Good morning!
Corn and soybeans firmer, wheat mixed this morning... Wheat futures extended Thursday’s losses overnight. Corn and soybeans posted two-sided trade, with corn weaker and soybeans firmer early this morning. As of 6:30 a.m. CT, corn futures are trading 3 to 6 cents higher, soybeans are 5 to 6 cents higher, winter wheat futures are mostly fractionally higher to a penny lower and spring wheat is mostly fractionally to a penny higher. Front-month U.S. crude oil futures are around $1 lower and the U.S. dollar index is about 250 points higher this morning.
Cattle on Feed, Cold Storage Reports out this afternoon... Traders expect the Cattle on Feed Report to show the April 1 feedlot inventory up 0.4% from last year, with placements expected to be down 7.8% and marketings 1.8% below-ago levels. The Cold Storage Report will detail frozen meat stocks at the end of March. The five-year average is a 15.5-million-lb. decline in beef stocks and an 18.6-million-lb. drop in pork stocks during March.
Painful week for China’s markets... Sentiment toward the country’s assets has soured as Covid lockdowns slow economic growth and policy stimulus falls short of investors’ expectations. Domestic equities have lost about $2.7 trillion of market value this year, prompting the authorities to step up efforts to halt the decline. The offshore yuan posted its biggest weekly loss since the surprise devaluation in 2015. China is heading for the largest oil demand shock since the early days of the pandemic. Crude headed for its third weekly loss in four.
Chinese central bank governor stresses price stability... China’s central bank governor Yi Gang on Friday underlined the importance of grain production and energy supply for ensuring price stability amid rising inflationary pressure worldwide, reported China Daily. Yi said price stability is a policy priority, and if grain production and energy supply remain stable, inflation will be kept within a reasonable range. Yi said the People’s Bank of China, the nation’s central bank, will maintain an accommodative monetary policy throughout this year to support the real economy and is ready to support small and medium-sized enterprises with more instruments if needed.
Chinese growth expectations lowered... Economists polled by Bloomberg have lowered their growth forecasts for China once again, as widespread Covid-19 lockdowns threaten to hold back the economy in the months ahead. Gross domestic product will likely expand 4.9% in 2022, down from the previous estimate of 5%, according to a survey of 62 economists compiled by Bloomberg. Second- and third-quarter economic growth forecasts were slashed by 30 basis points to 4.3% and 5.2% year-on-year, respectively. The outlook for major policy interest rates stayed largely unchanged. Economists expect a 10 basis-point cut in the one-year loan prime rate to 3.6%, and a conservative 25 basis-point easing in reserve ratio requirement in the second quarter.
China to sell soybean reserves next week... China’s National Grain Trade Center announced it will sell 500,000 MT of imported soybeans from its state reserves on April 29.
Another big jump in Russian wheat export tax... Russia’s wheat export tax for April 27-May 5 will be $119.10 per metric ton, based on an indicative price of $370.20 per metric ton, up $8.40 from the previous week. The wheat export tax has risen for six consecutive weeks and is at its highest level.
Russia donates wheat to Cuba... Russia donated nearly 20,000 MT of wheat to political ally Cuba. Russian ambassador to Cuba Andrei Guskov said at a ceremony that his country´s government had agreed last year to send the grains to Cuba. But the ship transporting the wheat, Guskov said, was stalled off the island for a month by Western sanctions imposed on Russia after its invasion of Ukraine. He noted that banking-related restrictions had complicated Russia´s payments to the shipper, making it impossible for the boat to offload and “convert the wheat to bread for Cubans.” The substantial donation is the latest in a series of overtures between the two countries.
French corn planting jumps... Some 32% of the expected corn area has been planted in France, compared with 8% a week earlier and 37% a year ago, according to FranceAgriMer. The office also reported 91% of the French soft wheat crop was in good or excellent condition in the week to April 18, down from 92% the previous week but above the 85% at the same point last year.
World officials to release food security plan... In the coming weeks, world officials will release proposals to bolster food supplies, ensure that small farmers can afford fertilizer and improve social safety nets in places with food insecurity. “There’s a very real risk soaring global market prices for food and fertilizer will result in more people going hungry, further exacerbate inflation and harmful fiscal and external positions,” Treasury Secretary Janet Yellen said.
Five new HPAI commercial cases confirmed... USDA’s Animal and Plant Health Inspection Service (APHIS) has confirmed additional highly pathogenic avian influenza (HPAI) cases in commercial poultry operations in two states. APHIS confirmed two more flocks in Lancaster County, Pennsylvania (1,127,700 in one commercial table egg layer flock and 879,400 in another commercial table egg layer flock) and three in Minnesota (two commercial turkey meat bird flocks in Todd County with a total of 60,000 birds and one commercial turkey meat bird flock in Stearns County with 63,700 birds).
Cattle pricing bill hearing a ‘formality’.... Sen. Charles Grassley (R-Iowa) said in his Capitol Hill Report the upcoming Cattle Price Discovery and Transparency Act of 2022 hearing is a formality. He said there is enough support to get it out of committee. He does not expect the committee to learn a lot during the hearing. Grassley expects testimony for and against the bill during the upcoming hearing. The hearing is an opportunity for both sides to get their side to the public.
Cattle futures post technical breakout... Strong gains the past two days pushed June live cattle futures above their March highs, producing a technical breakout. Bullish traders are now talking about a challenge of the contract high posted in February. While the current rally is cash-led, it is likely to be somewhat short-lived as slaughter numbers will build seasonally in the coming months.
Pork cutout back to $110... The pork cutout value firmed $1.71 on Thursday, rising to $110.20, though movement totaled only 188.72 loads on the day. Packers have struggled to find sustained retailer demand around this price level since late February. If retailer buying dries up here again, packers will likely lower prices to keep product moving through the pipeline.
Overnight demand news... Exporters reported no tenders or sales.
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 pm Raw-Fiber Equivalents of U.S. Textile Trade Data — ERS
- 2:00 pm Cattle on Feed — NASS
- 2:00 pm Cold Storage — NASS
- 2:00 pm Peanut Prices — NASS
- 2:30 p.m. Commitments of Traders — CFTC