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Global Grains, Export Inspections, Markets & Rain Days Update 03/15/2022

USDA announced yesterday morning the sale of:

159,000 mts of old crop corn to Mexico

NOPA soybean crush for February to be reported around noon today.

About 9:40 AM Central Time yesterday, news was released that Russia had suspended wheat exports until 30 June; May wheat jumped 41 cents in two minutes. However, the total export ban was not true, although the Russian Prime Minister Mikhail Mishustin did sign a decree for a temporary ban on the export of grain to the Eurasian Economic Union (EAEU) states and sugar to some other countries. The members of the EAEU are Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. Andrey Sizov says there will be more discussion of total Russian wheat export ban in the coming week.

Corn planting progress in Texas 27% complete, 11% in Louisiana and 1% Mississippi.

Winter wheat in Kansas rated 23% good or excellent, down 1% from last week; Texas 6%, also down 1%; Oklahoma 24% G/E, up 9%; Colorado 18% G/E, down 3%; and Arkansas SRW rated 71% G/E.

Corn and bean basis at the Gulf were steady yesterday.

 

More COVID shutdowns in China gets the credit for the weak crude oil prices yesterday which put a damper on all commodities as well as rhetoric coming from the leaders of both sides that Russia and Ukraine were searching for peace and a potential cease fire.

But, at the end of the day, the fighting continued. A spokesman for Ukraine’s president said late yesterday no deal will be made for at least two weeks, but no later than early May. What that means is neither side has the upper hand yet and it will take two to six more weeks to see who will emerge as the probable victor. The fourth round of talks between Russia and Ukraine was held on yesterday via video conference and the talks will continue today.

Yesterday was the third consecutive day very strong flow of Russian natural gas into the European Union and the strongest flows since the invasion of Ukraine. Does that mean Russia needs the money or they want the EU to go easy on the sanctions? Both.

High protein wheat (high gluten content) is trading at a greater premium to “ordinary” protein hard wheat than ever before due to poor 2021 hard wheat crops in North America as well as high priced corn and beans taking acres away from wheat. The millers expect continued problems to secure high protein wheat until at least 2023 because corn and beans prices are already higher than in 2021. One year ago, 12½% protein wheat was $3 per mt premium to 11½% protein. Today it is $13 more. Two years ago, July KC (bread) wheat was 61 cents cheaper than July CBOT (pastry) wheat. Today, July KC is 22 cents premium to CBOT July.

Of the world’s annual corn production of a billion mt, 175 million mts (17.5%) is consumed by humans. For the people in the high human consumption corn countries, corn for fuel is becoming more problematic for politicians.

 

We have become a bit concerned the La Niña episode type weather is not dissipating as quickly as the Equatorial Pacific surface temperatures indicated it should. More research has revealed that a Pacific Decadal Oscillation (PDO) situation has developed.

A negative phase of PDO develops when colder than normal temperatures off the West Coast of North America develop at the same time warmer than normal temperatures in the North Central Pacific develop. If the water temperature variation is extreme, a low pressure stationary trough will develop over the Northern West Coast of the US (more rain and storms than normal extending across Canadian Prairies) which will cause a high pressure ridge to form in the Midwest. And, yes, this likely would be a “blocking” high pressure ridge preventing the normal jet stream flow which brings the moisture to the Corn Belt.

There is an index to measure the strength of a PDO, and that index is higher now than any time since the 1950’s. The strongest negative PDO episodes develop when an extended a La Niña episode occurs during the minimum sunspot activity of the eleven-year sunspot cycle. And yes, that minimum sunspot activity was in 2020 when a La Niña started. For reasons too difficult to understand, much less explain, the La Niña and sunspot cycle lows have a chance of hooking-up only every other sunspot cycle, meaning 22 years apart. Sixty-six years ago was 1956. We were not very interested in the weather in 1956, so we can’t give you first information.

Unlike a typical La Niña, a negative PDO connected La Niña can be expected to bring dry summers to the Southeastern US after a wet winter and spring in the Upper Delta, lower eastern areas of the Midwest and parts of the Tennessee River Valley.

We say again, be slow to sell new crop corn and beans.

Yesterday's Export Inspections Tracker:



 

Market Data

This morning:

Crude oil is at $98.18, down $4.83

The dollar index is at 98.73, down 0.27

July palm oil is at 5,489 MYR, down 291. 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 $101.15, down $1.07 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 $4.730, down 0.079. The contract high was made March, 7th at $5.270. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $2.8572 per gallon, down 0.1362. 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 78°F with 0 inches rain. Cordoba high temperature 90°F with 0 inches rain. Salto high temperature 88°F with 0 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.37 inches, 70 to 90°F. Cordoba 0.66 inches, 65 to 89°F. Salto 1.74 inches, 67 to 89°F.

The Western Corn Belt has same number rain days in the 10 day forecast as yesterday and the Eastern Corn Belt has 3 more rain days than yesterday.



Explanation of Rain Days


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