Good morning!
Corn, soybeans weaker to open the week, wheat mixed... Corn and soybeans modestly pulled back from Friday’s strong gains during the overnight session, while wheat traded mixed. As of 6:30 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are 4 to 5 cents lower and wheat futures are trading within a penny of each side of unchanged. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is modestly weaker this morning.
Active U.S. weather pattern to continue.... Multiple rain events are forecast to push across the U.S. during the next 10 days, keeping planting to a minimum in the wettest areas. The lower Midwest, Delta and Southeast will be the wettest. HRW wheat areas received rains during the weekend, though not enough to end the dryness in west-central and southwestern locations. Areas of east-central Argentina experienced freezing temps overnight, with the cold blast expected to last into Tuesday. Rains fell on some of the safrinha corn areas in Brazil during the weekend and will last into early this week.
Assessing Russia’s crop damage... World Weather Inc. speculates permanent wheat damage from recent freezes is not likely to be more than 6%; winter rapeseed likely suffered damage on 40% of crop area. However, a much larger part of Russia’s Southern Region, eastern Ukraine and western Kazakhstan is dealing with drought. Lost wheat production because of drought could be many times greater than that which is lost from recent freezes.
IKAR cuts Russian wheat production, export forecasts... Russia’s IKAR agricultural consultancy cut its forecast for Russia’s wheat crop to 86 MMT from 91 MMT previously. Its 2024-25 wheat export forecast was lowered 3.5 MMT to 47 MMT. IKAR forecasts total grain production at 135 MMT and exports at 59.5 MMT, down 5 MMT, respectively. Russia’s ag ministry kept its grain production forecast at 132 MMT.
The week ahead in Washington... Focus on the new farm bill will continue this week with additional briefings about the House farm bill proposals. The Ag Committee on Friday released a more extensive summary of key titles of the farm bill. House Ag Chair Glenn “GT” Thompson (R-Pa) is keeping the door open for some changes to the proposed House farm bill to woo some Dems to vote for the measure when the panel marks it up May 23. We continue to await the release of Congressional Budget Office scoring of the House and Senate farm bill proposals. Those will provide additional insight into analyzing which bills are truly reflective of production agriculture. On the economic front, U.S. inflation data will be in focus, with producer prices out on Tuesday and the consumer price index on Wednesday.
China’s consumer prices rise, factory deflation persists... China’s consumer price index rose 0.3% from year-ago in April, the third straight month of consumer inflation amid ongoing recovery in domestic demand. Food prices fell 2.7%, the 10th consecutive monthly decline. China’s producer prices declined by 2.5% versus last year, the 19th straight month of contraction in factory-gate prices.
China’s new bank loans decline more than expected in April... Chinese banks extended 730 billion yuan in new yuan loans in April, declining sharply from 3.1 trillion yuan in March and the smallest amount since July 2023. New loans totaled 10.19 trillion yuan for the first four months of the year. Meanwhile, total social financing, a broad measure of credit and liquidity, logged a negative reading of 200 billion yuan, the first contraction since January 2002. Outstanding yuan loan grew 9.6% from a year earlier, matching March for the lowest on record.
China to start issuing special long-term bonds to support economy... China’s finance ministry will start issuing 1 trillion yuan ($138.23 billion) of special long-term government bonds on May 17 with hopes of stimulating key sectors of the economy. Beijing will issue 300 billion yuan worth of 20-year bonds, 600 billion yuan worth of 30-year bonds and 100 billion yuan worth of 50-year bonds. The finance ministry said 30-year special bonds will be sold in 12 tranches from May 17 to Nov. 15, 20-year bonds will be sold in seven batches beginning May 24, while 50-year bonds will be issued in three tranches from May 17. The market also expects the central bank to provide liquidity support through cuts in interest rates and bank reserve requirements.
U.S. to provide funding to contain H5N1 on dairy farms... The Biden administration said on Friday it will provide nearly $200 million to fight the spread of the H5N1 virus among dairy cows. The measures include providing personal protective equipment (PPE) for workers, with financial support for affected sites that participate in a study by the USDA and the Centers for Disease Control and Prevention (CDC). Financial assistance includes up to $2,000 per month for sites providing PPE, $1,500 for developing biosecurity plans and $100 for producers using an in-line sampler in their milk systems. Additionally, up to $2,000 per month will be available for safe milk disposal and up to $10,000 will cover increased veterinarian costs. USDA will cover the cost of shipping samples for testing to the National Veterinary Services Laboratories, with a cap of $50 per shipment for two shipments per month. In total, support could amount to $28,000 per location over the next 120 days. There is also up to $98 million in funds from the Animal and Plant Health Inspection Service earmarked to compensate for lost milk production and to manage the movement of lactating cattle. The Department of Health and Human Services (HHS) said it would provide $101 million through FDA and CDC to protect public health and the nation’s food supply. The money includes $34 million through the CDC for testing efforts and supporting public health labs, $8 million for vaccines and $3 million for wastewater surveillance.
Wholesale beef prices slumping, but retailer demand is strong... Choice boxed beef prices fell another 82 cents on Friday, while Select dropped $1.59, extending the recent slide in wholesale prices. The positive news is that movement totaled 155 loads and averaged 130.2 loads last week, signaling strong underlying retailer demand.
Cash hog fundamentals appear ready to restart seasonal climb... The CME lean hog index is up 4 cents to $91.32 as of May 9. While that’s still 32 cents below the April high, there has been only one daily decline this month. The pork cutout value firmed $1.34 on Friday to $99.77, the highest level since April 23, led by a $7.13 jump in butts.
Weekend demand news... South Korea purchased 68,000 MT of corn expected to be sourced from South America or South Africa. Indonesia tendered to buy 300,000 MT of 5% broken grade white rice from unspecified sources.
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
- 10:00 a.m. Export Inspections — AMS
- 11:00 a.m. Feed Grains Database — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat data — ERS
- 2:00 p.m. County Estimates - Cattle & Sheep — NASS
- 2:00 p.m. North American Flour Milling Products Summary — NASS
- 3:00 p.m. Crop Progress — NASS