First Thing Today | May 20, 2024

Wheat futures rebounded from the poor finish last Friday by posting strong gains during the overnight session. Corn and soybeans followed to the upside.

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Pro Farmer’s First Thing Today
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Wheat leads overnight price gains... Wheat futures rebounded from the poor finish last Friday by posting strong gains during the overnight session. Corn and soybeans followed to the upside. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents higher, soybeans are 2 to 5 cents higher and wheat futures are 13 to 18 cents higher. Front-month crude oil futures are around 30 cents lower and the U.S. dollar index is nearly 100 points higher.

Wet week ahead for Corn Belt... Rains fell on the western and northern Corn Belt overnight and will continue this morning. Forecasts call for generally wet conditions over the region during the next 10 days. HRW wheat areas of Southern Plains will be mostly dry this week. In the Black Sea region, southern Russia and eastern Ukraine are also expected to trend drier than normal. In Brazil, safrinha corn areas will receive some needed rains, while southern locations will get more rains and remain excessively wet.

Recent cold temps hurt Ukraine’s grain crops... Recent severe frosts across Ukraine’s northern and eastern regions could reduce this year’s grain and oilseed harvest, analyst APK-Inform said. The cold temps damaged crops of wheat, barley, rapeseed and peas, APK-Inform said, adding that 20% to 30% of the yield could be lost. Ukraine’s agriculture ministry told Reuters its crop forecast was unchanged for now, with combined grain and oilseed production at 74 MMT, down from 82 MMT last year.

Nearly 70% of China’s April soybean imports came from Brazil... Of the 8.57 MMT of soybeans China imported last month, 5.92 MMT (69.1%) came from Brazil, up 11.7% from last year. Chinese soybean imports from the U.S. totaled 2.45 MMT (28.6%) in April, up 44% from last year. For the first four months of this year, China imported 15.9 MMT of soybeans from Brazil, up 72% compared to the same period last year, while imports from the U.S. stood at 9.58 MMT, down 48%.

Slow Argentine farmer sales of soybeans... Argentine farmers had by early May sold only 31% of an expected 49.7 MMT crop, the slowest pace since at least 2014-15, government data show. Rains have slowed Argentina’s soybean harvest and low prices discouraged farmers from selling new-crop supplies.

‘Tale of two Australias’... Dry weather in Australia’s west and south is threatening to shrink crops, with canola output likely to drop this year, but ample rainfall in eastern states is expected to boost the country’s overall wheat output. More than a month into the winter planting season, “it’s a tale of two Australias,” Rod Baker at Australian Crop Forecasters, told Reuters. “In Queensland and most of New South Wales, things are looking fantastic,” he said, predicting higher wheat and barley plantings and better yields than last year. But farmers in Western and South Australia are feeling increasingly anxious as they plant crops into dry soils. The area planted with canola nationwide will shrink 6% to 3.1 million hectares with production likely to fall 5% from last year to 5.4 MMT, Baker said. The wheat area, however, should rise 1% to 13.5 million hectares with production increasing 11% to 29.3 MMT, he said. Barley area is set to grow 4% to 4.5 million hectares and output to rise 7% to 11.2 MMT.

The week ahead in Washington... The House Ag Committee on Thursday (May 23) will mark up the House farm bill titled the Farm, Food, and National Security Act of 2024. Our Special Report compares some of the key topics in the proposed House and Senate farm bills. The economic focus this week will be the minutes from the last Fed monetary policy meeting on Wednesday, along with a plethora of Fed speakers. USDA will update planting progress and winter wheat crop conditions this afternoon and its outlook for food prices on Friday.

USMCA meets Tuesday and Wednesday... Trade will be on the agenda this week as the U.S.-Mexico-Canada Agreement (USMCA) Free Trade Commission (FTC) meets Tuesday and Wednesday in Arizona. There are still several disputes that have not been resolved as the trade leaders from the three countries meet, including agriculture issues such as Mexico’s ban on imports of GMO corn for food use and U.S. issues with the Canadian dairy program operation.

China probe ag minister for corruption... China’s agriculture minister is being investigated for suspected violations of law and discipline, the country’s anti-graft watchdog said on Saturday. Tang Renjian is under investigation for “serious violations of discipline and law” by the Central Commission for Discipline Inspection (CCDI) and National Supervisory Commission. Tang has been removed from the leadership roster on his ministry’s website as of Monday. The move to investigate Tang, also the head of China’s food security campaign, was unusually swift.

China leaves interest rates unchanged... The People’s Bank of China kept the 1-year loan prime rate (LPR), the benchmark for most corporate and household loans, at 3.45%. The 5-year LPR, a reference for property mortgages, remained at 3.95%. Meanwhile, China’s fiscal revenue slipped 2.7% in the first four months of 2024 from a year earlier with revenue from government land sales down 10.4%, while fiscal expenditure rose 3.5% through April.

China’s pork imports remain slow... China imported 90,000 MT of pork in April, the same as March but down 35.7% last year. Through the first four months of this year, China’s pork imports stood at 340,000 MT, down 48.4% from the same period last year.

Bird flu discovered in western China... Cases of bird flu have been confirmed among wild fowl in western China, the ag ministry said on Saturday. Two counties in Qinghai province confirmed 275 cases of H5 influenza among dead Pallas’s gull and other wild birds.

Wholesale beef prices continue to surge... Wholesale beef prices firmed $3.30 for Choice and 89 cents for Select on Friday, though movement slowed to 99 loads. With Choice beef at $313.45 and Select at $297.40, traders will watch movement closely to see if there are signs the surge in prices is slowing retailer demand.

Hog premiums weaken... The CME lean hog index is up 16 cents to $92.29 as of May 16. After Friday’s losses, the premium June lean hog futures hold to today’s cash quote tightened to $4.21. Meanwhile, the pork cutout value firmed 58 cents on Friday, led by a $5.77 gain in primal bellies.

Weekend 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