First Thing Today | May 16, 2023

Corn, soybean and winter wheat futures pulled back from Monday’s gains during overnight trade.

Pro Farmer's First Thing Today
Pro Farmer’s First Thing Today
(Pro Farmer)

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Grains weaker overnight... Corn, soybean and winter wheat futures pulled back from Monday’s gains during overnight trade. As of 6:30 a.m. CT, corn futures are trading 1 to 4 cents lower, soybeans are 6 to 8 cents lower and winter wheat futures are 3 to 6 cents lower, while spring wheat is steady to fractionally higher. Front-month crude oil futures are modestly weaker and the U.S. dollar index is around 150 points lower.

‘No encouraging prospect’ for extension of Black Sea grain deal but communication continues... Prospects for extending the Black Sea grain deal are not encouraging at the moment, Russian RIA news agency reported, citing a Russian source familiar with the situation. “Technical-level” discussions will continue, the source told RIA, but when asked about the prospects for extending the grain deal, the source said “at the moment there are no encouraging prospect.” The Kremlin says questions remained about Russia’s part in the deal, though communication on the issue is ongoing.

Ukraine grain exports expected to fall sharply amid lower production... Ukrainian exports of corn and wheat are expected to plunge this year as an anticipated sharp drop in production will leave less supplies to ship aboard. The head of the Ukrainian Grain Association (UGA) forecasts corn production will fall 22.7% to 21.1 MMT and exports in 2023-24 will plunge 29.6% to 19 MMT. For wheat, UGA forecasts production of 17 MMT, down 15.8% from last year, while exports for 2023-24 are expected to fall 9.7% to 14 MMT. Sunflower seed production is expected to jump 20% to 12.7 MMT.

Ukraine removes some barriers for ag exports... Ukraine has removed some of the barriers for agricultural commodity exports it imposed last year to avoid food shortages, mostly involving export licenses for live cattle, froze beef, chicken meat, eggs, rye, oats, millet and other commodities. The changes would not affect domestic supplies, the government said, and were developed with input from associations in a bid to help “optimize” agricultural exports and boost foreign exchange earnings.

HRW wheat tour starts today... The Wheat Quality Council’s annual HRW tour through Kansas and remote areas of surrounding states kicks off this morning in Manhattan, Kansas. Scouts will sample fields today across central and far northwestern areas of Kansas enroute to Colby, including some areas of far southern Nebraska. Day 1 results will be released this evening.

HRW CCI rating inches up but remains historically low... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 5.6 points to a still-historically low rating of 242.6. The HRW crop improved in each of the states aside from Montana. The SRW crop inched up 0.6 point to 376.5. Declines in Illinois, Missouri and North Carolina were more than offset by improvements in the other states. Click here for more details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 14.

  • Winter wheat: 29% good/excellent (29% last week); 49% headed (48% five-year average).
  • Corn: 65% planted (59% average); 30% emerged (25% average).
  • Soybeans: 49% planted (36% average); 20% emerged (11% average).
  • Cotton: 35% planted (36% average).
  • Spring wheat: 40% planted (57% average); 13% emerged (23% average).

Consultant again raises Brazilian crop estimates... Soybean yields in Rio Grande do Sul ended up a little better than expected, so crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop estimate another 1 MMT to 155 MMT. Cordonnier also raised his Brazilian corn crop estimate 1 MMT to 125 MMT, noting the safrinha crop is one week closer to the end of the growing season without a major frost/freeze. Developing dryness in some central and southern areas is keeping his Brazilian corn estimate conservative compared to others. Cordonnier left his Argentine crop estimates at 23 MMT for soybeans and 35 MMT for corn.

Debt-limit meeting this afternoon... President Joe Biden is scheduled to meet about the debt limit with four congressional leaders — House Speaker Kevin McCarthy (R-Calif), Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Hakeem Jeffries (D-N.Y.) — at 2 p.m. CT. Biden reportedly wants: 1) the GOP to “drop its effort to roll back parts of Biden’s key legislative accomplishments, like the Inflation Reduction Act, as well as take student debt relief off the table;” 2) limit any spending caps “to as little as two years”; and 3) a debt-ceiling extension “of at least two years — through the 2024 election. He’s reportedly willing to give: 1) accepting discretionary spending caps through the remainder of his term; 2) “clawing back billions of dollars in pandemic aid once seen as critical to the agenda”; and 3) possible “restrictions on certain safety net programs for the poor.”

More disappointing Chinese economic data... China’s industrial production expanded 5.6% annually in April. While that was the 12th straight month of growth in the industrial output and the fastest pace since last September, it came in well shy of expectations for 10.9% growth. China’s retail sales increased 18.4% from year-ago in April. While that was the third straight month of growth and the strongest pace since March 2021, it fell shy of expectations for a 21% jump. These figures along with trade data, factory gate deflation and worse-than-expected bank loans signaled weak domestic demand, raising pressures on policymakers to shore up the economic recovery.

California to work with pork industry on Prop 12 implementation... The California Department of Food and Agriculture (CDFA) pledged to work with the pork industry to implement Proposition 12, which the Supreme Court upheld last week. In a blog post, CDFA said, “As we approach July 1, when a previous court order suspending Prop 12 enforcement expires, CDFA looks forward to engaging with industry representatives to further discuss what is needed to achieve a smooth transition to compliance.” CDFA in the coming months said it will “continue to focus on engaging with stakeholders to inform and educate. Enforcement actions could be taken by the attorney general’s office or any county or city-level prosecutor in California.” CDFA’s Animal Care Program will continue to focus on implementation of distributor registration requirements, accreditation of third-party certifiers, and outreach and technical assistance to businesses throughout the supply chain.

Brazil confirms first cases of HPAI in wild birds... Brazil, the world’s top chicken exporter, for the first time confirmed highly pathogenic avian influenza (HPAI) cases but only in wild birds, the country’s ag ministry said on Monday. The Brazilian government confirmed the H5N1 subtype of the HPAI virus in two marine birds on the coast of Brazil’s southeastern state of Espirito Santo. The ag ministry said because the cases were detected in wild animals, Brazil’s status “HPAI-free” was not affected.

Cash cattle end recent skid... Cash cattle averaged $174.13 last week, up 20 cents from the previous week, ending a three-week decline in prices. Firmer prices in the northern market where supplies are tighter more than offset lower trade in the Southern Plains. For the cash market to put in an early seasonal low, the northern market must continue to guide cash cattle trade.

Hog traders extend premiums to cash market... Lean hog futures posted strong gains on Monday, with price action suggesting the start of a seasonal rally could be underway. The CME lean hog index is up another 59 cents to $76.50 (as of May 12). June lean hog futures finished Monday $9.65 above today’s cash quote.

Overnight demand news... Japan is seeking 113,555 MT of milling wheat in its weekly tender.

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