Good morning!
Wheat and soybeans strengthen, corn mixed overnight... Wheat futures posted strong gains overnight, while soybeans traded solidly higher and corn was mixed amid bull spreading. As of 6:30 a.m. CT, corn futures are trading fractionally lower to 4 cents higher, soybeans are 5 to 10 cents higher, SRW wheat is 14 to 15 cents higher, HRW wheat futures are 21 to 26 cents higher and HRS wheat is 19 to 20 cents higher. Front-month crude oil futures are modestly higher and the U.S. dollar index is around 200 points lower this morning.
Ukraine says Black Sea grain deal uncertain, no talks planned this week... Ukraine says no talks are planned this week regarding an extension of the Black Sea grain deal, which is set to expire May 18. Olha Trofimtseva, a foreign ministry ambassador at large, said: “The situation overall (after talks last week) has not changed much, and we receive quite conflicting information about the grain deal and the possibility of its continuation.”
Rainy weekend for some, more rains this week... Weekend rainfall was heavy across southern Minnesota, northern Iowa, northern Nebraska, central Oklahoma and central/southern Texas. Kansas was dry, though it should receive some rains this week, according to World Weather Inc. The forecaster says all U.S. crop areas will get rain at some point during the next 10 days.
Record April NOPA crush figure expected... Analysts expect members of the National Oilseed Processors Association (NOPA) to report April soybean crush totaled 174.2 million bushels. While that would be down 11.6 million bu. (6.3%) from March it would be a record for the month and up 4.4 million bu. (2.6%) from last year. Soyoil stocks are expected to be reported at 1.828 billion pounds.
The week ahead in Washington... President Joe Biden and congressional leaders agreed to meet this week to continue discussions on the debt ceiling. Talks are intensifying as both sides narrow their differences on key topics. Unless ongoing debt limit talks force Biden to change his plans, he is currently scheduled to leave town on Wednesday for the G7 meeting in Japan. He’ll meet with Japanese Prime Minister Fumio Kishida on Thursday. They’ll be joined on Friday by the leaders of the other G7 countries: Canada, France, Britain, Germany and Italy. Executives at failed regional lenders Silicon Valley Bank and Signature Bank are set to testify before the Senate Committee on Banking, Housing and Urban Affairs this week. Federal Reserve speakers will be out in force this week, with multiple speeches scheduled. The key agricultural report this week will be Friday’s Cattle on Feed Report.
CBO updates forecasts... The Congressional Budget Office (CBO) on Friday released updated forecasts that will be used to score a new farm bill. Highlights:
- Corn: CBO now pegs corn planted area for 2023 at 92.5 million acres versus 93 million in February. CBO puts the 2023 yield at 179.5 bu. per acre, up from 178.5 bu. per acre in February, with carryover now put at 1.945 billion bu. compared with 1.797 billion bu. in February. The season average corn price forecast is now $5.25 versus $4.80 in February. CBO forecasts no PLC or ARC payments in FY 2024 as it did in February. Given the minimal or no payments in FY 2024 and small payments in FY 2025, the bigger payments compared with February for corn are focused in FY 2027-2030.
- Soybeans: CBO made minimal changes as it only adjusted the price forecast, now putting it at $12.50 versus $12 per bushel in February. The price adjustment kept ARC and PLC payments forecast at zero for FY 2024.
- Wheat: CBO trimmed forecast carryover for 2023 to 664 million bu. from 667 million bu. in February on a cut to beginning stocks. CBO’s price outlook is now $7.30 for 2023 wheat versus $6.95 in February. The price outlook also has CBO expecting $7 million in ARC payments in FY 2024 versus zero in February.
White House envoy optimistic port talks to produce deal soon... A tentative agreement covering longshore workers at the largest U.S. ports is within reach after a year of negotiations between the union and employers, according to a Biden administration official involved in the talks cited by Bloomberg. Many importers and retailers have diverted cargo away from West Coast ports since contract negotiations began last May, worried about potential supply chain disruptions caused by labor actions or lockouts.
China holds rates steady, adds more liquidity... The People’s Bank of China (PBOC) injected liquidity into the financial system for the sixth straight month in a bid to bolster economic growth. It added a net 25 billion yuan ($3.6 billion) via its medium-term lending facility, contrary to expectations it would skip a net injection for the first time this year. It kept its one-year MLF interest rate unchanged. Meanwhile, global investors got a new strategic tool: onshore interest-rate swaps that had an annual turnover of $3 trillion last year. The so-called Swap Connect program between mainland China and Hong Kong gives overseas funds easier access to the derivatives that can help them hedge bond exposure.
EU revises GDP and inflation forecasts higher... The European Commission revised its growth forecasts for the European Union, which is now expected to grow 1% in 2023, compared to the previous forecast of 0.8%. For 2024, the revised forecast indicates a growth rate of 1.7%, up from the previous projection of 1.6%. The EU’s projected inflation rate for 2023 is now 5.8%, an increase from the previous estimate of 5.6%. For 2024, the inflation rate is now put at 2.8%, up from 2.5%. The European Commission emphasized that as inflation remains high, financing conditions are expected to tighten further.
Cash cattle fundamentals weakening... Cash cattle and wholesale beef prices are sliding despite tight supplies. Given the supply situation there is hope the seasonal bottoms in both markets will come early this year, though neither market has signaled lows are in place yet. Choice boxed beef prices fell another $1.11 on Friday, while cash cattle prices dropped for a fourth consecutive week.
Cash hog index picking up a little steam... The three-week rise in the cash hog market has been slow and methodical, but it’s showing signs of picking up steam. The CME lean hog index is up 51 cents today (as of May 11) to $75.91, the highest level since March 28. June hog futures, which are the new lead-month contract, finished Friday $8.19 above today’s cash quote. Traders will likely remain cautious buyers of futures until the cash market shows stronger daily gains.
Overnight demand news... Exporters reported no tenders or sales.
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
- 11:00 a.m. Monthly Soybean Crush — NOPA
- 2:00 p.m. Dairy Monthly Tables and Dairy Quarterly Data — ERS
- 2:00 p.m. Season Average Price Forecasts — ERS
- 2:00 p.m. Wheat Data — ERS
- 2:00 p.m. North American Flour Milling Products Summary — NASS
- 3:00 p.m. Crop Progress — NASS