First Thing Today | May 28, 2024

Wheat futures posted strong gains overnight coming off the extended holiday weekend amid ongoing Russian crop concerns. Corn followed to the upside, while soybeans slumped after a firmer start.

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Pro Farmer’s First Thing Today
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Wheat and corn firmer, soybeans weaker overnight... Wheat futures posted strong gains overnight coming off the extended holiday weekend amid ongoing Russian crop concerns. Corn followed to the upside, while soybeans slumped after a firmer start. As of 6:30 a.m. CT, corn futures are trading 1 to 2 cents higher, soybeans are 3 to 4 cents lower, SRW wheat is 9 to 10 cents higher, HRW wheat is 13 to 16 cents higher and HRS wheat is 10 to 12 cents higher. Front-month crude oil futures are more than $1.00 higher and the U.S. dollar index is more than 200 points lower this morning.

Corn Belt, Mid-South stay wet... Heavy weekend rainfall was seen over the central Corn Belt and Tennessee River Basin. These areas are expected to receive more rainfall this week, limiting planting in the wettest areas. The Southern Plains are forecast to receive some needed rains, though they will come too late to benefit much of the HRW crop. In the Black Sea region, Russia’s Southern Region, western Kazakhstan and eastern Ukraine won’t receive any significant rain during the next 10 days to two weeks while temps will be warm, increasing crop stress in these areas.

IKAR further cuts Russian wheat production, export forecasts... Russia’s IKAR agricultural consultancy cut its forecast for the country’s wheat crop another 2 MMT to 81.5 MMT. Its forecast for 2024-25 Russian wheat exports was lowered to 44 MMT. IKAR expects all grain production at 129.5 MMT, with grain exports at 55.5 MMT. Some 1.5 million hectares of crops in Russia have been damaged by bitter frosts this spring and the total figure may rise to 2 million hectares, the head of the Russia’s Grain Union said on Monday. It said Russia’s total grain production will be lower than 130 MMT, without providing a specific estimate. Russia’s ag ministry does not plan to revise its forecasts for the Russian grain harvest or exports, RIA state news agency cited Minister Oksana Lut as saying on Monday.

Russia increasing control over grain industry... Russia is potentially gaining more power in exports by increasing its control over the grain industry amid global supply concerns, Bloomberg reports. Western companies like Cargill Inc. and Viterra withdrew from Russia last year due to government pressure, paving the way for local firms to dominate. This consolidation intensified after President Vladimir Putin’s invasion of Ukraine, with just four companies now handling three-quarters of grain exports from Russia’s Black Sea terminals. This shift grants Moscow more influence over wheat supplies, crucial for global food inflation control, and complicates the ability of overseas traders to monitor Russian grain flows, especially as adverse weather affects the wheat crop.

Traders union cuts Ukraine grain/oilseed crop forecast... Ukrainian grain traders union UGA cut its forecast for Ukraine’s combined grain and oilseed production by 1.5 MMT to 74.6 MMT. Production is expected to include 25.5 MMT of corn, 19.1 MMT of wheat, 4.6 MMT of barley, 13.7 MMT of sunseed, 5.5 MMT of soybeans and 4.3 MMT of rapeseed.

EU crop monitor trims wheat, rapeseed yield forecasts... European crop monitoring service MARS on Monday trimmed its forecast for the average soft wheat yield in the EU this year, to 5.92 metric tons per hectare (t/ha) from 5.93 t/ha forecast in April. MARS projected the bloc’s average rapeseed yield this year at 3.21 t/ha, down from 3.26 t/ha forecast last month.

Cold temps slow leafhoppers in Argentina... Cold temperatures across much of Argentina’s major crop areas over the weekend will help slow a severe leafhopper outbreak that has damaged the country’s corn crop, the Rosario Grain Exchange said on Monday. The leafhopper outbreak has resulted in the exchange cutting its forecast for the current corn harvest by 20% since the beginning of the season to 47.5 MMT.

Cordonnier keeps South American crop estimates unchanged... South American crop consultant Dr. Michael Cordonnier kept his Brazilian crop estimates at 147 MMT for soybeans and 112 MMT for corn. He has a neutral bias toward both crops as he monitors soybean losses in Rio Grande do Sul due to recent flooding and weather conditions for the safrinha corn crop in central and south-central areas of the country. Cordonnier left his Argentine production estimates at 50 MMT for soybeans and 47 MMT for corn, though he has a lower bias toward both amid falling yields as harvest progresses.

The week ahead in Washington... Congress is out this week on its Memorial Day recess, with both the House and Senate slated to return June 3. The House Ag Committee farm bill passed last week, though Chair Glenn “GT” Thompson (R-Pa.) acknowledged no House floor movement on the measure would take place until September, when the hope is that fiscal year 2025 appropriations bills will be dealt with in some manner. The economic highlight of the week will be Friday’s personal consumption expenditures price index for April, the Fed’s preferred inflation gauge. The focus for agriculture will be USDA’s updated outlook for ag trade on Wednesday.

International shipping costs surge... The cost of international shipping has surged as businesses expedite their shipments for the festive season in response to disruptions from attacks in the Red Sea, the Financial Times reports. The average cost of shipping a 40-foot container between the Far East and northern Europe at short notice reached $4,343 last week, nearly three times higher than the same period last year, according to freight market tracker Xeneta. These price hikes, while not surpassing the peak seen after Yemen’s Houthi group began targeting vessels in November, are notable for occurring during the typically quieter spring months. Traditionally, shipping costs peak between late summer and autumn, as retailers import goods for the Black Friday sales and Christmas season.

China’s industrial profits grow in April... Profits at China’s industrial firms rose 4.0% in April, following a 3.5% contraction the previous month. For the first four months of the year, industrial profits increased 4.3% from the same period last year. Profits in the private sector expanded 6.4% while those for state-owned firms fell 2.8% during the January-April period.

Neutral Cattle on Feed Report... USDA estimated there were 11.554 million head of cattle in large feedlots (1,000-plus head) as of May 1, down 100,000 head (0.9%) from year-ago. That was the first year-over-year decline in feedlot inventories in eight months. April placements dropped 5.8%, while marketings jumped 10.1% from year-ago levels. The data is virtually right in line with pre-report expectations and there should have no market impact.

Beef stocks declined less than average, pork inventories built more than normal in April... USDA’s Cold Storage Report showed beef stocks totaled 430.7 million lbs. at the end of April, down 3.8 million lbs. from March, whereas the five-year average was a 21.6-million-lb. decline. Still, beef stocks stood 21.4 million lbs. (4.7%) below year-ago and 37.9 million lbs. (8.1%) under the five-year average. Pork inventories rose to 501.3 million lbs., up 38.2 million lbs. from March versus the five-year average increase of 18.8 million lbs. during the month. But pork stocks were still down 66.2 million lbs. (11.7%) from April 2023 and 56.8 million lbs. (10.2%) below the five-year average.

U.S., other countries consider vaccinating workers exposed to H5N1... The U.S. and Europe are taking steps to acquire or manufacture H5N1 vaccines that could be used to protect at-risk poultry and dairy workers, veterinarians and lab technicians, government officials said. U.S officials said they were moving bulk vaccine from CSL Seqirus that closely matches the current virus into finished shots that could provide 4.8 million doses of vaccine. European health officials told Reuters they were in talks to acquire CSL’s prepandemic vaccine. Canadian health officials said they have met with GSK, maker of Canada’s seasonal flu shots, to discuss acquiring and manufacturing a prepandemic H5N1 vaccine once its seasonal flu production capacity is freed up. Other countries, including the UK, are discussing how to proceed on prepandemic vaccines, scientists said.

China’s sow herd shrinks... China’s sow herd totaled 39.86 million head at the end of April, down 0.1% from March and 6.9% below year-ago, the ag ministry reported.

Weekend demand news... South Korea passed on a tender to buy up to 138,000 MT of corn from South America or South Africa. Egypt purchased 250,000 MT of raw sugar from unspecified origins.

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