USDA WASDE today | Brazil crop estimates | Ukraine grain exports fall sharply
In Today’s Digital Newspaper |
Abbreviated format today as I just concluded a speech in Baton Rouge, La., to the American Sugar Cane League. Most cane growers are coming off a very good year (but a late freeze), with firm prices. Next stop is the annual CIRB meeting, this year in Bonita Springs, Florida.
Equities: Global stock markets were mixed overnight. U.S. stock indexes are pointed toward weaker openings. In Asia, Japan -0.3%. Hong Kong -0.1%. China -0.5%. India +0.6%. In Europe, at midday, London +0.7%. Paris +0.4%. Frankfurt +0.7%.
Ag markets firm ahead of USDA reports. Grain and soy futures traded solidly higher overnight, led by old-crop soybeans. As of 7:30 a.m. ET, corn futures were trading 1 to 2 cents higher, soybeans were mostly 7 to 11 cents higher and wheat futures were mostly 4 to 8 cents higher. Front-month crude oil futures were around 75 cents higher, and the U.S. dollar index was more than 300 points lower this morning.
USDA February crop reports out at noon ET. USDA is expected to make minor adjustments to its U.S. balance sheets in the Supply & Demand Report at 11 a.m. CT. Traders expect USDA to report U.S. ending stocks at 1.266 billion bu. for corn (up from 1.242 billion bu. in January), 211 million bu. for soybeans (up from 210 million bu.) and 576 million bu. for wheat (up from 567 million bu.).
The bigger focus will be any changes to USDA’s global production forecasts. Traders expect USDA to lower its Argentine corn and soybean crop forecasts, with little change anticipated for the Brazilian projections.
Brazil raises soybean crop estimate, cuts corn forecast. Conab raised its Brazilian soybean crop estimate by 177,000 MT from last month to a record 152.9 MMT. The soybean export forecast for 2022-23 remained at 93.9 MMT. The Brazilian government’s crop estimating agency cut its corn production forecast by 1.319 MMT to 123.7 MMT, citing delays to safrinha corn planting. This was Conab’s first assessment of safrinha production. Despite the lower production estimate, Conab raised its 2022-23 corn export forecast by 2 MMT to 47 MMT.
SOTU address: President Biden’s address made clear he will run for re-election as the speech could have been titled “Let’s Finish the Job” because he kept repeating the refrain — eight times precisely. It was filled with dramatic moments. He also used the speech to press his economic priorities, from bolstering American manufacturing to extending his climate efforts. Link to our special report on the address.
In Republicans’ SOTU rebuttal, Gov. Sarah Huckabee Sanders of Arkansas accused Biden of perpetrating a culture war.
Meanwhile, Suzanne Clark, the head of the U.S. Chamber of Commerce, reiterated her group’s support for the infrastructure law, but urged Biden to focus on striking more trade agreements and pulling back from what she said was overregulation.
Xi woos Taiwan. China’s leader appears to be pivoting from his hardline approach to the island. China signaled it will roll back a ban on Taiwanese food imports and host one of its senior opposition figures. In Xi’s report to the CCP, he said the development breaks “the myth of modernization equals Westernization,” reinforcing a pledge for self-reliance.
Ukraine grain exports fall sharply. Ukraine’s grain exports so far in 2022-23 are down 11.7 MMT (29.3%) from the same period last year to 28.2 MMT due to a smaller harvest and logistical difficulties caused by the Russian invasion, the country’s ag ministry said. The volume included 16.2 MMT of corn, 10.1 MMT of wheat and 1.9 MMT of barley.
Russia not satisfied with progress on export deal. Russian Deputy Foreign Minister Alexander Grushko said work to unblock its ag exports under the Black Sea grain deal was unsatisfactory, accusing the European Union of failing to deliver on its promises, TASS news agency reported. Russia has long contended its exports of grains and fertilizers are being held up by sanctions and other restrictions.
Fed’s Powell again says additional rate hikes coming. Fed Chairman Jerome Powell struck a hawkish tone in remarks delivered Tuesday, but stocks still rallied and finished solidly in positive territory. Powell acknowledged the stronger-than-expected jobs update from January, noting that is a sign of inflation. Markets brushed aside Powell’s remark that the Fed could go beyond the level signaled in December in projections relative to the Fed funds rate, a level which after last week’s Fed meeting Powell reiterated was at 5% to 5.25%. “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in,” Powell cautioned. He also indicated there is “a significant road ahead” relative to the Fed’s battle to get inflation to come back down to their 2% target. He still signaled more rate increases are coming “and then we’ll have to look around and see whether we’ve done enough.”
Upshot: In his speech at the Economic Club of Washington yesterday, Powell said he could see “the very early stages of disinflation,” but added that the easing in prices was likely to follow a “bumpy” path, particularly with hiring and wage growth proving strong.
A warning about China’s hog industry. “U.S. hog farmers look at the pictures of those farms in China, and they just scratch their heads and say, ‘We would never dare do that.’” — Brett Stuart, founder of the research firm Global AgriTrends, is worried about disease risks from China’s high-density pig farms, which in some cases pack the animals into tower blocks. Link for details via the New York Times.
Small ag trade surplus in January. The U.S. exported $17.03 billion of ag goods in December against imports of $15.80 billion for trade surplus of $1.24 billion, down slightly from November’s surplus of $1.44 billion. Through the first three months of fiscal year 2023, U.S. ag exports stood at $52.04 billion against imports of $48.94 billion for a surplus of $3.1 billion.
Russia’s government is said to be pressuring the central bank to loosen fiscal policy as it enters the second year of its invasion of Ukraine. Link for details via Bloomberg.
Senators want Vilsack to accelerate bird flu response with egg, poultry prices rising. And, lawmakers are also seeking an APHIS update on the outbreak, and indemnity payments to affected farmers. A bipartisan group of eight senators are urging USDA Secretary Tom Vilsack to move faster to deploy fiscal year (FY) 2023 funding set aside to respond to the ongoing H5N1 highly pathogenic avian influenza (HPAI) outbreak, which has infected over 58 million birds nationwide and contributed to a more than 30% jump in egg prices last year. The letter sent last week to Vilsack was led by Sens. Tammy Baldwin (D-Wis.) and Chris Coons (D-Del.). It calls on USDA’s Animal and Plant Health Inspection Service (APHIS) to “swiftly take further action to address the ongoing outbreak of highly pathogenic avian influenza (HPAI),” including by deploying $64 million in funding set aside under the FY 2023 omnibus spending bill to help respond to the outbreak. The funding level represented a slight increase from the $63 million set aside during FY 2022 and FY 2021.
A.P. Moller-Maersk, one of the world’s biggest shipping companies, is out with its quarterly earnings, which are widely seen as a barometer for global trade and the supply chain. The Danish firm controls about one-sixth of the world’s container trade, with offices across 130 countries and more than 100,000 employees worldwide. Earnings before interest, tax, depreciation and amortization (EBITDA) fell 18% Y/Y to $6.54 billion, coming in below consensus estimates of $6.95 billion, and lower than the $10.9 billion seen last quarter. Freight rates also fell by nearly a quarter, compared to the previous three months.
Maersk expects the global container market to grow between -2.5% and +0.5% in 2023, which signifies a slowdown, but is a far cry from the “dark clouds on the horizon” it predicted just a quarter ago.
Hunter Biden probe. House Republicans plan to grill former Twitter executives at a hearing today over their alleged collusion with the FBI to squelch the story of Hunter Biden’s laptop.
NWS weather outlook: Heavy snow over parts of the Upper/Middle Mississippi Valley and Upper Great Lakes on Thursday... ...There is a Slight Risk of excessive rainfall and severe thunderstorms over parts of the Lower Mississippi Valley... ...Snow over parts of the Northern/Central Rockies and the Northern/Central Plains; Pockets of rain/freezing rain over parts of the Northeast.
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package |