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Avian Flu, Fertilizers, SA Crops & Grain Trade, Markets & Rain Days Update 03/24/2022

John Deere will sell machine-servicing software to farmers and mechanic shops beginning in May.

 

More than 10 million egg-laying hens have died from Highly Pathogenic Avian Influenza (HPAI) across the country the past three weeks, including 13% of laying hens in Iowa, the #1 egg-producing state in the nation. That is a lot of corn and bean meal not going to get fed this spring, Folks.


South Dakota reported its first case of Avian flu with 85,000 birds gone. Nebraska says 570,000 birds infected to date.

The lean hog futures were smartly higher yesterday as the market fears European producers will liquidate some breeding livestock due to high feed prices because of the Russia/Ukraine war.

 

May Canola futures hit an all-time high for spot price: up 2½ times its price of 2 years ago. Canola is an oilseed.


Egypt bought 80,000 mt of soyoil this week and paid 14% more than they paid in February for sunflower oil. Egypt bought the soyoil because the sunflower oil lowest price offered was 43% higher than they paid last month. Ukraine is the world’s leading producer & exporter of sunflower oil.

 

The Upper Mississippi River is officially open for the 2022 season. The St. Lawrence Seaway opened its 2022 season on Tuesday. Basis should improve quickly in the Upper Midwest.

 

A barge in NOLA loaded with DAP traded above US$1,000 per ton yesterday. (DAP is Di Ammonium Phosphate)


The three big fertilizer producing companies (Nutrien, Mosaic, CF Industries) are flying high with nearly new high stock prices almost every day. But a top fertilizer company analyst is growing more cautious.


Analyst Charles Neivert said “The cash flows of these companies are astonishing". Nutrien is near his $110 price per share target, while Mosaic and CF can rise another 20%.


Brian Madden said, "We're getting into the seventh or eighth inning of the current investment cycle, as current prices are sowing the seeds of demand destruction later this year".


Madden recalled the last fertilizer super cycle of 2009 saw potash prices tripled in 15 months, then crashed by half over the next year; at the time, shares of Nutrien’s predecessor, Potash Corporation, plunged 80%.

 

Navigator CO2 Ventures LLC announced on March 23 that it has entered into a long-term agreement with Siouxland Ethanol LLC to provide CO2 capture, transportation and storage services on its carbon capture and storage (CCS) system, the Heartland Greenway.

 

Teucrium EFT (Index) Funds are seeing big inflows of investment cash to their corn, bean and wheat funds with daily volumes surging since the beginning of March. These funds trade on the stock exchange, but hold long futures positions against the stock.


We say again: South American weather is looking great for safrinha (second crop) corn. It is way too early to say it will be bin buster, but you need to pay attention to the number of rain days in the ten day forecast we report every day for six locations in South America; 78% of brazil’s corn production is their safrinha crop and that is the crop they export. Weather will start turning dry in May before the crop is mature. There is a world of difference in yield if the weather turns dry the second week of May rather than the fourth week in May.


Teucrium has already rolled their May long positions:

  • Corn was rolled on March 9 to 11 to the September contract.

  • Wheat was rolled on March 7 to 11 to the September contact.

  • Soybeans were rolled on March 9 to 11 all the way to the November contract.


Now we know why the bull spreads turned losers the first week of March. Take another look at the July/December corn spread chart below we shared yesterday. Note the top of the spread was just before Teucrium started its rolls.


We expect those bear spreads to become losers in a month or less. May and July corn have to curb old crop demand. Do not get married (keep too long) to bear spreads in corn and beans. Wheat bear spreads, go ahead, get married for a six-month hitch.



 

Broiler Hatchery


Last week:

Broiler egg set was up 1% than the same week a year ago.

Broiler egg hatch was down 1% than the same week a year ago.


 

Ethanol Production


Average daily ethanol production:

1024,000 barrels last week.

1026,000 barrels the previous week.

922,000 barrels the same week a year ago.

1005,000 barrels the same week two years ago.


 

Market Data

This morning:

Crude oil is at $114.28, down $0.65

The dollar index is at 98.86, up 0.24

July palm oil is at 5,878 MYR, down 135. The contract high was made March, 9th at 6,531 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $108.05, down $0.50 per cwt. The contract high was made yesterday at $109.69 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $5.331, down 0.035. The contract high was made yesterday at $5.450. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $3.3626 per gallon, down 0.0384. The contract high was made March, 9th at $3.7675. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


Yesterday, in the dry areas of South America: Santa Maria high temperature 74°F with 0 inches rain. Cordoba high temperature 82°F with 0 inches rain. Salto high temperature 77°F with 0.2 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.52 inches, 69 to 87°F. Cordoba 0 inches, 68 to 86°F. Salto 0.51 inches, 57 to 83°F.

The Western Corn Belt has 4 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 5 less rain days than yesterday.


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