February CBOT options expire today.
Highlights
Tampa is probably the biggest port for US fertilizer coming and going. Ammonia prices were down 19% yesterday. February AA priced at $790 per mt, down from January’s $975.
Natural Gas prices have declined over 50% in just the last 6 weeks, trading at the lowest price since May of 2021. It is possible that the restart of the Freeport LNG plant in Texas will cause US natural gas prices to increase as more pipeline natural gas will be liquified (LNG) and exported. More on that in the Tidbit section below.
The US economy grew at an annual rate of 2.9% in the 4th quarter, down slightly from 3.2% in the third quarter, but better than expected for the fourth quarter. Even though the US economy contracted the first two quarters of 2022, for all of 2022, the US economy expanded 2.1%.
The two years before covid upset the applecart, in 2018, the economy expanded by 2.92% and then 2.29% in 2019. Those were considered pretty decent years. And we had 2.1% growth in 2022 with 30 year high interest rates and $5 diesel! Where is that recession all the experts are talking about?
Tidbits
Yesterday morning, the USDA announced the sale of 106,000 mt of new crop soybeans to China. Any large sales to China during their week-long celebration of the Lunar New Year is very unusual and bullish.
The head of the Ukraine Grain Association does not expect their 2023 wheat production to exceed 16 mil mt and corn production will be no more than 18 mil mt due to war-reduced acreage. That is substantially less than USDA’s numbers of Ukraine’s ‘22 wheat at 21 mil and corn at 27 mil mt.
USDA said yesterday it does not see Russia’s official 2022 wheat crop production estimates as feasible. Given USDA is still at 91 mil, mt and Russia is at ~102 million, obviously somebody is wrong. Given that Russia doubled its wheat export tax the first of this month and Putin announced last week that Russia had to increase its grain reserves for national security, we think Russia knows the wheat crop was much smaller than they reported. It reminds us of the USDA and the “large” 2019 corn crop. That farce was a major contributor to high futures prices the past two years plus the corn basis continues to tell us corn futures are still too cheap even here in 2023.
The market expected the amount of US winter wheat acres in drought areas would be reduced on Thursday’s drought map, but it was unchanged. The drought in the HRW crop area is 59% and that, with nicely improving US wheat weekly export sales and a cold spell coming next week, proved to be bullish.
Freeport LNG the second-biggest USA liquified natural gas (LNG) exporter. Federal regulators gave the OK yesterday to begin the restart of its LNG export plant in Texas. However, Freeport LNG has not yet sought permission to restart the liquefaction trains that turn natural gas into LNG for export. That resumption of LNG production will have to come after a yet-to-be-issued request to federal regulators.
Analysts expect most of the plant's production to remain offline until March or later. The LNG company's plant shut-down after a pipeline explosion on June 8, 2022, and was barred from resuming production until federal regulators completed an extensive safety review and approved resulting changes. Initially, the plant was expected to resume operations in October.
Export Sales Tracker
Market Data
This morning:
Crude oil is at $81.63, up 0.62
The dollar index is at 101.83, down 0.01
July palm oil is at 3,852 MYR, up 94. The contract high was made September, 1st at 4,365 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
July cotton is at $87.78, down $0.56 per cwt. The contract high was made September, 1st at $101.64 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas is at $3.236, down 0.045. The contract high was made September, 6th at $5.938. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $2.9336 per gallon, up 0.0205. The contract high was made November, 4th at $3.1450. ULSD stands for Ultra Low Sulfur Diesel.
March Dow Futures is at 33,982, down 41. 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
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