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Market News & Rain Days 03/05/2022

Once again, the Biden Administration is being pressured by Big Oil to eliminate the biofuel mandates to retard rising food prices. Yes, Folks, Big Oil is really concerned about your rising food costs.

West Texas Intermediate (WTI) Crude oil was up $22.97 this week.

Here is a novel idea:

How about Corn Growers and Soybean Associations pressure the White House to increase the biofuel mandate to relieve consumers of higher gasoline and diesel prices?

The Rosario Grain Exchange lowered their estimate of Argentina’s corn crop to below 48 million mt. USDA was at 54 million mt in February.

Kansas City and Chicago wheat will have expanded trading limits of 75 cents again in Sunday night/Monday trade since May Chicago settled limit higher, according the CHS.

Roger’s track record on reporting expanded limits has made him gun shy, so the buck is passed to CHS.

Of all the wheat futures contracts traded on the three exchanges, only May wheat in Chicago settled limit up yesterday.

Not too long ago, three months had to settled limit up for expanded limits to kick-in and then they said two months. Now CHS says one month? Did not the Tech Guy said two months early last week?

Don’t bet the farm on the expanded limits. We will try to make sure before Sunday night.

The Russian stock market is scheduled to open Monday after being closed all this past week.

With all the sanctions levied against the Russian economy the past 8 days, the thought of the Russian stock market opening scares us and we are fearless.

The USA bought an average of $211 million worth of Russian crude oil each day this past week while providing millions, probably billions of military and humanitarian aid to Ukraine.

Highly respected Black Sea market analyst, Andrey Sizov:

Soon Ukrainian and Russian farmers will need to start their spring planting campaign. A lot depends on how long this war lasts. If it goes on a few more months, I’m afraid it would be a disaster for the Ukrainian crop.

Russian President Vladimir Putin signed legislation that imposes prison terms of up to 15 years for people charged with spreading “fake news” about the military or calling for sanctions against Russia.

Bloomberg News, among others, have suspended all news reports from its people in Russia.

Hungary has banned all grain exports.

While Ukraine and Russia are the primary Black Sea grain producers, Hungary along with Romania, Poland and Belarus are also Black Sea significant producers of grain in the Black Sea area. Moldova is there also, but small and the poorest country in the area.

Romania, on the other hand, announced grain exports will continue business as usual.

Natural gas in Europe is thirteen times higher than it is in the USA.

March urea futures have traded a range of more than $1400 since the first of the year.

 

Ukraine has applied for European Union membership.

The EU says it wants to accept Ukraine as a member as soon as possible.

While that will greatly simplify the refugee problem, if Ukraine is accepted into the EU, what will the EU do if Ukraine is defeated militarily by Russia?

We don’t see any EU member’s citizens willing to die to defend Ukraine. Most of these military age young adults of the US and Europe don’t even want a job! What are they called? Millennials or something like that?

 

Most people do not know interest rates can be hedged.

In the last half of the 1970’s, there was no such thing as a fixed interest rate loan. That day is likely to return as inflation and interest rates climb.

For the past 40 years, one could trade futures of US government debt instruments of Treasury Bills for short term rates (three month, six month and one year maturities), Treasury Notes for intermediate term interest rates and ten year Treasury Bonds for long term interest rates.

Ten year bonds really did not do a very good job on 30 year mortgages unless the interest cycle was ten or less years.

On Sunday night, 20 year U.S. Treasury Bond futures will begin trading at CME. We will provide a lot more information about how to hedge interest rates in the near future.

If you know you will be borrowing 30 year money in the next ten years, we suggest you consider locking in those interest rates now with a hedge.

Likewise, for those of you speculate in the futures, probably being long interest rate futures is not a bad risk after 30 years of interest rates near zero.

 

Market Data

Yesterday:

Crude oil settled at $115.00, up $7.33.

The dollar index settled at 98.51, up 0.73

July palm oil settled at 5,875 MYR, down 314. The contract high was made March, 3rd at 6,337 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton settled at $100.65, down 93 cents 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 $5.113, up 0.299. The contract high was made March, 4th at $5.136. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD settled at $3.2137 per gallon, up 0.1905. The contract high was made March, 4th at $3.2194. ULSD stands for Ultra Low Sulfur Diesel.

 

Rain Days Update

Yesterday, in the dry areas of South America:

Santa Maria high temperature 101°F with 0 inches rain. Cordoba high temperature 86°F with 1.0 inches rain. Salto high temperature 86°F with 0.1 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 3.57 inches, 74 to 96°F. Cordoba 1.57 inches, 69 to 80°F. Salto 1.47 inches, 74 to 83°F.

The Western Corn Belt has 4 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 3 more rain days than yesterday.



Explanation of Rain Days


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