Highlights, ENSO, Export Inspections, Markets & Rain Days Update 10/12/22

Highlights

China's Dalian futures exchange saw beans trade to a new contract high again Tuesday, the equivalent of US$21.16 per bushel.

Bean harvest is at 44% complete vs. 41% expected and 38% for the average. That is a bit bullish because there are less beans in the field than the market expected.

Corn at 31% vs. 34% expected and 30% average pace. That is a bit bearish because there is 3% more of the crop still in the field needing to come to market than the market expected.

Cotton is 29% harvested and the normal pace is 25%. Yep, that is a bit bullish.

Sorghum is 46% harvested and the normal pace is 41%. Yep, that is a bit bullish

Winter wheat planted is 55%, which is what was expected; 58% complete is the 5 year average.

Any sharp drop of corn, bean or wheat prices today will be regarded by the trade as a buying opportunity. Slow down the harvest equipment ten minutes after 11 AM Central and check to see if there are any big drops and, if so, do something, even if it is to decide to do nothing. A big dip would be 15+ cents on corn, 25+ on beans and wheat. The seasonal trend is up on all three and La Niña is stronger than last year and it was stronger last year than the year before that. La Niña is a big part of the reason why prices have been so high the past two years.

To learn all about La Niña, El Niño, and ENSO, go to:

https://www.wrightonthemarket.com/post/cause-and-effect-of-el-ni%C3%B1o-and-la-ni%C3%B1a-episodes-part-1

We are having a very hard time finding anyone in an I-State that has disappointing corn yields. There are a few disappointing bean yields, but overall, bean yields are better than expected to the very best yields ever by a substantial margin.

The big unknown: Is there enough extra corn in the I-States to make-up for the terrible corn yields from the Southeast US through Texas and Oklahoma, where many fields were not worth harvesting?

We expect the USDA to put corn yield in the 170 to 171 range, but the average estimate is a schmid below 170. USDA was at 172.57 in September. The USDA was at 50.55 bushels on bean yields last month and we look for no more than a couple tenths of a bushel decline at the most.

The most important numbers today will be how much USDA cut the exports of corn and beans. We are not worried about poor demand into the spring, but there is no denying export demand has been terrible since mid-August and then the low river with the added barge freight cost was a kick in the gut. We mentioned yesterday two stretches of the Mississippi were opened on Monday. As you might expect, there was rather significant firming of the river basis yesterday, but we are far from good. Silver Grove near Cincinnati went from -1.95 Dec to -1.50 on corn and -2.40 Nov to -1.70 on beans.

France’s farm ministry lowered their estimate of the corn production 180,000 mt, to 11.15 million. Last year’s crop was 15.5 million mt.

Honeywell International Inc will soon roll out technology that will increase supplies of lower-carbon aviation fuel produced from ethanol which will increase production efficiency of sustainable aviation fuel (SAF), lowering cost of the fuel.

"As demand for SAF has increased, we've been looking at different ways to make more SAF economically that people can adopt and adopt at large-scale and produce to displace significant fractions of the jet and diesel pools," said Kevin O'Neil, senior business leader for renewable fuels at Honeywell UOP.

The company predicts its technology can cut greenhouse gas emissions by as much as 80% on a total lifecycle basis compared with petroleum-based jet fuel. Such a cut in greenhouse gases will save airlines billions of dollars every year as airport landing and takeoff fees are heavily weighted based on how large or how small the carbon footprint is for each aircraft.

Export Inspections Tracker

Market Update

This morning:

Crude oil is at $88.63, down $0.72

The dollar index is at 113.44, down 0.22

December palm oil is at 3,742 MYR, up 50. The contract high was made April, 29th at 6,384 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $87.76, down $1.10 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.

December natural gas is at $6.920, down 0.008. The contract high was made August, 23rd at $10.119. Natural gas is the primary cost to manufacture nitrogen fertilizer.

December ULSD is at $3.5682 per gallon, down 0.0548. The contract high was made June, 17th at $4.0719. ULSD stands for Ultra Low Sulfur Diesel.

December Dow Futures is at 29,304, up 38. The lifetime high is 36,832 on January 5th, 2022.