Good morning!
Modest corrective rebound in grains overnight... Corn, soybean and wheat futures traded mildly higher on corrective buying during overnight trade. As of 6:30 a.m. CT, corn futures are trading 2 to 5 cents higher, soybeans are 5 to 10 cents higher, SRW wheat is around a nickel higher, HRW wheat is 1 to 3 cents higher and HRS wheat futures are around 3 cents higher. Front-month crude oil futures are about 75 cents higher and the U.S. dollar index is more than 250 points lower this morning.
U.S., G7 to unveil new Russian sanctions... The U.S. and the rest of the Group of Seven (G7) major economies will unveil new sanctions and export controls targeting Russia over its war against Ukraine, a U.S. official said. A G7 statement said, “We will starve Russia of G7 technology, industrial equipment and services that support the war machine,” adding it has “dramatically reduced” reliance on Russia’s energy supplies and commodities. Britain said sanctions would include targeting companies connected to the theft of Ukrainian grain and those involved in the shipment of Russian energy. Meanwhile, G7 leaders said they “continue to support the export of Ukrainian agri-products.” The G7 leaders will also spend substantial time discussing China and how to deal with Beijing’s relationship with Russia.
Russia raises base price for calculating wheat export tax... The base price for calculating Russia’s wheat export duty will rise to 17,000 rubles ($218.73) from 15,000 rubles per metric ton, Interfax news agency reported, citing Russian Agriculture Minister Dmitry Patrushev.
McCarthy optimistic on debt deal... House Speaker Kevin McCarthy (R-Calif.) is optimistic congressional negotiators could reach a deal to raise or suspend the debt ceiling in time to hold the first vote on it next week. The comments marked a significant shift for McCarthy, who has been warning for months that the political process was stalled, and the nation faced a very real prospect of debt default. He said, “I see the path that we can come to an agreement.” The two parties have begun to exchange offers and are hoping to reach a framework for a deal by Sunday, but legislative text would likely take another day or so to complete. The deal may fall between a clean debt limit increase sought by Democrats and a House-passed GOP bill proposing a combination of a debt limit increase, a decade of spending caps, expanded work requirements for some welfare benefits, and a recall of unspent pandemic aid.
Farm Bureau president stresses importance of farm bill... Zippy Duvall, president of the American Farm Bureau Federation, testified Thursday before the Senate Agriculture Committee’s Subcommittee on Commodities, Risk Management, and Trade, underscoring the importance of the farm bill. He said the bill impacts all American families and contributes to national security by ensuring a robust food supply. Duvall highlighted key issues for farmers. First, farmers want crop insurance to remain in place and expanded for specialty crops, which currently lack this support. Second, farmers are concerned about the mismatch between the Title I reference prices and the cost of production, which fails to provide an effective safety net. Finally, Duvall indicated strong farmer interest in conservation programs funded by the farm bill. Duvall stated that if these programs are market-based, voluntary, and science-driven, farmers will participate.
Thompson signals farm bill could include Prop 12 override language... House Ag Chairman Glenn “GT” Thompson (R-Pa.) told us on AgriTalk: “I was completely disappointed with the United States Supreme Court. I’m not sure how they missed the constitution and the Interstate Commerce provisions of the constitution, but it is what it is. There was some indication by one of the justices that perhaps they didn’t have enough clarity. The farm bill legislatively would be the place to draw those lines. Producers simply cannot operate in a system where one state can dictate production standards for the entire country, that is so wrong. I can’t even think about the negative consequences that would have on this industry. So, I’m going to continue reviewing the decisions and looking for opportunities for solutions... I think we can expect that the Agriculture Trade Suppression Act, or effectively nicknamed the Eats Act, will be introduced again. That would prevent states and local jurisdictions from interfering with the production. So, I think the act is a pretty good starting point for any legislative solution in the farm bill.”
China vows to curb speculation in FX market... China will resolutely curb large fluctuations in the exchange rate and study the strengthening of self-regulation of dollar deposits, the central bank said on Friday. The comment comes after the yuan dropped to multi-month lows and breached the closely watched 7-per-dollar level. China’s central bank and forex regulator will jointly guide expectations, correct pro-cyclical and one-sided behavior when necessary and curb speculation, the People’s Bank of China said in a statement. China will strengthen self-discipline management of U.S. dollar deposit businesses, improve currency hedging services for firms and reduce the cost of hedging for small and medium-sized firms, the bank said.
German producer inflation slows to 25-month low... The annual producer inflation in Germany eased for the seventh straight month to a 25-month low of 4.1% in April, indicating a gradual reduction in price pressure within Europe’s largest economy. Energy inflation eased further with the cost of electricity falling by 2.9%, while capital goods prices surged by 6.8%.
Japan’s core inflation rises in April... Japan’s consumer prices excluding fresh food rose 3.4% annually, quickening from the previous month’s 3.1% increase. That’s likely to support views the Bank of Japan may have to revise its price outlook, bringing it a step closer to policy normalization.
Cattle on Feed Report to confirm shrinking feedlot supply... USDA’s Cattle on Feed Report this afternoon is expected to show the May 1 feedlot inventory down 3.5% from year-ago. After placements came in stronger than expected in last month’s report, that category will be a focal point, with April placements expected to have declined 3.7%. April marketings are expected to have dropped 9.7%.
Still waiting on active cash cattle trade... Cash cattle negotiations remained quiet on Thursday, with neither side willing to concede. While cattle futures continued to trade at big discounts to the cash market, this week’s price gains suggest traders aren’t anticipating weaker cash trade.
Hog futures premium still wider than normal... Buyer interest in hog futures has been limited despite the seasonally rising cash market. As of Thursday’s close, June lean hog futures held a $6.88 premium to the CME lean hog index, which is stronger than the 10-year average rise of roughly $3.50 from now until June 16, the date the lead contract will be settled against the index.
Overnight demand news... South Korea purchased 65,000 MT of corn expected to be sourced from South America or South Africa.
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
- 2:00 p.m. Cattle on Feed — NASS
- 2:00 p.m. Chickens and Eggs — NASS
- 2:00 p.m. Milk Production — NASS
- 2:00 p.m. Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC