Good morning!
Grains trade lower overnight... Corn, soybean and wheat futures faced pressure while holding in relatively tight trading ranges overnight. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are mostly 5 to 6 cents lower and wheat futures are 4 to 6 cents lower. Front-month crude oil futures are holding near unchanged and the U.S. dollar index is nearly 300 points higher.
Weekly Export Sales Report out this morning... For the week ended May 4, traders expect:
| 2022-23 expectations (in MT) | 2022-23 last week | 2023-24 expectations (in MT) | 2023-24 last week |
Corn | (100,000)-800,000 | (315,639) | 0-300,000 | 120,957 |
Wheat | 75,000-300,000 | 211,053 | 100,000-325,000 | 279,672 |
Soybeans | 150,000-500,000 | 289,730 | 0-200,000 | 67,000 |
Soymeal | 50,000-300,000 | 179,584 | 0-50,000 | (17,007) |
Soyoil | 0-12,000 | 14,017 | 0-10,000 | 0 |
China to stabilize, diversify soybean imports... China will stabilize and diversify its soybean imports, an official with the state’s grain reserve bureau said. Lu Jingbo, deputy director at the National Food and Strategic Reserves Administration, said China will “develop new soybean source markets while stabilizing traditional soybean markets. He did not indicate whether “stabilizing” meant limiting or slowing import growth.
Exchange cuts Argentine soybean crop estimate... The Rosario Grain Exchange cut its Argentine soybean crop estimate by 1.5 MMT to 21.5 MMT amid lingering drought impacts. That would be the country’s smallest soybean crop since 1999. The exchange kept its Argentine corn crop estimate at 32 MMT. It also warned drought is limiting planting of the 2022-23 wheat crop. The Buenos Aires Grain Exchange said the transition to El Niño is unlikely to bring heavy rains to the country before September.
Firm raises EU wheat crop, export forecasts... Strategie Grains raised its forecast for 2023-24 wheat production in the European Union given favorable conditions across most of the bloc. The firm now expects the EU to produce 130 MMT of wheat this year, up 1.1 MMT from its prior forecast and 3.8% above last year. Strategie Grains raised its EU wheat export forecast for 2023-24 by 300,000 MT to 31 MMT.
China’s consumer, producer prices trigger deflation concerns... China’s consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened. China’s consumer price index eased to 0.1% above year-ago in April, the lowest level since February 2021. Food inflation dropped to a 13-month low of 0.4% due to a notable slowdown in the price of pork and a steeper drop in the cost of fresh vegetables. The country’s producer price index dropped 3.6% compared to April 2022, the seventh straight month of factory gate deflation and the steepest fall since May 2020.
China’s new bank loans tumble... Chinese banks extended 718.8 billion yuan ($103.99 billion) in new loans in April, tumbling sharply from 3,890 yuan in March and the lowest in six months. The value of outstanding loans in China increased 11.8% from year-ago last month. China’s M2 money supply increased 12.4% from last year.
Biden to meet with key Ag Committee lawmakers regarding farm bill... President Joe Biden has invited a bipartisan group of lawmakers to the White House today to discuss the upcoming farm bill reauthorization, Politico reports, citing four people familiar with the plans. Invitees include Rep. Glenn “GT” Thompson, Sen. John Boozman, Sen. Debbie Stabenow and Rep. David Scott. USDA Secretary Tom Vilsack will also reportedly attend the meeting. Perspective: It’s always good to have a president’s attention on a big topic like the farm bill. It will be interesting to see if Biden/Vilsack detail any must-haves in a new farm bill. Food stamp funding and implementation flexibility, conservation and climate-smart programs are key possible administration topics.
WOTUS flipflop in Kentucky... Just hours after a federal district judge in Kentucky denied the state’s petition for an emergency injunction to keep the Biden administration’s Waters of the U.S. (WOTUS) rule from being enforced in the state, the U.S. Court of Appeals for the Sixth Circuit issued an injection keeping the rule from being enforced. The appeals court in April issued a stay against the rule in Kentucky that ended May 10. Even though Judge Gregory Van Tatenhove earlier Tuesday denied Kentucky’s request, hours later the appeals court issued their injunction, keeping the rule on hold in Kentucky. The rule is enjoined in 27 states but in effect for the rest of the country.
BOE raises interest rates... The Bank of England (BOE) lifted its key interest rate by a quarter-point on Thursday, matching the pace of the Federal Reserve and the European Central Bank this month. The increase marks the 12th consecutive hike since BOE started tightening in December 2021. It puts the main BOE rate at 4.5%. That’s higher than ECB’s main rate of 3.75%, but below the Fed’s range of 5.0% to 5.25%.
Ocean shipping returning to normal... Rolf Habben Jansen, CEO of ocean liner Hapag-Lloyd, says ocean shipping is starting to feel like a normal year after three abnormal years of Covid disruptions. At the moment, there’s a seasonal calm before the usually busy period in the third quarter when retailers restock before the holidays. “To me it feels like a year that we had before the pandemic,” he said. “So I wouldn’t be surprised if we indeed see a similar picture because as far as I know, Christmas is still going to take place in 2023.” Jansen also said he’s not concerned yet about possible labor unrest at the U.S. West Coast ports as long as the union dockworkers and their employers reach a deal in the next several weeks. If talks drag on past June, he might start to worry.
Packers slowing cattle slaughter runs... There has been only a smattering of cash cattle trade so far this week – not enough to establish a true tone. Packers are slowing slaughter rates as market-ready supplies continue to tighten, with limited Saturday operations. That has reduced their need for supplies and slowed the seasonal decline in carcass weights.
Cash hog index continues to creep higher... The CME lean hog index is up 43 cents to $75.07 (as of May 9), the highest level since the end of March. The expiring May contract finished yesterday $1.505 above today’s cash quote, while the premium in June hogs was $9.105. While the cash index has been on a steady climb over the past two-and-a-half weeks, daily gains likely need to increase to attract sustained buyer interest to summer-month futures.
Overnight demand news... South Korea purchased 133,000 MT of corn likely to be sourced from South America and tendered to buy another 69,000 MT of optional origin corn. Japan purchased 125,974 MT of milling wheat in its weekly tender, including 21,159 from the U.S., 59,540 MT from Canada and 45,275 MT from Australia. Algeria purchased between 600,000 and 720,000 MT of milling wheat – likely to be sourced mostly from the Black Sea region.
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