Good morning!
Grains pull back overnight... Corn, soybeans and wheat pulled back from Monday’s strong gains during the overnight session. Key today will be whether buyers show up on the overnight price weakness as they did yesterday. As of 6:30 a.m. CT, corn futures are trading mostly a penny lower, soybeans are 2 to 3 cents lower, SRW wheat is 4 to 5 cents lower, HRW wheat is 11 to 12 cents lower and HRS wheat is mostly 8 cents lower. Front-month crude oil futures are modestly weaker, while the U.S. dollar index is around 150 points higher.
HRW CCI rating inches up, SRW reading declines... USDA rated the winter wheat crop 50% “good” to “excellent,” up one percentage point from the previous week. 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 inched up 0.1 point to 317.5, the first increase this spring, though top producer Kansas dropped 1.2 points. The SRW CCI rating fell 4.3 points, the first decline this spring, led by a 3.6-point drop in top producer Illinois. Click here for details.
Crop Progress Report highlights… Following are highlights from USDA’s crop progress and condition update as of May 5:
- Winter wheat: 50% good/excellent (49% last week); 43% headed (32% five-year average).
- Corn: 36% planted (39% average); 12% emerged (9% average).
- Soybeans: 25% planted (21% average); 9% emerged (4% average).
- Spring wheat: 47% planted (31% average); 12% emerged (9% average).
- Cotton: 24% planted (20% average).
Cordonnier further cuts Argentine corn crop forecast... South American crop consultant Dr. Michael Cordonnier cut his Argentine corn crop estimate another 2 MMT to 47 MMT, noting falling yields and increased impacts from corn stunt disease. The disease will have a greater impact on later-harvested corn acres, so Cordonnier warned there could be additional cuts to his production estimate. He left his Argentine soybean production forecast at 51 MMT. Cordonnier left his Brazilian soybean and corn production estimates at 147 MMT and 112 MMT, respectively, as he evaluates impacts from flooding in far southern Brazil and dry weather in south-central safrinha corn areas.
Russia cuts grain trader’s export quota... Russia’s ag ministry has reduced the grain export quota of one of the country’s largest grain traders Rodnie Polya (formerly known as TD RIF) for the current marketing year by almost 1.2 MMT, setting the new quota at 2.78 MMT amid a row with authorities over phytosanitary issues. The ministry also completely nullified the quota for Louis Dreyfus Vostok and four other companies, though specific details on the quantities affected were not provided. This is part of a broader policy by Russia to control grain exports, having established a total grain export quota of 29 MMT for the second half of the 2023-24 marketing year, spanning from Feb. 15 to June 30.
Canadian grain stocks out this morning... Statistics Canada will release Canadian grain stocks as of March 31 at 7:30 a.m. CT. Analysts expect all-wheat stocks of 12.2 MMT, which would be down from 13.9 MMT last year. Canola stocks are expected to total 8.3 MMT, up from 7.0 MMT last year.
Farm bill update... House Ag Chair Glenn “GT” Thompson (R-Pa.) will reportedly release the House farm bill several days before the panel’s May 23 markup. House Ag Democrats are meeting this afternoon to discuss farm bill plans. On Thursday morning, House Ag Democrats, House Minority Leader Hakeem Jeffries (D-N.Y.) and Senate Ag Chair Debbie Stabenow (D-Mich.) are meeting. Stabenow and Thompson will reportedly speak Thursday afternoon. Thompson is also expected to meet privately with Senate Ag ranking member John Boozman (R-Ark.). Thompson and Ag Committee staff late this week are expected to release several farm bill papers on key topics.
Slight change in ERP payments... Payments under Phase 2 of the Emergency Relief Program (ERP) edged up to $886.1 million as of May 5, up from $886.09 million the prior week. Totals for ERP Phase 1 and total ERP payments were largely unchanged.
Japan to scrutinize yen moves... Bank of Japan (BOJ) Governor Kazuo Ueda said the central bank will scrutinize recent yen moves in guiding monetary policy as they could significantly affect the economy and prices. Ueda said he discussed with the premier recent currency moves, as well as economic developments after BOJ’s decision to end negative interest rates in March. Ueda also said the central bank will keep a close eye on how the yen’s moves could affect Japan’s underlying inflation.
China’s forex reserves fall more than expected in April... China’s foreign exchange reserves, the world’s largest, fell $44.83 billion to $3.201 trillion last month, as the dollar strengthened against other major currencies. The yuan depreciated 0.28% against the dollar, while the dollar strengthened 1.8% against a basket of other major currencies in April.
China adds to gold reserves... China’s central bank added 60,000 troy ounces of gold to its reserves in April, extending the period of consecutive purchases to 18 months despite high prices. China held 72.80 million ounces of gold at the end of April, valued at $167.96 billion. Gold demand from global central banks has been elevated for two years, supporting prices. The People’s Bank of China was the largest official sector buyer of gold in 2023 with net purchases of 7.23 million ounces (224.9 MT), according to the World Gold Council (WGC), the most for a single year since at least 1977. WGC expects global central banks to slow purchases of gold in 2024 but to keep them higher than they were prior to 2022.
CDC requests worker protective gear to combat H5N1... The U.S. Centers for Disease Control and Prevention (CDC) said on Monday it had met with state health officials and asked them to facilitate distribution of protective gear for farm workers to avoid infection against the H5N1 virus. CDC said it asked state health departments to work with their agriculture department counterparts and partners in communities to prioritize the distribution of personal protective equipment from their stockpile to workers on farms where dairy herds have been known to be infected with the virus. CDC urged farmers, workers and emergency responders last week to wear appropriate protective gear when in direct or close physical contact with sick birds, livestock, feces, raw milk or contaminated surfaces.
Southern Brazil flooding affects 10 poultry, pork plants... Torrential rains and flooding has killed livestock, blocked roads and forced meatpackers to partially or fully halt operations at 10 pork or poultry plants in Rio Grande do Sul, Brazil, meat lobby ABPA said. ABPA said these plants have been struggling with a shortage of animals for slaughtering and lack of employees at the plants. ABPA said Rio Grande do Sul could face a shortage of poultry and pork products until the production systems resume, which could take more than 30 days. The state accounts for 11% of Brazil’s total chicken production and for 19.8% of pork supplies, ABPA data showed.
Wholesale beef prices strengthen... Wholesale beef prices firmed on Monday, with Choice up $4.56 and Select $2.10 higher, though movement slowed to 78 loads. It appears packers are trying to heel deeply negative cutting margins by pushing wholesale prices higher after the flurry of retailer purchases amid the recent drop in prices.
Pork cutout nearing $100 again... The pork cutout firmed $1.38 to $99.50 on Monday, fueled by strong gains in bellies, loins and ribs. Just as importantly, movement improved to 305.4 loads. Meanwhile, the seasonal rise in the CME lean hog index is showing signs of stalling, as it is down 16 cents to $90.80 as of May 3, marking declines in five of the past eight days.
Overnight demand news... South Korea purchased 68,000 MT of corn to be sourced from South America. Japan is seeking 114,077 MT of milling wheat in its weekly tender. Egypt tendered to buy an unspecified amount of vegoils from multiple sources.
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
- 2:00 p.m. Noncitrus Fruits and Nuts - Annual — NASS