First Thing Today | May 9, 2023

Corn, soybean and winter wheat futures faced pressure overnight, while spring wheat traded mildly higher.

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

Good morning!

Corn and beans lower, wheat mostly weaker... Corn, soybean and winter wheat futures faced pressure overnight, while spring wheat traded mildly higher. As of 6:30 a.m. CT, corn futures are trading around 6 cents lower, soybeans are 3 to 5 cents lower, SRW wheat is 8 to 9 cents lower, HRW wheat is 1 to 2 cents lower and HRS wheat is 1 to 4 cents higher. Front-month crude oil futures are around 75 cents lower and the U.S. dollar index is about 175 points higher.

All sides to meet on Black Sea grain deal this week... A high-level meeting on the Black Sea grain deal will take place in Istanbul on May 10-11, Russian state-owned RIA news agency quoted Russian Deputy Foreign Minister Sergei Vershinin as saying. Officials from Russia, Ukraine, Turkey and the United Nations are expected to attend as they seek to extend the deal beyond the May 18 deadline. Ukraine says it has “several scenarios” to transport its grain if the deal isn’t extended, without providing details. Meanwhile, the UN said no ships were inspected the past two days Joint Coordination Center in Istanbul.

HRW CCI rating continues historic decline... When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 5.8 points to a historically low 237.0. Kansas led the decline, falling nearly 3.6 points during the week. Only the Texas and Montana crops showed modest improvement over the past week. The SRW crop rose 1.7 points to 375.9, which was an above-average rating for the first week of May. Click here for more details.

Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 7.

  • Winter wheat: 29% good/excellent (28% last week); 38% headed (35% five-year average).
  • Corn: 49% planted (42% average); 12% emerged (11% average).
  • Soybeans: 35% planted (21% average); 9% emerged (4% average).
  • Cotton: 22% planted (23% average).
  • Spring wheat: 24% planted (38% average); 5% emerged (11% average).

China’s April soy imports far less than expected... China imported 7.26 MMT of soybeans during April, up 0.6% from March but down 9.8% from last year and well shy of the 9 MMT traders expected, as new customs procedures delayed the unloading of cargoes. Through the first four months of this year, China imported 30.29 MMT of soybeans, up 6.8% from the same period last year.

China’s imports contracted, exports grew at slower pace... China’s imports shrank 7.9% from year-ago during April amid weak domestic demand, lower commodity prices, and a stronger dollar. Exports rose 8.5% versus April 2022, down from 14.8% growth the previous month. China’s trade surplus surged to $90.2 billion last month, up from $88.2 billion in March. The trade surplus with the U.S. widened to $29.7 billion from $27.6 billion the previous month.

India proving to be a major competitor for China... Western companies are desperately looking for a backup to China as the world’s factory floor, a strategy widely termed “China plus one.” India is making a concerted push to be the plus one, the Wall Street Journal reports. Only India has a labor force and an internal market comparable in size to China’s. Western governments see democratic India as a natural partner, and the Indian government has pushed to make the business environment more friendly than in the past.

Consultant raises Brazilian crop estimates... Soybean yields in central and northeastern Brazil topped expectations and more than compensated for disappointing results in far southern areas. As a result, crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop estimate 1 MMT to 154 MMT. He also raised his Brazilian corn crop estimate 1 MMT to 124 MMT, despite some safrinha corn areas starting to turn drier.

Canadian grain stocks out this morning... Statistics Canada will release its estimates of Canadian grain stocks as of March 31 at 7:30 a.m. CT. Traders expect all wheat stocks to come in at 14 MMT, which would be up from 11.22 MMT on March 31, 2022. Canola stocks are expected to total 6.9 MMT, up from 5.2 MMT last year.

Debt talks update... Senate Republican leader Mitch McConnell (R-Ky.) warned he won’t come to President Joe Biden’s rescue on the debt limit by breaking a partisan deadlock as a U.S. default looms. Ahead of a meeting today at 3 p.m. CT between Biden and congressional leaders, McConnell said in an interview he told the president privately it was up to him and House Speaker Kevin McCarthy (R-Calif.) to find a solution, even as he projected confidence the nation would avert a default. House and Senate Republicans are unified behind McCarthy’s strategy to negotiate a spending cut package alongside a debt-limit boost. Biden and Democratic leaders on Capitol Hill say Republicans must take default off the table. Only then will a deal to reduce spending be possible.

ERP Phase 2 payouts continue to rise... Payments under the Emergency Relief Program (ERP) Phase 2 increased to $414,533 as of May 6, paid out to 215 recipients, a rise of just over $120,000 compared with the prior week. Payments under ERP Phase 1 remained essentially unchanged along with the amounts paid out for the two Coronavirus Food Assistance Program (CFAP) efforts.

Cattle traders maintain pessimistic stance... The average cash cattle price dropped $3.22 to $173.93 last week, the third straight weekly decline. After posting an all-time high the week ended April 14, cash cattle prices dropped $6.51 and are expected to be lower again this week. But front-month June live cattle futures finished Monday $11.505 below last week’s average cash price. Given the tight market-ready supply situation, that’s too pessimistic from our viewpoint.

Cash hog index ticks down... The CME lean hog index is down 12 cents to $74.42 (as of May 5), ending the recent string of price strength. While the expiring May contract finished modestly firmer on Monday, traders continued to narrow premiums in summer-month contracts. As of yesterday’s close, the premium June hogs held to today’s cash quote fell to $8.88.

Overnight demand news... Japan is seeking 125,974 MT of milling wheat in its weekly tender. Taiwan tendered to buy up to 65,000 MT of corn that can be sourced from the U.S., Brazil, Argentina or South Africa. Algeria passed on a tender to buy up to 140,000 MT of corn and 70,000 MT of soymeal.

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

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