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Tidbits & Rain Days 02/07/2022

US soybean export sales last week were 40.3 million bushels for old crop and 32.4 million bushels of new crop. Only 12.8 million bushels of old crop beans needed each week to meet USDA’s export projections for the marketing year. Granted, most of US soybeans are shipped between September and January as bean sales usually drop-off to 5 to 10 million bushels per week by the end of November as buyers switch to the new crop beans in Brazil. The world’s soybean buyers think there is a very serious production problem in Brazil. Corn exports sales last week were 46.3 million bushels. Only 20.2 million needed each week to meet USDA sales projections. US corn export sales usually pick-up in the late winter and into the summer. Brazil, the world’s number 2 corn exporter, has been importing corn from Argentina for more than four months after last year’s drought was pretty rough on Brazil’s safrinha (second) corn crop. Former Minnesota farmer, Kory Melby, now an agriculture consultant in Brazil the last 21 years reported today:

Beans dry down quickly in the Cerrado. Just because beans are 30% yesterday, they can be 15% today with a full day of Sun. three days of hot and dry they can be 9%. Things change fast with heat. But for the last 6 weeks, it has rained every day for some. Patience, the beans are coming.

Brighton Capital shows what capturing the carbon dioxide from ethanol production is worth:

An ethanol plant producing 100 million gallons of ethanol per year will use 34.5 million bushels of corn and produce 34.5 million pounds of carbon dioxide which is 15,649 mt worth $50 per mt = $782,448 additional gross revenue per year.

Will a pound of carbon dioxide per bushel pay for the pipeline and equipment at both ends? People with money think so. Here is the plan:

The Tech Guy provided this long-term chart of crude oil prices below.

You can see the 2007-08 run to $147 per barrel which occurred during the housing market inflation followed by the housing market crash into 2009. The red line is a supply/demand balance line which can also function as a target line because, over time, all markets attempt to find their comfort zone. Energy prices appear to be returning to the long term supply/demand balance line. Since the future can't be 100% known, we will be watching this chart.

Roger's comment: Economic principle is the price of crude oil will return to that supply/demand balance line. It is just a matter of time. Crude prices have already closed more than 50% of the gap from the $30 pre-pandemic low in early 2016.


 

This morning:

Crude oil is at $91.77, down 0.54

The dollar index is at 95.5, up 0.01

March palm oil is at 5546 MYR, down 203. The contract high was made today at 5,876 MYR. Palm oil owns 32% and soybean oil owns 28% world market share.

March cotton is at $126.17, down 0.57. 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 $4.451, down 0.121. The contract high was $6.132 at October, 6th, 2021. Natural gas is the primary cost to manufacture nitrogen fertilizer.

March oats are at $7.34¼, down 0.01½. The contract high was $7.78 made November, 22nd, 2021. Oats used to be thought the predictor of corn prices.


 

Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0.3 inches of rain yesterday; 0 inches a year ago and 0.5 inches two years ago (one inch = 24.5 mm). Yesterday's high temperature was 86°F. Day time highs the next ten days will range from 82 to 86°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 91°F with 0 inches rain. Cordoba high temperature 83°F with 0 inches rain. Salto high temperature 74°F with 0 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 0.09 inches, 82 to 96°F. Cordoba 0.5 inches, 70 to 91°F. Salto 0.01 inches, 78 to 94°F.

The Western Corn has the same number of rain days as yesterday and the Eastern Corn Belt has six more rain days than yesterday.


Explanation of Rain Days


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