Good morning!
Grains mostly weaker overnight... Corn and soybeans faced mild followthrough selling during the overnight session. Wheat traded mostly lower overnight, though SRW wheat futures have firmed this morning. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are 3 to 4 cents lower, SRW wheat is steadyt to a penny higher, HRW wheat is mostly a nickel lower and HRS wheat is 2 cents lower. Front-month crude oil futures are more than $1.00 lower and the U.S. dollar index is nearly 100 points higher.
Pathway for corn, soybeans to qualify for SAF credits... As we reported in “Evening Report” yesterday, Treasury and IRS issued updated guidance on the sustainable aviation fuel (SAF) tax credit, aligning with the Inflation Reduction Act’s goal to boost SAF production by providing incentives based on lifecycle greenhouse gas (GHG) reductions. This guidance includes the release of the now called 40BSAF-GREET 2024 model, designed to calculate GHG reductions more accurately, incorporating new data and methodologies including climate-smart agricultural practices for soybeans and corn as a feedstock for SAF. EPA’s new model is designed to address previously identified shortcomings in the R&D GREET model, particularly in how it calculated lifecycle greenhouse gas emissions. The lifecycle approach accounts for all emissions from the initial production stages through to the final use of the fuel. Click here to view our special report on the SAF credit guidance, including biofuels industry comments.
Argentina’s oilseeds union strike lifted... Argentina’s oilseed sector workers lifted their two-day strike late Tuesday, despite the lower house of Congress approving contentious reforms backed by President Javier Milei but opposed by some unions. Activity at the main agricultural shipping hub in Rosario began normalizing late Tuesday. “We’re lifting the [strike] action now,” Daniel Succi, secretary general of the SOEA oilseed worker union, told Reuters. Next week a union meeting will be held “to see how we proceed,” he added.
Record soy crush, big jump in ethanol use expected... Analysts expect USDA to report March soybean crush totaled an all-time record 205.6 million bu., according to a Bloomberg survey. That would be up 11.7 million bu. (6.0%) from February and 7.6 million bu. (3.8%) above last year. Corn-for-ethanol use is expected to total 464.5 million bu., which would be up 23 million bu. (5.2%) from February and 28.4 million bu. (6.5%) above March 2023.
Fed focus on post-meeting statement, Powell comments... The Fed will keep interest rates unchanged at the conclusion of the two-day monetary policy meeting this afternoon. Traders will closely monitor the post-meeting statement and Fed Chair Jerome Powell’s comments for clues to future monetary policy moves. Expectations for the Fed’s initial rate cut have been pushed back and there’s even some scattered talk the next move may be a rate hike if inflation data remains stubbornly high.
Ukraine’s grain exports increase in April... Ukraine exported 6.3 MMT of grain last month, according to ag ministry data, up from 5.5 MMT in March. The April shipments included 4.1 MMT of corn, 1.9 MMT of wheat and 231,000 MT of barley. Through the first 10 months of the 2023-24 marketing year, Ukraine exported 41.4 MMT of grain, 200,000 MT (0.5%) below the same period last year. That 2023-24 total included 22.9 MMT of corn, 15.8 MMT of wheat and 2.2 MMT of barley.
Slow-moving new farm bill is now on a far faster track... The House GOP new farm bill proposals were officially revealed in a five-page summary released by the Ag Committee (link). The summary is largely in line with what we have been reporting. The House Ag panel wants to markup the Chairman’s mark on May 23. Senate Ag Chair Debbie Stabenow (D-Mich.) later today will release her farm bill proposals. They will include summaries and a section-by-section explanation but will not contain full text. Sources note it integrates over 100 bills that signal members’ preferences for the bill’s content. The agriculture sections of the Inflation Reduction Act (Climate Bill) will be moved into the farm bill. Meanwhile, Sen. John Boozman (R-Ark.), the ranking member of the Senate Ag Committee, intends to introduce the framework of a bill following House Ag Chair Glenn “GT” Thompson’s (R-Pa.) release of a key summary of the House GOP farm bill proposals.
Deeper temporary shipping channel in Baltimore Harbor expected to reopen late next week... The Port of Baltimore anticipates reopening a temporary shipping channel at a greater depth to facilitate commercial vessel traffic around May 10. The temporary Fort McHenry Limited Access Channel, expected to open with a depth of 45 feet, had previously operated at a depth of 38 feet for four days, allowing 19 vessels, including nine arrivals and 10 departures, to navigate through the port. This movement included ships carrying diverse goods like sugar, cement and lumber. Officials hope to fully reopen the main channel by the end of May, with the new 45-foot channel expected to operate overnight from 8 p.m. to 7 a.m. daily. This gradual reopening is critical for resuming normal operations at one of the East Coast’s busiest ports.
New CBOT daily price limits... Effective today, the Chicago Board of Trade will reset daily price limits for grain and oilseed futures. Price limits for each product are reset twice per year – on the first trade date in May and the first trade date in November. The new limits will be:
- Corn: 30 cents; 45 cents for days with expanded limits.
- SRW and HRW wheat: 40 cents; 60 cents for days with expanded limits.
- Soybeans: 85 cents; $1.30 for days with expanded limits.
- Soymeal: $25; $40 for days with expanded limits.
- Soyoil: $0.035; $0.055 for days with expanded limits.
Odds of higher cash cattle trade fading... Feedlots moved some cattle in the northern market around $185.00 early this week, roughly steady with week-ago. Given the sharp pressure on cattle futures, packers’ hefty purchases last week and negative cutting margins, chances for higher cash cattle prices seem to have vanished. Most cash sources now expect steady/weaker cash prices this week.
Cash hog slide continues... The CME lean hog index is down a dime to $90.26 as of April 29, marking the fourth consecutive daily decline. While losses in the cash index haven’t been sharp, they signal the seasonal rally has stalled. We expect the pullback to be relatively brief before the cash market continues its climb to a seasonal peak during summer.
Overnight demand news... Algeria tendered to buy a nominal 50,000 MT of optional origin soft milling wheat.
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
- 1:00 p.m. FOMC meeting concludes — Fed
- 2:00 p.m. Annual milk production and factors affecting supply — ERS
- 2:00 p.m. Commodity Costs and Returns — ERS
- 2:00 p.m. Milk Cost of Production Estimates — ERS
- 2:00 p.m. Broiler Hatchery — NASS
- 2:00 p.m. Cotton System Consumption and Stocks — NASS
- 2:00 p.m. Fats and Oils: Oilseed Crushings — NASS
- 2:00 p.m. Flour Milling Products — NASS
- 2:00 p.m. Flour Milling Products - Annual Summary — NASS
- 2:00 p.m. Grain Crushings and Co-Products Production — NASS