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Grain Prices Outlook, Export Sales,Markets & Rain Days Update 03/25/2022

Highlights


Thanks to Matt who farms in East Central South Dakota for sending this yesterday morning after seeing our report of the first case of bird flu in South Dakota:

Although South Dakota may have only reported 84,000 birds, the current number is around 500,000, mostly turkeys and about 123,000 laying hens that have been destroyed. I know of 3 different farms affected.

 

April options expire today.

 

Yesterday morning, the USDA reported the sales of 318,200 mts of old crop soybeans for delivery to unknown. CGB at Clayton, in NE Iowa (on The River) soybean basis went from 30 under two weeks ago to 11 over yesterday.

 

Putin said Russia will refuse to accept payment for natural gas in US dollars and euros. Payments will be in rubles. As a result, natural gas in Netherlands rose to $1,353 per 1,000 cubic meters.

 

The markets always consolidate before any USDA report and they started their “evening-up” phase about two days sooner than we expected. Lower corn and bean prices here at the end of the week is simply a matter of the specs taking their profit by selling out their long (previous purchases at lower prices) positions as well as some farmers selling ahead of one of the two most significant USDA report dates of the year on March 31st.

Wheat, on the other hand, is really looking sick. This is the time of year when US wheat exports are usually very strong. North America is the wheat supplier of last resort because we have the most expensive wheat and the greatest transportation expense for exported wheat. World wheat importers buy all the cheaper wheat much closer to them first. Russia and Ukraine being their principal suppliers.

Some of you may recall that the first year of the COVID scare, the Middle East countries hoarded wheat and that hoarding continued into the autumn of 2021. Several Mid-Eastern countries recently stated they have enough wheat to last a year. The war between the two leading wheat exporting countries (Russia and Ukraine) gave the wheat market a terrific boost four weeks ago, but the war continues and world demand for wheat is really sucking wind.

The wheat technical picture took a decided negative hit today. Certainly the recent rain in the US Southern Plains discouraged wheat futures buying yesterday, but the biggest negative for the wheat is a lack of export demand despite the world’s two leading wheat exporters trying to kill each other in wheat country. We expect the USDA numbers on Thursday to be negative to bearish for the wheat market and the opposite for corn and beans.

What are the chances we will get more bullish wheat news in the coming weeks than we already have seen? Very, very slim. Don’t forget, the season price trend for wheat is down into late summer.

The US drought monitor shows 40.8% of the country is in some form of drought. A year ago, drought stood at 29.83%. About 70% of the nation’s winter wheat is in a drought area.

 

Several Ag groups are lobbying to open some CRP land for row crops.

A 56 pound bushel of corn will make:

2.9 gallons of ethanol

15.2 pounds of distillers dried grains

0.8 pound of distillers’ corn oil used for biodiesel and feed

1.1 pound of carbon dioxide (refrigerants, polymers, fertilizers, proteins, foams & 500+ more)

 

For the third consecutive year, U.S. sorghum graded above necessary requirements for U.S. #1 grade with the 2021 crop protein percent of 11.3%, up from 10.4% the previous year.

 

Great Britain has agreed to remove the 25% tariff on U.S. corn imports effective June 1, 2022.

 

Koch Foods has opened its new $60 million poultry feed mill in Attalla, Alabama. It will consume 100 railcars of corn every two weeks and produce up to 12,500 tons of poultry feed a week. The 130-acre facility can hold more than one million bushels of corn.


 

USDA Export Sales Update


Note the poor weekly sales of wheat on yesterday’s USDA Export Sales Report:



 

Market Data


This morning:

Crude oil is at $111.44, down $0.9

The dollar index is at 98.54, down 0.25

July palm oil is at 5,796 MYR, up 18. 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 $109.44, up $0.19 per cwt. The contract high was made today at $109.75 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $5.540, up 0.002. The contract high was made yesterday at $5.600. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $3.3555 per gallon, down 0.0035. 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 75°F with 1.1 inches rain. Cordoba high temperature 79°F with 0.1 inches rain. Salto high temperature 65°F with 1.2 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.39 inches, 66 to 88°F. Cordoba 0.04 inches, 67 to 88°F. Salto 0.14 inches, 65 to 82°F.

The Western Corn Belt has 4 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has the same number of rain days than yesterday.


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