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Ukraine & China Grains, USDA Inspections, ENSO, BC Vote, Markets Update & Rain Days 03/08/2022

Yesterday morning USDA announced the sale of:

66,000 mt of old crop soybeans to China.

66,000 mt of new crop soybeans to China

 

The next potential shock in the wheat and corn markets could be the Ukrainians burning their own corn and wheat inventory to keep the Russians from getting it. Reportedly, the Russians will attack Odessa this week, the largest grain exporting port on the Black Sea, located in Southeast Ukraine. I can't see Ukraine letting Russia get control of the grain in the event the Russians are able to occupy Odessa's port.

Ukraine and Russia heads of foreign affairs are scheduled to meet in Turkey on March 10.

Ukraine is organizing rail delivery of grain to the tune of 150 cars per day to Romania, 45 to Poland, 17 to Hungary, and 60 to Slovakia; each car will contain 70 mt of grain. Nice gesture, but not nearly enough to change the big picture.

Ukraine told its farmers in the military to go home and get the crops planted; the farmers who wanted to join the military were told, “Thanks, but no thanks. We need you farming more than we need you fighting Russians.”

 

AgRural lowered their Brazil soybean production estimate 5.7 million mt 122.8 million. USD A was at 134 million as of a month ago.

China sold 526,254 mts of wheat from state reserves on Monday, which was 100% of what was offered. Average price was $13.14 per bushel. They are holding a wheat auction every day this week. Soft Red Winter Wheat exporters at the Gulf are paying from $12.49 to $14.09 per bushel. They generally load it on a ship for 12 cents over their cost. Considering the freight rate to China from the Gulf is $1.90 per bushel, it looks like wheat exports from the US to China are on hold for a while…

On the other hand, China's winter wheat crop could be the "worst in history" according to their agriculture minister. If China says something is bad, it is really much worse.

 

Yesterday corn basis at the Gulf was 2-3 cents weaker for March and mostly unchanged thereafter. Soybean basis levels were steady.

Brazil will reduce their bio-fuel mandates; more soy oil will be available for export.

 

The weekly USDA report of Inspections of Grains for Export was issued yesterday; see the tracker below. Note the percentages year-to-date compared to what the USDA projects. That is indicative of changes in exports on the next USDA Supply and Demand Report (S&D), which this month's edition will be issued 10 AM Mountain Time tomorrow. USDA seldom makes any significant S&D changes on the March domestic S&D because they get the Quarterly Stocks Report on the last business day of March. USDA likes to check the inventory as of March first before making changes on the S&D. The big news on Wednesdy's report will be changes in South American production and the world carryover.

 

The latest ENSO graph was issued yesterday (the pretty graph below). It looks like normal spring weather for the Corn Belt. To learn what impact Pacific Equatorial temperatures have on world weather go to:

https://www.wrightonthemarket.com/post/cause-and-effect-of-el-ni%C3%B1o-and-la-ni%C3%B1a-episodes-part-1


 

Market Data


This morning: Crude oil is at $120.41, up 1.01 The dollar index is at 98.91, down 0.38 July palm oil is at 5,976 MYR, down 65. The contract high was made March, 3rd at 6,337 MYR. Palm oil owns 32% and soybean oil owns 28% world market share. December cotton is at $101.55, up $0.34 per cwt. The contract high was made February, 10th at $106.36 per cwt. Cotton competes with soybeans and corn for acres. July natural gas is at $4.808, down 0.144. The contract high was made yesterday at $5.270. Natural gas is the primary cost to manufacture nitrogen fertilizer. July ULSD is at $3.3860 per gallon, up 0.0571. The contract high was made yesterdayat $3.4873. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


Yesterday, in the dry areas of South America: Santa Maria high temperature 98°F with 0 inches rain. Cordoba high temperature 86°F with 0.2 inches rain. Salto high temperature 84°F with 0.5 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 1.87 inches, 71 to 90°F. Cordoba 0.25 inches, 75 to 84°F. Salto 0.17 inches, 75 to 85°F. The Western Corn Belt has 4 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 less rain days than yesterday.


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