Highlights
USDA will issue its monthly S&D at 11 AM CT today. It is not likely to be a market shaper. We already know the stocks as of March first and the weekly exports and crush. What we don’t know is what USDA will do with South American crop production.
Brazil’s USDA, CONAB, increased their corn production estimate 3.3 million mt to 115.6 million mt. They knocked 400,000 mt off the bean crop, down to 122.4 million mt.
Gulf corn basis was 2 to 3 cents lower April thru July. Soybean basis was a penny lower for April and May.
The US Congress voted to revoke Russia’s most favored nation trade status. That means there will be trade tariffs on Russian goods.
Minimal chance of rain over the next two weeks in the Southern Plains (hard red winter wheat) with the eastern areas of Oklahoma and Texas expected to get some rains in a week, but Kansas looks dry.
Australia is a major wheat exporter when they have a good crop and they completed harvest a few months ago of their largest wheat crop ever. La Nina episodes bring above normal rainfall to Aussie wheat country. Their wheat basis to CBOT wheat remains at a very large discount throughout the country as they price-in that very large crop.
The EPA denied 36 petitions from oil refiners seeking biofuel blending waivers, but provided 31 of those relief by allowing them to meet their 2018 obligations without purchasing RIN credits to show compliance with the law, without meeting the regulatory requirements of the law. The EPA said Renewable Identification Numbers (RINs) or no RINs, nothing is going to change the amount ethanol used in 2018. The purpose of the RIN market was to allow those petro refineries to not blend ethanol when it is not available at a reasonable price, but those refineries must buy the RINs from ethanol processors so they have the net income as if they sold the ethanol. Texas has begun transporting illegal immigrants directly to Washington, D.C.
Shanghai’s 25+ million residents reportedly enjoy the highest standard of living in China. With the COVID lockdown entering its second week, Shanghai has run out of food. Cityam.com reported today: "Frustration, panic and anger is growing in Shanghai as millions of residents are struggling to get their hands on meat, rice and other food supplies while the government tries to contain a spreading Covid outbreak with anti-coronavirus controls that confine most of its 25 million people to their homes. This is a massive embarrassment for the ruling Communist Party during a politically sensitive year when President Xi Jinping is expected to try to break with tradition and award himself a third five-year term as leader.”
We are thinking this Covid problem greatly reduces the possibility that China will attack Taiwan anytime soon, which, if they did attack Taiwan, the initial reaction would be soybean prices to less $6. But remember, 1.4 billion people got to eat, Covid or no Covid. The city leaders say there is plenty of food in the city, but they just cannot figure out how to get it to the distribution centers and grocery stores.
We are thinking the citizens of Shanghai would rather take their chances with Covid rather than having to fight like mad dogs for food. Just imagine how much hoarding of food there is...
JP Morgan Chase & Co. told their investment clients that commodities could soar by as much as 40% if investors increase their investments in raw materials as an inflation hedge. And then ended the report with, “We advise there is an elevated need for inflation hedges.”
Export Sales Update
Yesterday’s Weekly Export Sales tracker:
Market Data
This morning: Crude oil is at $96.57, up $0.54 The dollar index is at 99.97, up 0.22 July palm oil is at 5,696 MYR, up 68. 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 $114.89, up $0.20 per cwt. The contract high was made April, 5th at $115.00 per cwt. Cotton competes with soybeans and corn for acres. July natural gas is at $6.507, up 0.008. The contract high was made yesterday at $6.581. Natural gas is the primary cost to manufacture nitrogen fertilizer. July ULSD is at $3.1058 per gallon, up 0.0254. The contract high was made March, 9th at $3.7675. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 4 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 less rain days than yesterday.
Explanation of Rain Days