Good morning!
Quiet price action overnight... Soybeans extended Monday’s strong gains overnight, while corn modestly pulled back and wheat traded narrowly on both sides of unchanged. As of 6:30 a.m. CT, corn futures are trading around a penny lower, soybeans are 6 to 7 cents higher and wheat futures are a penny lower to 2 cents higher. Front-month crude oil futures are modestly firmer and the U.S. dollar index is down more than 250 points.
HRW conditions modestly improve during March but still historically low... Individual state crop conditions ratings showed modest improvement in the HRW wheat crop during March. The “good” to “excellent” ratings for HRW wheat stood at 19% in Kansas (unchanged from the end of February), 34% in Oklahoma (down two points), 18% in Texas (down one point), 28% in Colorado (down one point), 22% in Nebraska (up three points), 22% in South Dakota (down one point) and 31% in Montana (up 10 points). When the updated crop condition ratings were plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the HRW crop improved 3.4 points from the end of February to a rating of 267.5. The HRW crop went into dormancy with the lowest fall CCI rating on record of 280.3.
Consultant keeps South American crop estimates unchanged... Argentina received its best rains of the growing season last week. While they were too late for some of the crop, the rains should help later-maturing soybeans and corn. As a result, South American crop consultant Dr. Michael Cordonnier left his Argentine soybean and corn crop estimates at 26 MMT and 36 MMT, respectively. Cordonnier also left his Brazilian production estimates unchanged at 151 MMT for soybeans and 121 MMT for corn.
Poland, Romania want EU to trace Ukrainian grain exports... Romania and Poland are in talks with the European Commission over export tracing mechanisms for Ukrainian grains to ensure local farmers are not hurt by a flood of cheap imports. Large quantities of Ukrainian grains, which are cheaper than those produced in the European Union, have ended up in central European states, hurting prices and sales of local farmers.
Indonesia’s CPO export tax and levy to remain unchanged... Indonesia plans to set its crude palm oil (CPO) reference price for April 1-15 at $898.29 per metric tons, a senior ag ministry official said. That price would put the export tax and levy at $74 and $95 per metric ton, respectively, unchanged from the current level.
Regan to testify before Congress again today... EPA Administrator Michael Regan heads back to the Hill today to justify the administration’s fiscal year 2024 budget request, this time before House appropriators. Republicans are expected to grill him aggressively on why the agency needs a 19% funding boost, as laid out in President Joe Biden’s budget request. Last week, Regan told the Senate Environment and Public Works Committee that the White House’s $12 billion budget request is needed to address longstanding problems like crumbling wastewater infrastructure and historical pollution in neglected communities. Also, EPA’s controversial action on a new Waters of the U.S. (WOTUS) ahead of a coming Supreme Court decision on the matter will also be raised during the hearing.
Senate to consider WOTUS measure... The Senate will vote Wednesday on a measure blocking the Biden administration’s new rule defining water subject to certain environmental regulations. “I think we’re going to be successful,” sponsor Sen. Shelley Moore Capito (R-W.Va.) said. But President Biden has already indicated he will veto the measure if it gets to him. It has already cleared the House.
Total ERP Phase 1 payments edge higher... Payments under Phase 1 of USDA’s Emergency Relief Program (ERP) totaled $7.42 billion as of March 26, up slightly from $7.41 billion the prior week. Payments for non-specialty crops totaled $6.29 billion with specialty crop payouts at $1.13 billion. There are now 10 applications approved for ERP Phase 2 payments totaling $17,302. Payments under the Coronavirus Food Assistance Program (CFAP) efforts were steady with the prior week.
USDA announces second installment of debt relief... USDA announced another $123 million in payments will be made in April under the Inflation Reduction Act (IRA) to provide debt relief for borrowers. Focus for the second round of payments is on those who were past due on a qualifying direct loan as of Sept. 30, 2020, but by fewer than 60 days and are still delinquent; those who restructured a qualifying loan after Feb. 28, 2020, through primary loan servicing at FSA; and those who owe more interest on a direct loan than the level of principal owed. The agency is still working on the payments that are to go to farmers who suffered discrimination in FSA loan programs. This falls under some $3.1 billion in debt relief that was included in IRA.
NCBA: APHIS risk analysis is dated... USDA’s Animal and Plant Health Inspection Service (APHIS) is proposing to amend its regulations to allow the importation of fresh (chilled or frozen) beef from Paraguay. APHIS said: “Based on the evidence from a risk analysis, we have determined that fresh beef can safely be imported from Paraguay, provided certain conditions are met. This action would provide for the importation of fresh beef from Paraguay into the United States while continuing to protect the United States against the introduction of foot-and-mouth disease.” But NCBA Executive Director of Government Affairs Kent Bacus said, “Paraguay has a history of outbreaks of foot-and-mouth disease, and we cannot jeopardize the safety of U.S. consumers and the health of our U.S. cattle herd with outdated information.” Comments are due by May 26.
USDA considering petition on ‘free range,’ ‘pasture-raised’ claims for meat, poultry... USDA’s Food Safety and Inspection Service (FSIS) is considering a petition from Perdue Farms that the agency “conduct rulemaking to define separate ‘free range’ and ‘pasture raised’ claims for meat and poultry products,” the agency said. Perdue is also asking FSIS to update guidance on claims related to living/raising conditions to ensure that they align with consumer expectations. The company submitted the petition March 16, which specifically calls on FSIS to “promulgate labeling regulations under the Poultry Products Inspection Act (PPIA) that remove ‘pasture-raised’ from claims considered synonymous with ‘free range’ and further amends its current Compliance Guideline such that ‘pasture-raised’ is separately and specifically defined.” Perdue argues that the two phrases need to have separate definitions as there is “substantial confusion” relative to what constitutes pasture raised. The company based its petition on consumer research, which it detailed in the petition for the rulemaking request.
Japan lifts long-standing ban on Canadian beef... Japan removed restrictions on Canadian processed beef imports that have been in place since a 2003 case of bovine spongiform encephalopathy. The deal lifts age limits on Canadian beef that can be shipped to Japan and removes restrictions on processed items like beef patties. Canada still exported $379.29 million in beef to Japan in 2022 despite the restrictions, making it the second largest export destination for Canadian beef. Japan’s lifting of restrictions comes as it is scheduled to reduce tariffs on beef imports starting April 1 under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a trade pact of which Canada is a member.
Higher cash cattle expectations... Cash cattle averaged $164.41 last week, up 24 cents from the previous week. While packers bought a strong 85,000 head of cattle, including 21,000 for delayed delivery, cash sources expect prices to be steady/firmer again this week amid tight market-ready supplies. April live cattle futures pushed out to a slight premium to the cash market with Monday’s strong gains, but the higher cash expectations open the door for more upside.
April hogs now premium to cash index... The CME lean hog index is down another 42 cents to $76.57 (as of March 24), the sixth straight daily decline. The weakening cash market along with strong gains in futures on Monday pushed the April contract to a $2.055 premium to today’s cash quote. Traders will likely want to see the cash market stabilize before they build in much more premium.
Overnight demand news... Turkey provisionally bought 535,000 MT of milling wheat with more purchases expected in the tender for up to 695,000 MT.
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
- 11:00 a.m. State Stories — NASS
- 2:00 p.m. Livestock and Meat Domestic Data — ERS