Rain Days & Tidbits 02/03/2022

Yesterday USDA reported the sale of 380,000 mts of old crop soybeans to unknown destinations. The size of the Brazilian soybean crop as estimated by five analytical firms this week: Datagro: 130 million mt down from 142.1 in Dec Cogo: 125 down from 131 StoneX: 126.5 down from was 134 Agresource: 125 down from 131 AgRural: 128.5 down from 133.4 Datagro also cut its forecast for Brazilian summer corn crop to 92.44 million mt. As a result, total corn production is 115.22 million mt. The USDA is at 115 million mt. Brazilian government withdrew bill that would tax corn exports. Brazil’s President Bolsonaro is heading to Russia to meet Putin. No doubt about the two-month fertilizer embargo. Fertilizer is gold in Brazil these days with #soybeans heading to 16 bucks Corn used for ethanol last week is estimated at 105.47 million bushels. Weekly crush needs to average 100.22 million to reach USDA’s projection. The puts we plan to recommend you buy for old crop corn and beans sold this winter and spring will probably be December corn and November bean put options purchased in late May to early July. However, if the SA crops are even worse than currently projected, we might see the futures high for the year in March or April. If so, we may recommend July puts because less time value and then replace those with new crop puts in late June. Now that La Niña is dying, it increases the chances of a good yielding 2022 US crops. Thus, the poor crops in SA very well may make the futures high for the year sometime in the next two months. After falling more than 40% in 50 days, urea prices went back up. Yesterday, urea traded at US$650 per mt in Brazil’s ports, up $150 per mt in one week. But that is primarily because India is going to try to buy a million mt of urea today. But I will admit, natural gas prices are moving in an uptrend again. BP aims to more than double its 2019 bioenergy production by 2025 and to quadruple it by 2030. Nuseed has reached an agreement with BP of North America for the sale of Nuseed Carinata oil to BP for processing to produce biofuels. Nuseed is increasing production in Argentina and planning expansion programs in South America and the United States. Nuseed’s Carinata is a non-food cover crop that can be used to produce low-carbon biofuel feedstock. I never heard of it myself. The USDA attaché reported China’s corn imports will be 20 million mts this marketing year, 6 million mts below the USDA’s current estimate. With corn prices in China over $11.00 per bushel last week at an all-time high and government stocks uncharacteristically low, I will disagree with the attaché. None-the-less, corn basis at the Gulf was 3 cents weaker for first half February and 2 cents weaker for March and April. Soybean basis at the Gulf were 4 cents higher for February and steady for the deferred months. The USA is sending 3,000 more troops to Eastern Europe. The USDA released its semi-annual Cattle Inventory Report last Friday. All cattle and calves in the US as of January 1 totaled 91.9 million head, 2% below a year ago. The number of momma cows in the USA is 39.5 million head, 2% less than a year ago. Beef & dairy replacement heifers are both down 3% from a year ago. West Texas Intermediate Crude Oil (WTI) Crude oil is down 47 cents at $87.79 this morning. The Dollar Index is trading at 96.06, up 0.12. Palm oil futures in Malaysia are not trading the rest of the week due to the Lunar New Year. It made new contract highs the last four trading days. March cotton is down 54 cents per cwt at $125.79. The contract high was made February 1th at $129.37. The cotton gin people say that the demand for new clothes has exploded now that societies around the world are beginning to return to normal from the COVID restrictions. Cotton competes with soybeans for acres. March Natural Gas is down $0.193 at $5.308 per Metric Million Btu. The contract high was made October 6th at $6.132 per MMBtu. Natural gas is the primary input cost of nitrogen fertilizer. March Oats are up $0.08 at $7.33. The contract high is $7.78 made November 22nd. Last week: Broiler egg set was up 3% than the same week a year ago. Broiler egg hatch was down slightly than the same week a year ago. Average daily ethanol production: 1,041,000 barrels last week. 1,035,000 barrels the previous week. 936,000 barrels the same week a year ago. 1,081,000 barrels the same week two years ago. Ethanol inventory was 25.854 million barrels compared to 24.476 million barrels the previous week. Producing less ethanol and the inventory increasing 900,000 barrels is quite bearish, but one week does not make a trend. Corn took a dive yesterday after news of the ethanol inventory is the 4th highest weekly total ever. It is a little early for the inventory build, but we always see a build-up of stocks before the spring and summer driving season. Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0.3 inch of rain yesterday; 0.4 inch a year ago and 0.5 inch two years ago (one inch = 24.5 mm). Yesterday's high temperature was 84°F. Day time highs the next ten days will range from 83 to 91°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 106°F with no rain. Cordoba high temperature 86°F with no rain. Salto high temperature 104°F with no rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.27 inches 80 to 98°F Cordoba 0.51 inches 78 to 93°F Salto 1.14 inches 73 to 93°F The Western Corn Belt has one less rain days than yesterday and the Eastern Corn Belt has five less rain days than yesterday.

Explanation of Rain Days