Tidbits & Rain Days, New Highs, World Production, March Wheat Futures 02/19/2022

New crop December corn and November soybeans both made new contract highs yesterday.

Now that March options expired, all eyes will turn to the USDA 2022 Agriculture Outlook Forum next Thursday and Friday. The big news will be acres of corn, soybeans, spring wheat, cotton planted and then demand, which will then give us the projected carryout and price on Friday.

At last year’s forum, USDA projected the carryout in terms of days’ use and the average price paid to farmers would be:

Corn Soybeans

2021 crop 38 $4.30 9.4 $11.15

2022 crop 38 $4.20 11.7 $11.25

On the most recent S&D, USDA projected the carryout days and price:

Corn Soybeans

2021 crop 30 $5.45 27 $13.00

No new information on 2022 crop carryout until Friday.

Yesterday the USDA reported the sales to unknown destination of:

66,000 mts of old crop soybeans

132,000 mt of new crop soybeans

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Joe Biden said yesterday afternoon Vladimir Putin has decided to attack Ukraine. A car bomb exploded near government buildings in Donetsk. No one was hurt, but thousands of civilians are reportedly being evacuated east into Russia.

The Canadian Government is using its Emergency Act powers to order all insurance companies to cancel the insurance policies on all vehicles participating in the demonstrations.

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Despite reports of excessive rains, Mato Grosso’s second crop corn planting is 68% complete, up 11% from the previous week and 7% ahead of the average pace.

The Mato Grosso farmer group Aprosoja-MT are engaged in talks with Iran on a 5 million mt corn export deal to Iran in exchange for Iran shipping fertilizers to Aprosoja-MT. Iran imported 3.1 million mts of Brazilian corn in 2021. Iran has abundant natural gas to make nitrogen and they are buddies with Russia, so getting fertilizer will be no problem for Iran.

China’s government said yesterday many soybean crush plants will suspend operations as crush margins have fallen into the red. None-the-less, grain people in China say China has very little of its soybean needs covered after March. Analysts continue to reduce South American soybean production keeping US FOB soybean prices lower than Brazil’s after March.

A drought in Morocco will likely cause grain imports to increase 2 million mts this year to 10 million. Most of that extra tonnage will be wheat with some lesser amounts of corn.

France’s AgriMer rates French soft winter wheat crop at 95% good to excellent, unchanged from last week and 9% above last year’s crop at this time.

Meanwhile, yesterday’s weather forecast from NOAA for the US hard red winter wheat area is for warmer and drier than normal for the next three months. Hard winter wheat producers continue to debate tearing-up poor wheat stands to plant soybeans, corn, or cotton (in the southern areas). This hard red winter wheat market looks strong to me with dry soils from Texas extending to the hard spring wheat areas of Canada.

We had a wicked close on March CBOT Wheat yesterday. Somebody wanted to make sure the March Call options with a strike price above $8 expired worthless. Yes, Ladies and Gentlemen, the futures market can be manipulated in the short run...

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Market Data

This morning: Crude oil settled yesterday at $91.66, down 10 cents. The dollar index ended the week at 96.11, up 0.31. March palm oil made a new contract high yesterday at 6,075 MYR and settled at 6,008, up 41. The previous contract high was 5,970 MYR made Thursday. Palm oil owns 32% and soybean oil owns 28% world market share. March cotton settled at $122.99, up $1.6 per cwt. The contract high was made February, 1st at $129.37 per cwt. Cotton competes with soybeans and corn for acres. March natural gas settled at $4.431, down 0.055. The contract high was $6.132 at October, 6th, 2021. Natural gas is the primary cost to manufacture nitrogen fertilizer. March ULSD settled at $2.7815 per gallon, down 0.0047. The contract high was made February, 14th at $2.9666.

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Rain Days Update

Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0.4 inches of rain yesterday; 0.4 inches a year ago and 0.1 inches two years ago (one inch = 24.5 mm). Yesterday's high temperature was 79°F. Day time highs the next ten days will range from 84 to 91°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 88°F with 0 inches rain. Cordoba high temperature 91°F with 0 inches rain. Salto high temperature 91°F with 0 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.07 inches, 86 to 96°F. Cordoba 1.15 inches, 77 to 84°F. Salto 1.37 inches, 79 to 89°F. The Western Corn Belt has 1 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has the same number of rain days than yesterday.

Explanation of Rain Days