Good morning!
Selling persists overnight amid risk-off trading... Corn, soybean and wheat futures faced followthrough selling during overnight trade. As of 6:30 a.m. CT, corn futures are trading 7 to 10 cents lower, soybeans are 10 to 12 cents lower, SRW wheat futures are 4 to 5 cents lower, HRW wheat is around a penny lower and HRS wheat is 3 to 4 cents lower. Front-month crude oil futures are more than $2.00 lower and the U.S. dollar index is down around 400 points.
Fed decision on interest rates this afternoon... The Fed is widely expected to raise benchmark interest rates another 25 basis points at the conclusion of the two-day Federal Open Market Committee meeting this afternoon. Traders will closely dissect the post-meeting comments and Chair Jerome Powell’s comments for indications of whether the Fed intends to keep tightening or pause.
Clarida: Fed should pause after today... The Fed should suspend its interest-rate increases after today, former Fed Vice Chair Richard Clarida said. “I would be in the camp of signaling a pause,” Clarida said at the Wall Street Journal’s Future of Everything Festival on Tuesday, citing the cumulative effects of the Fed’s rate increases so far as well as tighter credit conditions following the failures of a few regional banks in the past two months. He noted the collapses of multiple banks will reverberate through the financial system and make it more difficult for some businesses and consumers to get loans, which will have a cooling effect on the economy.
Russia says grain deal talks will be held Friday... Russian Foreign Ministry spokeswoman Maria Zakharova said talks between Russia and the United Nations on the Black Sea grain deal will be held in Moscow on May 5. She said the UN would be represented by top trade official Rebeca Grynspan. The Kremlin confirmed Russia will continue talks with the UN and other parties about the grain deal but said it would not do anything to harm its own interests.
Tour indicates really low Oklahoma wheat production... A group of crop experts projected Oklahoma’s drought-damaged winter wheat crop at 54.3 million bu., with an average yield of 24.6 bu. per acre, following an annual tour of the state, said Mike Schulte, executive director of the Oklahoma Wheat Commission. The estimates were based on field assessments conducted by Oklahoma State University Extension educators as well as private crop consultants and area agronomists. However, the average wheat production estimate among members surveyed at a meeting of the Oklahoma Grain & Feed Association, where the tour numbers were released, was much lower at 40.7 million bushels. In 2022, Oklahoma produced a winter wheat crop of 68.6 million bu. on an average yield of 28 bu. per acre.
Dairy appears absent in U.S./Canada trade talks... Statements released by both the U.S. and Canada following Tuesday’s meeting of U.S. Trade Representative Katherine Tai and Canadian trade minister Mary Ng cover a lot of issues, but it appears the dispute between the two countries over dairy was not a part of the discussions. The officials discussed “ongoing consultations under the United States-Mexico-Canada Agreement (USMCA) on certain Mexican energy and agricultural biotechnology measures that continue to threaten U.S. and Canadian investments and exports, and recent changes in Mexico’s mining law,” according to a readout from the Office of the U.S. Trade Representative. The statement issued by Ng’s office indicated the two discussed Canadian softwood lumber and Buy America provisions but again no mention of the dairy dispute.
Barclays toughens deforestation rules for beef sector clients... Barclays has told beef sector clients they must prevent deforestation in their South American supply chains, in a policy document seen by Reuters that toughens the bank’s stance. The document seen by Reuters said the bank required beef producers to prohibit the production or primary processing of beef on or from areas in the Amazon cleared or converted after 2008. It also required them to commit to a deforestation-free South American beef supply chain, both direct and indirect, with full traceability, by 2025 in areas at high risk of deforestation including the Amazon, Brazil’s Cerrado and the Chaco biomes. Companies would also need to monitor, verify and report on deforestation-free beef volumes by December 2025 and have a policy commitment in place to respect human rights across their operations and supply chain. More broadly, Barclays said it had “no appetite” for providing financial services to soy, beef, palm oil, forestry and timber companies directly involved in illegal logging or related activities, which used fire to clear land or which committed acts of violence or exploitation of local communities.
Cattle market looking toppy... Cash cattle started trading at $1 lower prices in the Southern Plains, while wholesale beef prices continued their recent pullback on Tuesday with Choice down 78 cents and Select $2.34 weaker. Weakening cash fundamentals gave traders incentive to take profits out of the long side of the market. While supply-side fundamentals remain strong, cattle futures, the cash market and wholesale beef prices all appear like they have posted seasonal tops.
Hog fundamentals strengthening... The CME lean hog index is up 92 cents to $73.02 (as of May 1), the highest price since April 4. The pork cutout value firmed $1.61 on Tuesday to $82.08, the highest price since March 16. With cash fundamentals firming seasonally, the recent narrowing of spreads between futures and the cash index should slow, though traders may want to see sustained strength before they add to premiums.
Overnight demand news... Egypt purchased 655,000 MT of wheat – 535,000 MT from Russia and 120,000 MT from Romania.
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
- 2:00 p.m. Broiler Hatchery — NASS