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Vegetable Oils Risks, World Production, Export Inspection & Rain Days 02/23/2022

Yesterday morning, USDA announced sales of:

60,000 mt of old crop hard red winter wheat to Nigeria

60,000 mt of new crop had red winter wheat to Nigeria

132,000 mt of new crop soybeans to China

 

Russia produces 80% of the world’s sunflower oil, which is one of the most important vegetable oils behind palm, soybean, and canola. If sanctions against Russia include no one buying their agricultural products (other than China, Iran and north Korea), the lack of sunflower oil would have more bullish effect on world markets than any other commodity.

 

The safrinha (second crop corn) crop in Brazil is getting planted quickly behind the combines harvesting beans with steady precipitation in northern/central Brazil. While the rain is great for the newly planted corn in the sandy soil, it is making bean harvest a bit stressful. Brazil’s soybean harvest is estimated at 33% complete by AgRural. Beans are normally 16% moisture when harvested in normal weather years. This year, the beans are 18 to 22% moisture (on good days). The extra drying time is keeping beans away from the ports longer than normal. Some ships have been waiting to load for forty days already. Most years, 15 to 25 days is the longest wait. Argentina’s beans are still in the middle of the growing season. That means the US is the only other place to buy beans on the spot market.

Demurrage on ocean freighters run about $14,000 to $18,000 a day. when freight rates were at the top a few months ago, some ships lines were charging $100,000 a day demurrage. Estimates are Brazil will export 7.2 million mt of beans this month, well below the normal 9 million mt for a February; 1.8 million mt of beans is 30 ship loads.

The southern areas of South America (SA) continue to be dry and crop production estimates continue to decline, but rain is expected March 3rd to 6th.

Corn basis at the Gulf yesterday was relatively steady despite the big up move in futures.

Soybean basis at the Gulf was stronger through April and then unchanged into the summer months.

Wheat futures were sharply higher yesterday on inflation buying as with corn and beans, but most of the strength in wheat is the possibility of ports being closed in the Black Sea. A Ukrainian wheat and corn trader said last evening all the Black Sea ports were operating.

Corn USDA inspections for export yesterday were the largest of the marketing year.


 

Export Inspection Update


 

Market Data

This morning: Crude oil is at $91.95, up 0.04 The dollar index is at 95.96, down 0.07 July palm oil is at 5541 MYR, up 105 after making new contract high today at 5,605 MYR. Palm oil owns 32% and soybean oil owns 28% world market share. December cotton is at $102.02, up 0.36. 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 $4.586, up 0.007. The contract high was $5.121 at February, 2nd, 2022. Natural gas is the primary cost to manufacture nitrogen fertilizer. July ULSD is at $2.6799 per gallon, up 0.0091 after making new contract high yesterday at $2.7274. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update

Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received 0 inches of rain yesterday; 0.7 inches a year ago and 0.9 inches two years ago (one inch = 24.5 mm). Yesterday's high temperature was 89°F. Day time highs the next ten days will range from 89 to 93°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 86°F with 0 inches rain. Cordoba high temperature 82°F with 0 inches rain. Salto high temperature 87°F with 0 inches rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 3.27 inches, 78 to 94°F. Cordoba 1.41 inches, 73 to 86°F. Salto 1.29 inches, 79 to 86°F.

The Western Corn Belt has 2 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 2 less rain days than yesterday.


Explanation of Rain Days


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