Highlights, Broilers & Ethanol, Markets & Rain Days Update 6/16/22

Highlights

The Federal Reserve increased interest rates 75 basis points (0.75%) yesterday. It was 28 years ago since the Fed increased the interest rate that much. The 30 year home mortgage fixed rate is now 6.28%.

The stock market rallied on the news as the market feels the Fed has finally gotten serious about controlling inflation.

Fed Chairman Powell said more rate increases are coming in the next few months. He predicted the inflation rate will be back down to 2% in 2024.

He needs to read the history of the inflation balloon of the 1970's into the '80's... 2% inflation rate is 5 to 10 years away, depending on the aggressiveness of the inflation control program. But then, if the Fed and Biden handlers crash the economy, we could see 2% deflation next year.

Yesterday morning, the USDA announced the cancellation of a sale of 100,000 mts of old crop soybeans to unknown buyer.

Such cancellations near the end of a marketing year are a part of the normal transition from one marketing year to the next. Over the course of a year, planned usages do not go as planned. Beans booked last summer for export this summer may not be needed this summer. Profit margins, shipping costs, and politics (tariffs, quotas, currency exchange rates, etc.) change and can change a lot in a matter of months. Do not get bearish beans because of this cancellation. After all, China regularly cancels a purchase to knock prices down so they can buy twice as much at a lower price.

There is a rumor China switched 5 or 6 ship loads of beans from US origin to Brazil. The Brazilian currency (real) has been in free fall the past several months or so while the US dollar has gained 3%. Brazil's beans are now cheaper for June and July shipment, but US beans are the buy from August into January.

NOPA soybean crush for May was 171.077 million bushels. That was a record large crush for May and up 4.6% from a year ago.

Soyoil stocks were 1.774 billion lbs, lowest since September. The market expected 1.765 billion pounds. The oil yield was a record large of 12 pounds per bushel providing the larger than expected inventory of oil.

Typically, soybeans yield less bushels, but more oil per bushel in dry years. There were plenty of dry soybean fields last August.

Broilers & Ethanol Update

Last week:

Broiler egg set was up 1% than the same week a year ago.

Broiler egg hatch was up 1% than the same week a year ago.

Average daily ethanol production:

1,060,000 barrels last week.

1,039,000 barrels the previous week.

1,025,000 barrels the same week a year ago.

841,000 barrels the same week two years ago.

Ethanol inventory was 23.197 million barrels compared to 23.636 million barrels the previous week.

Market Data

This morning:

Crude oil is at $116.08, up $0.77

The dollar index is at 104.99, down 0.17

July palm oil is at 5,760 MYR, down 18. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $118.49, up $0.57 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $7.598, up 0.178. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $4.4905 per gallon, down 0.0565. The contract high was made yesterday at $4.6700. ULSD stands for Ultra Low Sulfur Diesel.

Rain Days Update

The Western Corn Belt has 1 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 8 less rain daysthan yesterday.

The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/