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Global Grains, Markets & Rain Days Update 03/19/2022

Friday was the third consecutive day that the Gulf corn basis was weaker: March down 8-11 cents; April & May down 11; June down 12; July down 5.

Soybean basis at the Gulf: March down 5-7; April down 3; May down 2; June & July steady.

Last week’s US soybean export sales total of 46.0 million bushels was the 2nd largest ever for the 2nd week of March.

Canola market was another 1-2 bucks higher yesterday at $1,098.80 per mt.

Indonesia is the world’s largest palm oil exporter. Many months ago, the country increased export taxes and placed a limit on the amount of palm oil that could be exported each month. The purpose was to keep more palm oil at home for biofuel and prices down for consumers. Yesterday, Indonesia removed the limitation on quantity (it made no money), but increased the export tax substantially. The new tax rate will be tied to the price of palm oil. The tax maxes out at US$375 per ton when the palm oil price is $1,000 per mt or more. Get this: the official palm oil price in Indonesia yesterday was US$1,432.24. With the tax, that makes the FOB cost per pound US 82 cents. Soybean oil, the second place holder of world market share, is 70 cents a pound at the CBOT. China and India buy most of the world’s palm oil. Several months ago, India eliminated the tariff on US soybean oil and has bought at least 66,000 mt of bean oil since then.

 

Argentina will turn a bit drier in key areas next week.

About 40% of the US Southern Plains is expected to receive an inch of rain next week.

Keep in mind the seasonal trend for corn is down the last three weeks of March and then higher into the third week of June. That is due, in large part, to the bull spreads (buy old crop and sell new crop) that were put on at harvest are being liquidated in March as the market turns its attention away from increasing old crop demand to concern about getting the new crop corn acres and weather to produce new crop corn. Planting Intentions and Quarterly Inventory reports will be released March 31st.

The wheat market was smartly lower yesterday despite no indication peace was at hand in Ukraine. The word is the big wheat traders have concluded the wheat market has ridden the Ukraine-Russian war horse into the ground. That would appear to be the same with old crop corn, but corn has a lot more bullish underlying support than the wheat. For one, the wheat crop is a lot closer to being made than the corn crop and the seasonal trend is up on corn, down on wheat. Technically, there is a gap on CBOT May wheat at $9.84 at $10.03 on the KC May wheat chart. Gaps under the market pull the market down. Nothing is 100% in this business.

La Nina may be strengthening. Take a look at the latest ENSO chart:



 

Market Data

This morning:

Crude oil settled at $105.10, up $2.12

The dollar index settled at 98.23, up 0.26

July palm oil settled at 5,567 MYR, down 263. 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 settled at $105.24, up $1.72 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 settled at $4.997, down 0.114. The contract high was made March, 7th at $5.270. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD settled at $3.0842 per gallon, up 0.0437. 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 92°F with 0 inches rain. Cordoba high temperature 67°F with 1.0 inches rain. Salto high temperature 69°F with 0.5 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 3.05 inches, 75 to 81°F. Cordoba 0.08 inches, 67 to 83°F. Salto 0.88 inches, 70 to 81°F.

The Western Corn Belt has 3 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 2 less rain days than yesterday.



Explanation of Rain Days


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