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Tidbits & Rain Days 02/10/2022

Yesterday morning, the USDA announced export sales of: 240,000 metric tons of new crop soybeans to China.

Poultry from a commercial turkey farm in Dubois County, Indiana tested positive for highly pathogenic H5N1 avian influenza. The report was from The Indiana State Board of Animal Health who also notified the appropriate people at USDA.

Avian flu could become a big deal because US poultry consume about 3.57 billion bushels of corn each year. That is 63% of all the corn fed and 24% of the annual corn production. The poultry industry employs more than 14,000 Hoosiers. Thanks to Allen Gard for the news report.

On Monday, soybeans at the ports for March shipment in Brazil were priced at 133 cents over the March futures. Yesterday, beans were priced 115 cents over the March. That decline makes Brazil the most competitive cost and freight (CFR) bean origin to China for March, April and May shipment.

On yesterday’s S&D, the USDA: Reduced wheat exports by 15 million bushels, but raised the national average price expected to be paid to farmers for 2021 wheat by 15 cents to $7.30.

Increased the soybean crush by 25 million bushels and increased the price expected to be paid to farmers for the 2021 crop by 40 cents to an even $13.00.

Drought in Romania and Moldova has hurt winter crops (wheat, barley, rapeseed). Farmers now estimating a production of only 8 million mt of wheat, 3 million mt less than last year.

Rumors yesterday afternoon had China seeking 3 million mt of US corn and that supposedly is what carried corn and beans higher after a negative USDA report. However, when the market moves sharply for no apparent reason, the reason is always stated to be a rumor about China doing something. It is a very safe answer.

Corn and beans are not trading fundamentals, i.e.: bearish numbers today and market sharply higher. We all need to pay more attention to the technical aspect of market analysis.

Take a look at what our Tech Guy reported after the close yesterday:

The soybean market has gained $4.15 since the Nov 9 low. Three months is historically a very big run for beans. Many reasonable folks feel like a significant correction is in order. Perhaps, but the truth is the market will tell us. The gap higher on the Sunday night opening is either an exhaustion gap, which means a correction of 2-4 weeks is in order, or it is a measuring gap that projects to either $17.79 or $19.74 in the coming few weeks to a few months, depending on which swing low is used. We should have a good idea by Friday’s close. The double bottom achieved on February 3rd confirms the bottom for few weeks to a few months on the wheat.

 

Exchanges

This morning: Crude oil is at $89.92, up 0.26 The dollar index is at 95.5, up 0.01 March palm oil is at 5692 MYR, down 12. The contract high was made on February, 7th, at 5,876 MYR. Palm oil owns 32% and soybean oil owns 28% world market share. March cotton is at $126.21, down 0.22. The contract high was made February, 1st at $129.37 per cwt. Cotton competes with soybeans and corn for acres. March natural gas is at $4.000, down 0.009. The contract high was $6.132 at October, 6th, 2021. Natural gas is the primary cost to manufacture nitrogen fertilizer. March ULSD is at $2.8396 per gallon, up 0.0147. The contract high was $2.9318 made 7 February. Diesel fuel is more important to most of you than oats.


 

Last week: Broiler egg set was up 1% than the same week a year ago. Broiler egg hatch was down 1% than the same week a year ago. Average daily ethanol production: 994,000 barrels last week. 1,041,000 barrels the previous week. 937,000 barrels the same week a year ago. 1,033,000 barrels the same week two years ago. Ethanol inventory was 24.799 million barrels compared to 25.854 million barrels the previous week.


 

USDA Supply & Demand Update

Our regular supply&demand report on wheat, corn and soybeans:

0222 S&D
.xlsx
Download XLSX • 18KB

 

Rain Days Update

Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0.2 inches of rain yesterday; 0 inches a year ago and 0.9 inches two years ago (one inch = 24.5 mm). Yesterday's high temperature was 76°F. Day time highs the next ten days will range from 82 to 88°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 95°F with 0 inches rain. Cordoba high temperature 94°F with 0 inches rain. Salto high temperature 94°F with 0 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 0.12 inches, 88 to 96°F. Cordoba 0.89 inches, 67 to 92°F. Salto 0.47 inches, 78 to 94°F. The Western Corn Belt has 3 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 more rain days than yesterday.


Explanation of Rain Days


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