Highlights
The Leading Economic Index (LEI) for the United States is a forward-looking gauge designed to predict business cycle shifts. The US LEI was down 0.4% percent in July, following a 0.7% decline in June. July was the fifth consecutive month of a decline, predicting recession risks are rising.
Russia’s seaborne exports of crude oil and refined crude oil products the first half of August exceeded 6 million barrels per day for the first time since hitting a post-pandemic high in April. Russia’s crude exports rose by 140,000 barrels per day on the month to average 3.36 million to remain above pre-war levels for the fifth month in a row. Oil product exports from Russia also rose for the third consecutive month in the period to average 2.75 million barrels per day, the highest since Russia’s invasion of Ukraine on Feb 24. We mentioned recently that Japan began importing Russian crude again in July. Yep, those sanctions are really hard on Russia’s crude oil business.
The US Army Corps of Engineers has completed the first phase of the Mississippi River Ship Channel deepening. The project provides a minimum depth of 53 feet that will allow ships with drafts up to 50 feet to call at the Port of New Orleans.
Earlier this month, the M/V Capri, loaded with a record 134,706 metric tons of coal, became the first ship to transit on the Ship Channel with a draft of 50 feet upon departure. The Capri departed on the Ship Channel the outbound voyage through Southwest Pass to the Gulf of Mexico.
The larger the tonnage of freight a ship can handle, the cheaper the cost of transportation, which is a major expense item when trying to sell US grain abroad. Grain is typically shipped from the Gulf in Panamax freighters, which hold 55,000 tons (~2 million bushels). Now Cape freighters with 5 million bushels of grain can traverse the Mississippi River Ship Channel, which is home to four of the top 15 ports in the United States by annual tonnage. With Panamax freight from the Gulf to Asia over $60 per mt, a ship carrying 2.5 more tons of grain will probably save more than $10 per ton and make US grain more competitive in the world market-place. However, this deep channel is especially significant as we head into harvest and the heavy export schedules, because the daily charter rate for Panamax freighters is $15,188 per day, but the daily charter rate for a Cape freighter is just $6,267.
The current ocean freight alternatives are: 55,000 tons shipped at $15,188 a day or 135,000 tons shipped for $6,267 a day. Because of the deeper channel, grain buyers around the world have a unique opportunity. With China’s record high soybean crush margin and this low cost Cape freighter charter rate, no wonder the Gulf basis for beans was up 30 cents early last week. Do not forget, Brazil and Argentina had short soybean crops this year and they will not be harvesting any beans until late January.
The rainfall map for the 24 hours ending yesterday morning:
Rain Days Update
The Western Corn Belt has 1 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 6 less rain daysthan yesterday.
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days