Good morning!
Mildly weaker tone this morning... Corn, soybeans and wheat faced light selling pressure during a relatively quiet overnight session. As of 6:30 a.m. CT, corn futures are trading mostly 1 to 2 cents lower, soybeans are 3 to 4 cents lower and wheat futures are 3 to 6 cents lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is slightly higher.
March S&D Report out later this morning... USDA’s Supply & Demand Report at 11 a.m. CT is expected to feature minor fine tuning to its domestic usage forecasts, with the biggest changes anticipated to be on the corn balance sheet. Traders expect 2022-23 U.S. ending stocks to come in at 1.308 billion bu. for corn (up 41 million bu. from February), 220 million bu. for soybeans (down 5 million bu.) and 573 million bu. for wheat (up 5 million bu.). Much of the focus will be on USDA’s South American production forecasts, especially for Argentina. Expected cuts to the Argentine crop estimates are likely to decrease USDA’s global corn and soybean ending stocks forecasts for 2022-23.
Argentina’s soybean crop could decline to 25 MMT... Argentina’s soybean production could fall as low as 25 MMT, according to the head of Oil World, as the crop continues to struggle with weather stress. Thomas Mielke, the head Oil World, also said China’s soybean imports could rise to 97.2 MMT in 2022-23, up from 91.6 MMT the previous year. He also noted global vegoil prices could rise in the second half of this year and 2024 on rising biofuel demand.
Bioceres to market GMO wheat in Argentina this year... Biotech firm Bioceres plans to increase production of its genetically modified HB4 wheat in Argentina with improved drought resistance, its chief executive told Reuters, following a key approval in Brazil and amid a lack of rainfall that is causing losses in the region. Bioceres CEO Federico Trucco told Reuters the company will start commercializing HB4 wheat in Argentina this year, although it would be mainly focused on working with “seed multipliers” to increase seed stocks.
Negative PDO could have strong influence on spring/summer weather... Changing ocean surface temperatures from the tropical eastern Pacific Ocean to the north-central and northeastern parts of the Pacific are expected to have great influence on world weather in the next few months. World Weather Inc. says, “The negative phase of Pacific Decadal Oscillation (PDO), an ocean/atmosphere phenomenon influencing North America since 2020, has intensified in recent weeks while La Niña conditions have nearly dissipated from an ocean temperature anomaly perspective. Concern about a strong negative PDO may rise during the spring and summer because sometimes that pattern can help induce a warmer and drier weather scenario in central parts of the United States during the summer season.”
House Ag panel to consider FY 2024 budget letter... The panel will hold a business meeting on Thursday for “consideration of the budget views and estimates letter of the Committee on Agriculture for fiscal year 2024,” House Ag Chairman Glenn “GT” Thompson (R-Pa.) announced Tuesday. Something farmers and farm groups should clearly like: The letter stresses production agriculture, Title I and the importance of funding the farm safety net. Click here for more details.
Yield curve warns of likely recession... The yield on two-year Treasury notes climbed to 5.011% on Tuesday, its highest since mid-2007, following hawkish comments from Fed Chair Jerome Powell, who signaled the Fed is prepared to return to bigger interest rate increases if data warrants. The two-year yield finished more than a percentage point above the 10-year yield, the biggest such gap since September 1981 — an inverted yield curve — and a level which according to Deutsche Bank strategists signals recession within a maximum of eight months.
End of the shale era is coming... The boom in U.S. oil production over the last decade is waning. Frackers are hitting fewer gushers and existing wells are producing less, the Wall Street Journal reports. That could eventually raise oil prices as drillers are forced to rely on lower quality wells that would be more expensive to pump.
German retail sales unexpectedly fall... Retail sales in Germany declined 0.3% on a monthly basis and 6.9% annually in January, following a 5.3% slump in December, as high inflation and uncertainty weigh on consumers’ mood. Economists expected a 2% increase in retail sales. Meanwhile, German industrial output rose 3.5% in January from the previous month, following a 2.4% decline in December. The surge was driven by an increase in production of electronic equipment and chemicals, although other sectors, such as the motor industry, saw a significant decline.
New reports on Nord Stream pipeline explosions... New reports surfaced on the underwater explosions in the Baltic Sea, which last September blew giant holes in both Nord Stream 1 pipelines and one of the two Nord Stream 2 pipelines. German public broadcasters ARD and SWR and newspaper Die Zeit on Tuesday evening published reports citing unnamed officials claiming Western intelligence services have traced the attacks to a “Pro-Ukrainian group.” The New York Times had similar revelations.
Feeder cattle surging... The CME feeder cattle index has broken out to the upside recently, surging to the highest level since fall 2015. Not only will feeder cattle supplies remain tight, but the recent decline in corn prices has sparked increased demand for feeders. While futures hold premiums, the recent surge in the cash index remains price-supportive.
Retailers respond to dip in wholesale pork price... The pork cutout value slipped 31 cents on Tuesday as all cuts except picnics and hams declined. The modest drop in the wholesale price spurred an increase in movement, as packers moved 312 loads of product on the day, signaling there’s solid retailer buying under the market.
Overnight demand news... South Korea purchased 65,000 MT of corn expected to be source from South America and another 117,000 MT of optional origin corn. Taiwan purchased 52,000 MT of corn expected to be sourced from South Africa. Jordan tendered to buy up to 120,000 MT of optional origin milling wheat. Tunisia purchased 100,000 MT of durum 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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. WASDE — WAOB
- 11:00 a.m. Cotton Ginnings — NASS
- 11:00 a.m. Crop Production — NASS
- 11:15 a.m. Cotton: World Markets and Trade — FAS
- 11:15 a.m. Grains: World Markets and Trade — FAS
- 11:15 a.m. Oilseeds: World Markets and TradeFAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. U.S. and Canadian Cattle and Sheep — NASS
- 2:00 p.m. U.S. and Canadian Hogs — NASS