One week from today will be the USDA’s September Crop Production and S&D Reports. All eyes will be on the US corn and beans yields as well as demand for new crop marketing year.
Highlights
This afternoon’s USDA Crop Condition Report will be the most important one of the year-to-date. It was a nasty week and a worse weekend for most Corn Belt crops.
Yesterday, Russian President Putin and Turkish leader Erdogan talked for 90 minutes in the resort city of Sochi, Russia. They discussed the Ukraine grain deal, the creation of a gas hub, as well as economic cooperation between the two countries.
Vladimir Putin said he was open to negotiations on a grain deal and expressed hope that soon the two countries will complete negotiations on the creation of a gas hub in Turkey in order to make the energy situation more stable.
Erdogan reported after the meeting that Russia and Turkey are moving towards a trade turnover of $100 billion a year, stressing that Russia and Turkey are going through a "completely different period in relations."
The relationship between Russia and Turkey has an added significance because Turkey is a member of NATO and is the closest NATO member to Russia.
China’s manufacturing sector strengthened in August despite persistently weak export orders, as domestic consumption supported the country’s factory activity. Caixin’s China manufacturing purchasing managers’ index (PMI) rose from 49.2 in July to above the neutral 50.0 threshold at 51.0 in August, signaling an expansion, a fresh improvement in the health of the sector, which has strengthened in three of the past four months.
Caixin is recognized as an unrivaled producer of independent, investigative journalism in China, and an indispensable source of business information.
Tidbits
China reduced the banks’ reserve cash requirement, meaning they can loan a higher percentage of their deposits. It is an “easy” money policy.
China’s corn price was higher last week for the second consecutive week, but new crop beans were sharply lower last week.
Brazil's new crop soybean basis was 20¢ weaker despite futures also being down 20¢.
Argentine officials announced August 27th another “soybean peso deal” to get farmers to sell soybeans. However, as of today, the soybean peso deal has yet to be authorized.
Enverus is an all-energy information service for the management, development, and acquisition of everything related to the world-wide energy chain. They see crude oil reaching $95 a barrel because world demand is up 2.2 million barrels per day, but production is only up 1.5 million. Enverus says 70% of the additional demand will be provided by China. Of course, the majority of economists think China’s economy will soon collapse due to real estate developers unable to find renters or buyers for their construction work of the past three years.
According to Enverus, it will be difficult to maintain high rates of oil production. A significant part of the oil wells in the USA are shale. Their production is limited by about 50% in the first 3 years. For high production rates, it is necessary to maintain high drilling rates. The number of operational drilling rigs in the US is the lowest since March 2022.
The World Energy Report for 2022, published by the UK-based Energy Institute and consulting firms KPMG and Kearney, noted that fossil fuels constituted 82% of world’s energy in 2022. This is nearly the same percentage as 30 years ago. Thus, the report suggests money being spent to promote windmills and solar panels would be better invested to make fossil fuels cleaner because common sense is that wind and solar panels will never replace 82% of the energy needs now being produced with fossil fuels.
US Secretary of State Gina Raimondo returned home a few days ago from a 4 day visit to promote a better political and business relationship between China and the USA. In a national broadcast interview Sunday, she said the United States will restrict the superconductor chips exported to China. She said, “We are trying to choke their military capacity in a way that China doesn’t feel we’re trying to choke their military technology.”
What is the chance someone in the upper management of China’s government did not get that news?
The war continues to escalate. All of Moscow’s airports were shut down this morning according to Visegrád 24.
Brazilian volunteer soldiers are headed to Ukraine to go into battle against the Russian Army. That is a good way to get fertilizer imports from Russia halted to Brazil, a country whose economy would collapse without fertilizer.
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Market Data
Prices are as of 2:50 am ET:
Crude oil is at $85.71, up $0.16
The dollar index is at 104.47, up 0.23
December palm oil is at 3,971 MYR, down 39. The contract high was made July, 24th at 4,210 MYR. Palm oil owns 61% and soybean oil owns 14% world market share.
December cotton is at $87.40, down $2.55 per cwt. The contract high was made September, 1st at $90.00 per cwt. Cotton competes with soybeans and corn for acres.
December natural gas is at $3.455, down 0.093. The contract high was made August, 15th at $3.902. Natural gas is the primary cost to manufacture nitrogen fertilizer.
December ULSD is at $2.9682 per gallon, up 0.0287. The contract high was made August, 25th at $3.0481. ULSD stands for Ultra Low Sulfur Diesel.
September Dow Futures is at 34,791, down 91. The lifetime high is 36,832 on January 5th, 2022.
Rain Days Update
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days