First Thing Today | May 23, 2024

Grain markets posted two-sided price action in relatively quiet overnight trade.

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

Good morning!

Wheat mixed, corn and beans firmer this morning... Grain markets posted two-sided price action in relatively quiet overnight trade. As of 6:30 a.m. CT, corn futures are trading fractionally to 2 cents higher, soybeans are 2 to 3 cents higher, SRW wheat is mostly a penny lower, HRW wheat is mostly a penny higher and HRS wheat is 4 to 5 cents lower. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is down 185 points.

Weekly Export Sales Report out this morning... For the week ended May 16, traders expect:

2023-24 expectations (in MT)

2023-24

last week

2024-25

expectations (in MT)

2024-25

last week

Corn

500,000-1,200,000

742,177

250,000-450,000

128,238

Wheat

(100,000)-100,000

78,459

200,000-650,000

304,321

Soybeans

275,000-550,000

265,733

0-200,000

25,160

Soymeal

200,000-500,000

300,445

0-50,000

31,110

Soyoil

0-20,000

9,114

0-10,000

962

‘Commodities are hot’... A Barron’s article says, “Commodities are having their moment. Gold and copper have hit historic highs while agriculture is knocking on the door to join the party.” The story concludes, “bottom line, the commodity bull market is alive and well and has more upside.”

House Ag Committee to markup $1.51 trillion farm bill proposal today... The nearly 940-page bill includes provisions for farm, food safety and nutrition programs, with a five-year reauthorization period. House Republicans are striving for bipartisan support but face significant Democratic opposition, particularly over proposed freezes to SNAP payments, changes to environmental and conservation programs, and restricting the Ag secretary’s use of Commodity Credit Corporation (CCC) funding. Ag panel Chair Glenn “GT” Thompson has been actively trying to secure support from vulnerable Democrats. Despite efforts, including a meeting with four key Democrats — Reps. Angie Craig (Minn.), Nikki Budzinski (Ill.), Andrea Salinas (Ore.), and Eric Sorensen (Ill.) — the bid was unsuccessful. Democrats are expected to propose significant amendments during the markup, which Republicans are unlikely to support. House Minority Leader Hakeem Jeffries (D-N.Y.) is working to maintain Democratic unity against the bill. Preliminary scoring from the Congressional Budget Office indicates the Thompson plan would increase the deficit by nearly $40 billion over the next decade, a leaked estimate that Republicans dispute.

Smaller German wheat, rapeseed crops expected... Germany’s wheat production is expected to fall 5.6% from last year to 20.31 MMT, the country’s association of farm cooperatives said, though that’s up from its prior forecast of 20.16 MMT. It forecast Germany’s winter rapeseed crop at 3.87 MMT, down 8.4% from last year and slightly smaller than the previous projection of 3.93 MMT. The association said reduced plantings was the driver of the sharp year-over-year projected declines in production.

Australia testing gene-edited wheat... Groundwork for a major trial of gene-edited wheat has begun in Australia, where a state company is growing hundreds of varieties it says could be up to 10% more productive and make farming more sustainable. Australian seed breeder InterGrain earlier this year imported several thousand wheat seeds created by U.S. agritech company Inari, including hundreds of new genetic variations, InterGrain chief executive Tress Walmsley told Reuters. These seeds are now growing in a testing greenhouse in southeast Queensland. Seeds from those plants will be used to grow more plants, producing enough seeds to plant at more than 45 trial sites across the country in the 2025 growing season, Walmsley said. Inari uses artificial intelligence to map huge numbers of potential gene edits and then applies CRISPR-Cas – a tool that can find and alter selected stretches of DNA – to change multiple genes simultaneously, allowing it to dial up or down characteristics. Gene editing could achieve gains 10 to 15 times faster than traditional plant breeding, InterGrain and Inari said.

Yellen: China faces ‘wall of opposition’ on industrial overcapacity... Treasury Secretary Janet Yellen said on Thursday that it was important for G7 countries and other economies to show China that it faces a “wall of opposition” over its excess industrial capacity, which threatens to flood the world with cheap exports. Yellen said concerns expressed by the U.S. and Europe about China’s overinvestment in electric vehicles, solar products, semiconductors and other strategic sectors were shared by emerging market economies including Mexico, India and South Africa.

China banks support developer Vanke, Fitch downgrades outlook... Cash-strapped major property developer China Vanke said on it had received a 20 billion yuan ($2.76 billion) syndicated loan facility and it would continue to push forward other financing to boost its liquidity. The latest deal brings the total of loans Vanke and its units have taken out this month to nearly 28 billion yuan, according to data compiled by Bloomberg based on public filings. Credit ratings agency Fitch downgraded China Vanke to BB- with a negative outlook.

Euro zone business growth hits one-year high... The HCOB euro zone composite purchasing managers index rose to 52.3 in May, the highest in a year, preliminary data showed. The reading showed the economic recovery in the euro zone gained momentum, amid faster increases in business activity, new orders and employment, while business confidence hit a 27-month high. Growth continued to be centered on the services sector (53.3 vs. 53.3), but manufacturing production neared stabilization (47.4 vs. 45.7), falling only marginally and the least during the 14-month period of contraction.

U.S. in ‘active conversations’ on potential H5N1 vaccine for humans... The U.S. is in “active conversations” with mRNA vaccine makers Pfizer and Moderna about a potential H5N1 vaccine for humans, a Department of Health and Human Services official said Wednesday. That came after it was revealed a second human case of the virus was found in a farmworker in Michigan, as we reported in “Evening Report” on Wednesday. The U.S. Centers for Disease Control and Prevention (CDC) reiterated risk from the virus to the general public remains low. CDC has not seen evidence of human-to-human transmission of H5N1 and has tested close to 40 people since March, including the Michigan worker. All the people who were tested were connected to or had exposures on a dairy farm, CDC said.

Initial cash cattle trade at higher prices... Initial light cash trade took place at higher prices in the northern market this week. Though cash negotiations have been slow to develop in most areas, it appears the average cash cattle price will challenge or eclipse the all-time high of $189.56 posted in March. Despite recent strong gains, nearby live cattle remain well below the cash market.

Cash hog fundamentals easing... The CME lean hog index is down 19 cents to $91.82 as of May 21, the third straight daily decline, though losses total only 47 cents over that span. The pork cutout dropped 62 cents on Wednesday to $100.07 and is $1.70 off its recent peak.

Overnight demand news... South Korea purchased 271,000 MT of corn expected to be sourced mostly 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