Good morning!
Wheat leads overnight price gains... Wheat futures surged amid strong followthrough buying overnight, pulling corn and soybeans higher. As of 6:30 a.m. CT, corn and soybean futures are trading mostly 2 cents higher, while wheat is 10 to 15 cents higher. Front-month crude oil futures are around 60 cents higher and the U.S. dollar index is trading just above unchanged.
May crop reports feature key new data... USDA will update its old-crop usage forecasts in the Supply & Demand Report at 11:00 a.m. CT. But the main feature will be the first official 2024-25 balance sheets. USDA is expected to project new-crop ending stocks will rise sharply from the current marketing year for corn, soybeans, wheat and cotton. USDA will also issue its first winter wheat production estimates. Click here to view the pre-report expectations.
China forecasts sharp reductions in corn, soybean and cotton imports for 2024-25... China’s ag ministry forecasts the country will import far less corn, soybeans and cotton in 2024-25 than the current marketing year. For 2024-25, China expects to import 13 MMT of corn (down 6.5 MMT from 2023-24), 94.6 MMT of soybeans (down 1.5 MMT) and 2 MMT of cotton (down 800,000 MT). The ag ministry cited an expected increase in domestic corn production, and reduced feed demand from the hog industry for the declines in corn and soybean imports.
U.S./China tensions heighten... The Biden administration added 37 Chinese entities to a trade restriction list, including some for allegedly supporting the spy balloon that flew over the U.S. last year. The Chinese embassy in Washington called the move “blatant economic coercion and bullying in the field of technology,” and said China would resolutely safeguard the lawful rights of Chinese firms and institutions. President Joe Biden is also set to announce new China tariffs as soon as next week targeting strategic sectors including electric vehicles, batteries and solar equipment. Sen. Chuck Grassley, (R-Iowa) expects Beijing to respond. “We know how China reacted when Trump put tariffs on,” he said. “They hit agriculture with it. I can’t be sure that China would hit agriculture the same as they did in the Trump ones, but they’re going to hit back.”
Dry weather in Australia’s top grain state raises crop concerns... Persistent dry weather in parts of Western Australia has raised concerns over the outlook for the upcoming season as crop planting continues, according to the Grain Industry Association of Western Australia. The group said, “The persistent warm conditions are a concern and, whilst still fairly early in the season and with plenty of time for rains to come, the current conditions have growers increasingly nervous about the upcoming grain growing season. Soil moisture profiles are historically very dry this year and the light falls of rain are either being sucked up like a sponge or are evaporating before it soaks in. The northern and eastern regions will pull back on intended plantings and drop paddocks out to fallow. This could reduce the planted area in the state by several hundred thousand hectares. However, the planted area estimate could swing the other way by a similar margin if there are decent rains in the next two weeks.”
French wheat crop ratings improve but still at four-year low... France’s ag ministry rated the country’s wheat crop as 64% good or excellent as of May 6, up one percentage point from the previous week. However, that was still the lowest rating for this time of year since 2020.
UK economy exits mild recession in Q1... The British economy expanded 0.6% in the first quarter of the year following contractions in the final two quarters of 2023. This growth rate is the highest since the fourth quarter of 2021, indicating a significant rebound.
Calls for emergency aid amid more cases of H5N1 in dairy herds... USDA reported four new incidents of the H5N1 virus in dairy cattle in Michigan and one in Colorado as of May 8. The virus has been detected in dairy herds in nine states. Amid these rising case numbers, concerns among lawmakers regarding the government’s response to the outbreak are intensifying. Sen. John Hoeven (R-N.D.), the Ranking Member of the Senate Appropriations Agriculture Subcommittee, discussed potential emergency funding to address the outbreak. However, details regarding the cost of such funding are still unclear, according to Politico. Hoeven emphasized the importance of proactive measures.
U.S. to post influenza A wastewater data online as part of H5N1 investigation... The U.S. Centers for Disease Control and Prevention (CDC) is planning to post data on influenza A found in wastewater in a public dashboard possibly as soon as today that could offer new clues into the outbreak of H5N1 in dairy cattle. CDC wastewater team lead Amy Kirby told Reuters on Thursday the agency has identified spikes of influenza A, of which H5N1 is a subtype, in a handful of sites and is investigating the source. She said there is no indication of human infection with H5N1. The dashboard will allow individuals to check for increases in influenza A in their area and compare it with historical data where available. Seasonal influenza cases have fallen off sharply, so spikes could offer a signal about unusual flu activity.
Wholesale beef prices drop... After briefly trading above $300.00 Tuesday morning, Choice wholesale beef prices have sharply retreated, including a $1.28 drop on Thursday. Select fell $2.49. While the pickup in movement to 173 loads signals underlying demand, it appears retailers are selective buyers.
Cash hog pause continues... The CME lean hog index is unchanged at $91.28 as of May 8, holding just below the seasonal peak to date in late April. While the pause in the seasonal rally has caused traders to reduce premiums futures hold to the cash index, the fact there hasn’t been much of a pullback in the cash market seemingly bodes well for an eventual surge to a summertime high.
Overnight demand news... Egypt purchased 73,000 MT of sunflower oil and 29,000 MT of soyoil.
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. WASDE — WAOB
- 11:00 a.m. Cotton Ginnings - Annual — 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 Trade — FAS
- 11:15 a.m. World Agricultural Production — FAS
- 2:00 p.m. Agricultural Chemical Usage - Field Crops — NASS
- 2:00 p.m. County Estimates - Cotton — NASS
- 2:00 p.m. County Estimates - Peanuts — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC