The Federal Reserve governors issued some rather harsh words Wednesday afternoon about inflation needs to be dealt with “aggressively”, but they did not raise rates. None-the-less, higher interest rates are coming and that knocked commodities and stocks down a notch yesterday afternoon.
Ukraine AgroConsult predicts Ukraine:
2022 corn production down 900 million bushels from 2021 (China needs that corn!)
2022 wheat production down 452 million bushels from 2021
The detailed numbers from Ukraine Agro:
Ukraine corn planted area will be 8.15 million acres (3.3 million hectares) vs. 13.5 million acres (5.46 million hectares) in 2021, corn production at 19 million mt vs. 41.87 million mt in 2021; corn exports at 28.5 million mt vs. 19.3 million mt last year. They see wheat planted area at 12.77 million acres (5.17 million hectares) vs. 17 .53 million acres (7.10 million hectares) last year; production at 19.8 million mt vs. 32.08 million mt last year with wheat exports at 16.3 million mt vs. 19.0 million last year.
The wheat markets are in for a rude awakening when the hostilities in Ukraine come to an end - Andrey Sizov, SovEcon, the Black Sea Wheat Guy. We agree wheat prices will fall like a rock.
When wheat rallies to the top of the sideways trading range it has been in the past month, load up on September put options. A $9 September CBOT put now is in the 44 cent area and the $8 put is in the 17 cents area. When September wheat gets to $7.00, the $9 put will be worth more than $2 a bushel. See the September wheat chart below.
On today’s weekly export sales to be released at 7:30 AM Central time, the market expects old crop wheat sales to range from 50,000 mt to 500,000 mt vs. 95,000 last week; new crop wheat sales 50,000 mt to 250,000 mt vs. 81,300 mt last week. Those are not export numbers that makes one want to buy wheat futures at current levels.
If you do not have your wheat contracted, get it done with a HTA, no forward contract. Basis will improve. If you have wheat contracted, it is time to get wheat puts bought. There is not a big rush as long as the war is ongoing and the US Hard Red Winter Wheat country remains bone dry, but just the talk of possible meeting of the warring parties drops wheat 50 to 75 cents every time. The bullish impact of the war put high in the wheat a month ago (already) and the market has not been close to that high since. US wheat exports are very poor and, since India and Australia had great wheat crops, they are replacing all of Ukraine’s remaining old crop wheat in the export market share.
Broilers & Ethanol Update
Broiler egg set was up slightly than the same week a year ago.
Broiler egg hatch was up slightly than the same week a year ago.
Average daily ethanol production:
1,003,000 barrels last week.
1,036,000 barrels the previous week.
975,000 barrels the same week a year ago.
672,000 barrels the same week two years ago.
Ethanol inventory was 25.903 million barrels compared to 26.529 million barrels the previous week.
This morning: Crude oil is at $97.97, up $1.74 The dollar index is at 99.47, down 0.13 July palm oil is at 5,611 MYR, down 80. The contract high was made March, 9th at 6,531 MYR. Palm oil owns 36% and soybean oil owns 28% world market share. December cotton is at $113.98, down $0.52 per cwt. The contract high was made April, 5th at $115.00 per cwt. Cotton competes with soybeans and corn for acres. July natural gas is at $6.287, up 0.115. The contract high was made yesterday at $6.535. Natural gas is the primary cost to manufacture nitrogen fertilizer. July ULSD is at $3.1188 per gallon, up 0.0407. The contract high was made March, 9th at $3.7675. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 1 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 less rain days than yesterday.