef stocks at the end of January totaled 532.7 million lbs., down 11.2 million lbs. (2.6%) from December. The five-year average was a 7.7-million-lb. increase in beef stocks during the month. Pork stocks totaled 517.7 million lbs., up 61.3 million lbs. (13.4%) versus December, whereas the five-year average was a 54.6-million-lb. increase during the month.
Weekend demand news... South Korea tendered to buy 85,000 MT of milling wheat to be sourced from the U.S. or Canada.
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. Chickens and Eggs — NASS
- 2:00 p.m. Peanut Stocks and Processing — NASS
- 2:00 p.m. Trout Production — NASS