Good morning!
Quiet trade ahead of USDA reports... Price action was relatively quiet in the grain and soy markets overnight as traders await key USDA report data later this morning. As of 6:30 a.m. CT, corn futures are trading around a penny higher, soybeans are 1 to 3 cents higher, winter wheat futures are 3 to 4 cents lower and spring wheat is 6 to 7 cents lower. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is about 250 points higher.
Prospective Plantings, Grain Stocks Reports out this morning... Based on a Reuters survey, traders expect planting intentions of 90.880 million acres for corn, 88.242 million acres for soybeans, 47.771 million acres for all wheat, 11.801 million acres for other spring wheat and 11.212 million acres for cotton. March 1 stocks are expected to be 7.470 billion bu. for corn, 1.742 billion bu. for soybeans and 934 million bu. for wheat. These reports have generated some major price moves for the corn and soybean markets, with March 1 stocks being the primary price driver for corn and plantings historically having a greater influence on the post-report moves in soybeans.
Contentious exchanges, issues at latest hearing with Vilsack... Odds are rising there will be no new farm bill this year unless some of the volatile remarks and issues that surfaced at a Thursday hearing can be resolved. House Agriculture Appropriations Subcommittee Chairman Andy Harris (R-Md.,) roundly criticized USDA Secretary Tom Vilsack during a hearing on President Biden’s fiscal year (FY) 2024 budget request. Vilsack again noted that despite record farm income, 50% of farmers in the country are not making money, 40% are making most of their profit from off-farm jobs and only the 10% of farmers who are selling more than $1 million in products each year are making substantial incomes. Vilsack said those statistics mean it is important to find ways for farmers to receive additional streams of income. Vilsack said one way to help them is by “creating more value-added propositions, creating a different market, a new commodity, and that’s essentially what USDA did. And it’s essentially what the charter of the Commodity Credit Corporation provides for.” We’ll have further details of the hearing in Evening Report.
Euro zone inflation posts record decline in March, but core prices rise... Euro zone consumer prices rose 6.9% annually in March, down sharply from the 8.5% jump the previous month. That was the largest decline in consumer inflation since Eurostat started collecting data in 1991. But core prices excluding energy and food costs increased 7.5%, up from the 7.4% annual increase in February.
Chinese factory growth slows in March... China’s official manufacturing purchasing managers index (PMI) declined to 51.9 in March from the 11-month high of 52.6 in February, but that still represented expansion in the factory sector for a third straight month. Output (54.6 vs. 56.7 in February), new orders (53.6 vs. 54.1), and export sales (50.4 vs. 52.4) all rose at slower paces in March. In contrast the non-manufacturing PMI jumped to 58.2 versus 56.3 in February, reaching the highest level since May 2011 as the services sector recovered.
China must strengthen fiscal policy... China needs to step up fiscal policy assistance for its economy, Vice Finance Minister Zhu Zhongming said, adding the country will move steadily on implementing preferential tax and fee policies. China will effectively ease tax burdens of small firms and household businesses as they still face many difficulties and need more support, Zhu said. On Monday, the finance ministry issued a preferential tax policy for some small firms and household businesses, including levying a 20% income tax for small firms with annual sales not exceeding 1 million yuan ($145,808.73). That tax policy will lower companies’ burdens by more than 480 billion yuan per year, Zhu said.
USDA expands Margin Protection crop insurance coverage for 2024... USDA’s Risk Management Agency (RMA) announced the expansion of Margin Protection (MP) under the crop insurance program to make the coverage available in more counties in the U.S. starting with 2024 crops. The expansion would add 1,255 counties for soybeans and 1,729 counties for corn, making the coverage available in 22 states for soybeans with 34 states being covered in total. It would also make it available for select counties for rice (Arkansas, California, Louisiana, Mississippi, Missouri, and Texas), and wheat (Minnesota, Montana, North Dakota, and South Dakota).
Neutral H&P Report... USDA’s Hogs & Pigs Report estimated the March 1 U.S. hog herd at 72.86 million head, up 171,000 head (0.2%) from year-ago. The breeding herd at 6.127 million head increased 0.5% and the market hog inventory rose 0.2%. All of those categories were in line with the average pre-report trade estimates. Market hog inventories for the three lightest categories were smaller than anticipated, while spring and summer farrowing intentions were lower than expected, but that won’t likely have much if any market impact.
Cash cattle trade sharply higher... Cash cattle trade started at $167 in the Southern Plains and as much as $170 in the northern market Thursday – up sharply from last week’s average of $164.41. Some feedlots reportedly passed on those prices in hopes of even stronger bids. Despite the strong gains so far this week, April futures could further extend to the upside based on Thursday’s cash trade.
Cash hog slide continues... The CME lean hog index is down another 23 cents, extending the slide to a nineth straight day. At $75.77 (as of March 29), the cash index is down $4.24 from its mid-March peak but still $3.66 off the January low. April hog futures finished Thursday 68 cents above today’s cash quote.
Overnight demand news... Exporters reported no tenders or sales.
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. Grain Stocks — NASS
- 11:00 a.m. Prospective Plantings — NASS
- 11:00 a.m. Rice Stocks — NASS
- 2:00 p.m. Agricultural Prices — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC