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Global Grains, Crude Oil, Export Sales, Markets & Rain Days Update 03/18/2022

Yesterday morning, USDA announced the sale of 136,000 mts of old crop corn to unknown.

Snow melt in Canada and the Upper Midwest will likely cause flooding in the Red River Valley (between Minnesota and Dakotas) and delay planting for several weeks.

Canadian Pacific (CP) will lock out employees on Sunday if the union fails to negotiate a new contract or agree to binding arbitration. Daily discussions have been taking place but appear far apart in an agreement. CP is the top transporter of Saskatchewan potash to overseas markets.

USDA confirmed another case of a highly pathogenic avian flu in a non-commercial flock in Merrick County, Nebraska. Total cases nationwide are now 37 with 16 of those being in non-commercial flocks. Seven million chickens and turkeys have been destroyed in 13 states so far.

Corn basis at the Gulf was 2-3 cents weaker for March yesterday and unchanged for A/M/J. Soybean basis was steady.

Turkey has rationed sunflower oil two liters per family per month starting next week. Ukraine was one of the biggest exporters of sunflower oil and now none.

Buenos Aires Grain Exchange (BAGE) lowered their Argentine corn production estimate to 51.0 million mt. USDA is also at 51.0 million. BAGE lowered the Argentine bean crop to 42 million mt. USDA is at 43 million. They see the sunflower crop at 3.3 million mt.

The cash canola market was up $9-$10 yesterday. New crop November canola settled 1 to 2 higher at 933.00 Canadian dollars.

AgroConsult revised Brazil’s corn crop 400,000 mt lower to 116.1 million mt. Their estimate for the 2nd crop is unchanged at 92.2 million mt. Last year, Brazil's second crop of corn was 60.9 million mt.

The US Climate Prediction Center issued its three month forecast yesterday. The Midwest and Southern and High Plains will have above normal temperatures April, May, and June with below normal rainfall in the Central and Southern Plains with above normal precipitation in the Eastern Corn Belt.

 

The Tech Guy said last week and again early this week that $93 to $95 was a major support area for April and May crude oil futures. He also said there was a possibility crude price could dip as low as $83, but he highly doubted. Given that the war in Eastern Europe will not end soon, inflation is 8% and increasing, the US Government is doing everything it can to restrict production of crude oil and coal, the probability of crude oil having an extended setback is slim from a fundamental standpoint. Take a look at the May 2022 crude oil daily price chart.


You can see that the price declined to the uptrend line three consecutive days this week and the support at that $94 to $95 area held each day. Perhaps even more impressive is the low yesterday was higher than the low on Wednesday and the low on Wednesday was higher than the low on Tuesday. After dropping $35 in six days, it is safe to say the correction is over and the uptrend is still intact.

We recommend you get your diesel and gasoline purchase price locked-in to cover your needs through harvest. You might be able to do that with your fuel supplier, but you can also do it very easily in a futures account with ULSD, natural gas or crude oil futures. You can buy call options or futures. The crude oil futures contracts are 100 barrels, 500 barrels, and 1,000 barrels. The futures exchange margin is about a dollar per barrel with the nearby months more than a dollar and deferred contracts progressively less. The last trading day is on or about the 21st of the month preceding the contract month. Example: Last trading day for May crude oil futures is on or about April 21st. Options are available on 1,000 barrel contracts.

This evening, the Tech Guy said he doubts if crude oil returns to the $95 area again this spring, but if it does, get loaded up. For the time being, be patient and buy your protection in any month of those three commodities when the May crude oil futures are in the $100 to $101 area.

Just to show you the USA leaders are doing their best to sustain the war in Ukraine… Yesterday, Russia made a $117 million bond payment, which enabled Russia to avoid defaulting on its national debt. And where do you suppose they got that $117 million?

Why, of course, the US Treasury Department helped out by releasing $117 million of Russia’s frozen funds to allow the debt service payment to be made. We can’t have a combative nation gettimg its credit rating trashed.

Below is the Weekly Export Sales Tracker. Corn sales were above the high end of expectations for both old and new crop.



 

Market Data

This morning:

Crude oil is at $105.94, up $2.96

The dollar index is at 98.01, up 0.04

July palm oil is at 5,866 MYR, up 36. 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 $103.45, down $0.07 per cwt. The contract high was made February, 10th at $106.36 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $5.014, down 0.097. The contract high was made March, 7th at $5.270. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $3.1090 per gallon, up 0.0685. 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 95°F with 0 inches rain. Cordoba high temperature 89°F with 0 inches rain. Salto high temperature 95°F with 0 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.77 inches, 74 to 90°F. Cordoba 0.43 inches, 68 to 82°F. Salto 2.26 inches, 68 to 80°F.

The Western Corn Belt has 3 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 more rain days than yesterday.



Explanation of Rain Days


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