Good morning!
Grain, soy markets lower this morning... Corn, soybeans and SRW wheat faced followthrough selling overnight, while HRW and spring wheat firmed. As of 6:30 a.m. CT, corn futures are trading 3 to 9 cents lower, soybeans are 4 to 7 cents lower and SRW wheat is around 2 cents lower, while HRW wheat is mostly 6 to 8 cents higher and HRS wheat is 3 to 6 cents higher. Front-month crude oil futures are modestly firmer and the U.S. dollar index is nearly 300 points higher this morning.
Turkish official: Black Sea grain deal set to be extended... The Black Sea grain deal is set to be extended, with Russia agreeing to stay in the pact for now, Turkish officials told Bloomberg. An announcement will reportedly be made today. The length of any extension is unknown at this time.
Last ship leaves Ukraine under current Black Sea deal... The last ship left a port in Ukraine on Wednesday under the current Black Sea grain deal that is set to expire on May 18. The Kremlin said it would not enter into “hypothetical discussions” on what Russia will do if the deal lapses. “I don’t think any hypothetical discussions are appropriate here,” Kremlin spokesman Dmitry Peskov said. “As of now, the decision hasn’t been announced, as you know. You’ll just have to wait until it is announced.” TASS news agency reported no preparations for completion of inspection of vessels in the Istanbul-based Joint Coordination Center are underway, but “contacts on the grain deal continue.”
Day 1 HRW wheat tour results... On Day 1 of the Wheat Quality Council’s HRW wheat tour, scouts found an average yield of 29.8 bu. per acre on samples taken from central and northern Kansas, down from 39.5 bu. along the same routes last year and the 2017-22 average of 43.4 bu. per acre. Besides drought impacts, the tour found wheat in north-central Kansas suffered more damage than expected from cold winter weather and a couple frost/freeze events. Separately, state wheat associations pegged wheat production at 30 million bu. in Nebraska (up from 26.2 million bu. last year) and 54 million bu. in Colorado (up from 35.8 million bu. last year). Scouts will sample fields in western Kansas today on routes from Colby to Wichita.
France cuts wheat export forecast... France’s ag ministry cut its 2022-23 wheat export forecast outside the EU by 100,000 MT to 10.3 MMT. The ministry trimmed its wheat export forecast within the bloc by 50,000 MT to 6.39 MMT.
Malaysia committed to raising palm oil biodiesel mandate... Malaysia is committed to progressively raising its biodiesel mandate, its commodities minister said at a meeting with global palm oil producers. He said the expansion will be done in phases based on the readiness of biodiesel blending facilities across the country. Malaysia currently mandates a 20% biodiesel blend rate, while Indonesia raised its rate to 35% in February.
Debt-limit talks update... President Biden will cut short a planned overseas trip to focus on striking a deal to raise the debt ceiling to avoid the country’s first-ever default, as party leaders remained at odds following a meeting Tuesday at the White House over potential spending cuts. Biden on Tuesday appointed two senior aides to hold discussions with Republican lawmakers. House Speaker Kevin McCarthy (R-Calif.) cautioned that negotiators are still “far apart” but added that the new lane of communication “gives us a structure to be more productive but a short time frame to get it done.”
Key states are nearing a deal to protect the Colorado River... California, Arizona and Nevada would voluntarily conserve a major portion of their river water in exchange for over $1 billion in federal funds to keep the Colorado River from drying up, according to the Washington Post. The river supplies water and hydropower for tens of millions of people, but there’s not enough to go around after decades of drought.
Euro zone inflation ticks up in April but core prices ease... Euro zone consumer inflation increased 7.0% from year-ago during April, up from 6.9% the previous month. Excluding volatile food and fuel prices, core inflation slowed to 7.3% from 7.5%, while an even narrower measure, which excludes alcohol and tobacco, slowed to 5.6% from 5.7% in its first decline since last June.
Firms cut China’s economic growth forecasts... Nomura cut its forecast for China’s 2023 gross domestic product (GDP) growth to 5.5% from 5.9% previously, after disappointing April data showed the post-Covid recovery was losing steam. Barclays lowered its forecast for China’s 2023 GDP growth to 5.3% from 5.6% previously. Meanwhile, Goldman Sachs and Morgan Stanley are among banks scaling back expansion plans and profit goals in China, as relations with the U.S. sour further and President Xi Jinping’s willingness to sacrifice economic priorities for security concerns rocks the private sector. Drastic jobs cuts are being eyed at the biggest U.S. banks with presence in China, Bloomberg reports.
Japan’s Q1 GDP growth beats forecasts... The Japanese economy grew 0.4% quarter-over-quarter during the first three months of this year after showing no growth in the final quarter of 2022. This was the fastest expansion since the second quarter of 2022. On an annualized basis, the Japanese economy expanded 1.6%.
Choice beef prices falls under $300... Choice boxed beef prices fell another $2.51 on Tuesday to $299.47. That’s the first time the Choice cutout has been below $300.00 since April 12. Movement improved to 136 loads on the day, but packers are having to lower prices to encourage demand, despite tight supplies, signaling retailers remain selective buyers.
Pork cutout slips... The pork cutout value fell 63 cents on Tuesday due mostly to a $7.83 decline in primal belly prices. The lower prices encouraged stronger retailer buying, however, as movement improved to 362.5 loads. Packers continue to struggle to push the pork cutout value above the mid-$80.00 range despite being cheaply priced compared to beef as supplies are stronger than demand.
Overnight demand news... South Korea purchased 68,000 MT of corn expected to be sourced from South America or South Africa. The Philippines tendered to buy 40,000 MT of optional origin feed wheat.
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
- 9:30 a.m. Weekly Ethanol Production — EIA
- 11:00 a.m. Feed Grains: Yearbook Tables — ERS
- 2:00 p.m. Broiler Hatchery — NASS