Good morning!
Mostly firmer tone this morning... Price action was light and two-sided overnight, but a mostly firmer tone has developed this morning. As of 6:30 a.m. CT, corn futures are trading 1 to 4 cents higher, soybeans are 2 to 4 cents higher, SRW wheat futures are around 2 cents higher, HRW wheat is 5 to 7 cents higher and HRS wheat is mostly 1 to 2 cents higher. Front-month crude oil futures are around 65 cents higher and the U.S. dollar index is about 225 points lower.
Argentine grain inspectors to launch strike... Argentina’s grains inspectors union said it will launch an indefinite strike over wage demands starting after midnight tonight. The URGARA union is an association of grain technicians who analyze grains held in storage and loaded on ships, so their strike could affect the country’s grain movement. The union said the strike, which will follow the expiration of a government-mandated conciliation period, would target grains storage facilities rather than ports.
Weekly Export Sales Report out this morning... For the week ended March 23, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | 600,000-1,800,000 | 3,095,895 | 50,000-300,000 | 93,049 |
Wheat | 125,000-300,000 | 125,568 | 0-150,000 | 13,000 |
Soybeans | 100,000-600,000 | 152,479 | 50,000-300,000 | 199,000 |
Soymeal | 75,000-250,000 | 121,094 | 0-50,000 | 0 |
Soyoil | 0-20,000 | 10,823 | 0-10,000 | 0 |
EU raises wheat production, export forecasts... The European Commission raised it 2022 wheat production estimate by 1 MMT to 127 MMT. The commission hiked its 2022-23 EU wheat export forecast by 4 MMT to 36 MMT.
WSJ: Small banks are losing to big banks; their customers are about to feel it... The collapse of Silicon Valley Bank and Signature Bank is testing Americans’ faith in the regional and community banks that supply credit to a big chunk of the nation’s entrepreneurs and businesses, including many in the ag sector. The 25 biggest U.S. banks gained $120 billion in deposits in the days after SVB collapsed, according to Federal Reserve data. All the U.S. banks below that level lost $108 billion over the same period, the largest weekly decline in smaller banks’ deposits in dollar terms on record. The Wall Street Journal (WSJ) reports “the panic has subsided, but the deposit swings could have long-lasting repercussions for the communities served by smaller banks. Banks need deposits to make loans; if deposits fall, lending is almost sure to follow.”
WSJ: A slow-motion banking crisis... In recent decades financial crises have tended to be fast-moving and violent. They usually revolve around a handful of companies or countries, and often climax over a weekend, before Asian markets open. That template is grounds for hope that the worst of the current turmoil may have passed. But Wall Street Journal writer Greg Ip writes that another template is also possible: “a corrosive, slow-motion crisis that could force many banks in coming years to shrink or be acquired, a process that also hampers the supply of credit.”
Senate votes to repeal Biden/EPA WOTUS rule... The Senate on Wednesday passed a resolution, 53–43, to repeal a Biden administration regulation of U.S. waters and wetlands — the Waters of the U.S. (WOTUS) rule. The disapproval resolution passed the House on March 9, 227–198. It was passed in accordance with the Congressional Review Act, which allows Congress to strike down regulations within 60 days of passage. However, President Joe Biden is expected to veto the resolution. It is unlikely Republicans would get the needed two-thirds majority to override a veto.
DOE releases offshore wind energy strategy... The Department of Energy (DOE) Wednesday released its Offshore Wind Energy Strategy outlining the administration’s plans to meet a goal of deploying 30 gigawatts (GW) of offshore wind energy by 2030 and 110 GW or more by 2050. There are currently 40 GW of offshore wind in various stages of development. One of the goals in the strategy is to lower costs for the effort, from $73 per megawatt-hour (MWh) to $51 per MWh by 2030, and to develop a domestic supply chain, and inform sustainable deployment of fixed-bottom offshore wind. The plan also aims to reduce floating offshore wind energy efforts costs by over 70% to $45 per MWh by 2035.
Time for checkoff reform... More than 130 agricultural and food groups want the House and Senate Agriculture committees to tighten the rules governing checkoff programs. The coalition supports the Opportunities for Fairness in Farming Act, which would prohibit checkoff programs from contracting with organizations that lobby on agricultural policy and require them to publish checkoff program budgets and expenditures. Publishing such information could prove very revealing for a few groups.
H&P Report expected to show contraction phase has ended... USDA’s Hogs & Pigs Report this afternoon is expected to show the hog herd was fractionally bigger than last year as of March 1, according to a Reuters survey of analysts. All hogs and pigs are expected to be up 0.2%, with the market hog inventory 0.2% bigger and the breeding herd 0.5% larger than last year. The winter pig crop is also expected to be 1.2% larger than last year, while producers are likely to indicate they intend to marginally increase spring and summer farrowings.
Not if cash cattle will strengthen, but how much... Mildly bullish cash cattle hopes to open the week have been augmented by futures price action. After starting the week at a discount to last week’s average cash price, April live cattle futures finished yesterday at a $1.415 premium to that level. While that’s not a huge premium, it reflects building attitudes. Cash sources now signal it’s just a matter of how much packers raise cash cattle bids for the week.
Cash hog market weakens again... The CME lean hog index is down another 25 cents, marking the eighth consecutive daily decline. The weakening cash market is pressuring futures. April lean hog futures finished Wednesday 77.5 cents above today’s cash quote (as of March 28). Until the cash market finds its secondary low and starts a seasonal climb, buyer interest will remain limited in futures.
Overnight demand news... Turkey purchased 395,000 MT of milling wheat from unspecified origins.
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
- 2:00 p.m. Fruit and Tree Nuts Outlook: March 2023 — ERS
- 2:00 p.m. Rice Yearbook — ERS
- 2:00 p.m. Egg Products — NASS
- 2:00 p.m. Hogs and Pigs — NASS