Good morning!
Grains weaker overnight... Corn, soybean and wheat futures faced mild followthrough selling during the overnight session. As of 6:30 a.m. CT, corn futures are trading a penny lower, soybeans are 3 to 5 cents lower, SRW wheat is 4 to 5 cents lower, HRW wheat is 7 to 8 cents lower and HRS wheat is 3 to 5 cents lower. Front-month crude oil futures are about $1.00 lower and the U.S. dollar index is around 150 points higher.
Much bigger Oklahoma wheat crop expected this year... Oklahoma’s winter wheat crop is estimated at 89.161 million bu. on an average yield of 33.68 bu. per acre, the Oklahoma Wheat Commission said, based on field assessments by Oklahoma State University Extension educators, private crop consultants and area agronomists. The average wheat production estimate among members surveyed at a meeting of the Oklahoma Grain & Feed Association, where the tour numbers were released, was higher at 102.2 million bu. with a yield of 37.3 bu. per acre. Last year, Oklahoma produced a winter wheat crop of 68.6 million bushels. USDA’s initial winter wheat crop estimates will be released Friday.
Brazil preparing for emergency rice imports... The Brazilian government is preparing a temporary measure to authorize the national crop agency Conab to import up to 1 MMT of rice to control prices after recent flooding Rio Grande do Sul. The special measure was in response to the extensive damage caused by torrential rains in Rio Grande do Sul, a state that normally accounts for around 70% of the Brazil’s rice production. Conab plans to initially import 200,000 MT of rice. If prices stabilize, the government will suspend other imports.
Will biofuels/SAF incentives be extended?... That’s the most often asked question about the future for biofuels/sustainable aviation fuel (SAF). Odds are high of this happening if Democrats continue to control the White House and perhaps at least one chamber of Congress. If Republicans gain control, the answer is more difficult. Even before election results are known, some veteran Washington sources tell us it depends on the coming “fiscal cliff” as the Trump tax incentives expire in 2025 and thus revert to 2017, and the coming debt ceiling debate in early 2025. While history shows tax credits get extended, especially those for biofuels, if the budget/deficit/debt situation gets serious, tax credits are a cost and that could make it more difficult to extend them.
Suspicions of fake China cooking oil alarm U.S. biofuels industry... China is flooding the U.S. with used cooking oil that the biofuels industry says may be tainted, Bloomberg reports. U.S. imports of used cooking oil, an ingredient to make renewable diesel, more than tripled in 2023 from a year earlier, with more than 50% coming from China, according to the U.S. International Trade Commission. American industry groups and biofuels executives are becoming increasingly worried that a significant amount of those supplies are fraudulent, and are urging the government to tighten scrutiny on the imports. One of the biggest concerns is that Chinese shippers are adding used cooking oil to fresh palm oil. The heightened suspicions come after the European biofuels industry expressed similar concerns about cooking oil from China last year.
China approves gene-edited wheat for first time... China’s ag ministry approved gene-edited wheat for the first time, as Beijing attempts to boost food security. The ministry also approved a new variety of genetically-modified corn with herbicide and insect-resistant traits, as well as one gene-edited corn variety that is higher yielding. The safety certificates have been approved for five years from May 5.
Study: Banned Chinese cotton found in 19% of U.S. and global retailers’ merchandise... Traces of banned Chinese cotton were found in 19% of sampled merchandise at U.S. and global retailers in the past year, a study showed. Researchers from Stratum Reservoir and Applied DNA Science used isotopic testing, which can link cotton to specific geographic areas by analyzing the concentration of stable elements like carbon and hydrogen present in both the crop and the environment in which it has been grown. The firms declined to name the retailers whose merchandise they tested.
EU wants China to stop flooding market with ‘massively subsidized EVs’... Europe needs to prevent China from flooding the market with highly subsidized electric vehicles (EVs), European Commission President Ursula von der Leyen said. “Fair competition is good. What we don’t like is when China floods our market with massively subsidized electric cars. And we have to tackle this, we have to protect our industry,” said von der Leyen, who met Chinese President Xi Jinping alongside French President Emmanuel Macron earlier this week. The EU is currently conducting an anti-subsidy investigation into Chinese EVs to determine whether to impose punitive tariffs on them.
Japan issues stronger warnings on yen’s impact... The Bank of Japan may take monetary policy action if pressure on the yen affects prices significantly, governor Kazuo Ueda said, offering the strongest indication to date the currency’s sharp declines could trigger another interest rate hike. Finance Minister Shunichi Suzuki also voiced “strong concern” over the negative impact of a weak yen, such as boosting import costs, and repeated Tokyo’s readiness to intervene in the market to prop up the weak currency. The remarks underscore the resolve of the Japanese government and central bank to cooperate in keeping damaging yen declines in check. Dollar/yen climbed back above 155 despite the warnings.
Solid packer demand for cash cattle... Despite buying a lot of cattle the past two weeks and negative cutting margins, cash sources indicate packer demand is solid early this week. A limited number of cash cattle traded around steady money, though most feedlots remain hopeful they will be able to get higher prices for a third straight week, which should happen if the reports on packer demand prove accurate.
Cash hog index pauses... The CME lean hog index is up 24 cents to $91.03 as of May 6. Since reaching a short-term peak at $91.64 on April 23, the index has drifted sideways, pausing the seasonal rally. Meanwhile, the pork cutout value dropped $2.41 on Tuesday, pressured by a $9.01 drop in bellies and a $4.33 decline in loins. Since hitting $103.60 on April 15, wholesale pork prices have weakened, though there have been spurts of price strength.
Overnight demand news... Taiwan purchased 65,000 MT of corn expected to be sourced from Brazil. Egypt tendered to buy an unspecified amount of wheat from multiple sources. Japan tendered to buy 65,000 MT of feed wheat and 25,000 MT of feed barley.
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