Tidbits
The S&P 500 and NASDAQ Indexes were down on Wednesday and had its worst day since late 2022 due to a selloff in high-flying technology stocks. The S&P slid 2.3%, with Tesla shares plunging 12% in the biggest drop since September 2020. The Nasdaq 100 was about 3.7% lower due to Google’s YouTube advertising revenue weakness.
Eduardo Vanin wrote on Wednesday:
"Soybean premiums (basis) FOB Paranaguá and CFR China surged 30 to 40 cents per bushel in just a few days. Farmer selling in Brazil was slow again, but demand from Chinese crushers seemed to be impacted by the worsening crush margins for both crops.
The quality of soybeans up North is becoming a serious challenge for the continuation of the export program in Brazil. Traders are attempting to manage this by relocating beans from different regions, which is costly.
Corn premiums appear to have reached a temporary ceiling. The US Gulf is cheaper for many destinations. I've heard that Argentina has also dropped its levels. Moreover, farmer selling in the last 10 days was quite strong, increasing the likelihood of a downward adjustment in premiums.
Interest rates in Brazil climbed again, still reflecting the government's vague announcements regarding expense cuts for 2025."
With June and July weather relatively friendly for much of the Corn Belt, some traders, analysts and observers have been steadily increasing the yields used in their supply and demand outlooks, with one private group coming in with a 189 bushel per acre corn yield late last week (which is 5% above the USDA trendline). Well, we doubt those, but no wonder prices are on the bottom with such estimates being used for trading algorithms.
Oil prices are soft today as concerns over weak demand in China and expectations of a nearing ceasefire deal in the Middle East overcame crude price gains on Wednesday.
The Russian government could ban diesel exports if prices spike in the near term, but no decision has been made yet. There are no conditions for a complete ban on diesel shipments abroad so far. However, the government is restoring a ban on gasoline exports on August 1.
Ebrahim Argha, analyst and fertilizer trader, reported Russian fertilizer exports to the EU surged 70% between January and May 2024 compared to the same period in 2023.
Argentine fertilizer imports rose 70% in the first five months of 2024 compared to 2023. Nitrogen fertilizers imports more than doubled (+108%) from a year ago.
The use of drones to spray pesticides on crops is still not approved or legal in Canada, but Canada's Pest Management Regulatory Agency has approved the first herbicide to be applied by drone.
China is the world leader in the total number of agricultural machinery. The number of agro-drones involved in field work in China has exceeded 200,000 units.
China reported its largest grain output increase in nine years this summer, driven by a bumper wheat harvest. Summer grain production has increased by 3.625 million metric tons to reach nearly 150 million tons, a new high despite frequent meteorological disasters.
Eurozone July Purchasing Managers Index (PMI) was down 0.8 at 50.1 vs a 51.1 expectation. PMI ranges between 0 and 100. Numbers above 50 signal upcoming growth, 50 is dead steady.
The U.S. economy grew faster in July, according to S&P surveys, in a sign it is holding up well despite high interest rates and lingering inflation. The first reading (estimate) of the S&P U.S. services PMI climbed to a 28-month high of 56.0 in July, from 55.3 in the prior month. Manufacturing PMI is not so overwhelming, the estimate for July is at 49.5, vs. 51.6 in June.
The United States has been the leading raw cotton exporter to the world virtually every year for more than 100 years. U.S.-grown cotton was once principally used in domestic mills, but raw cotton exports became the dominant use in the early 2000s. Mills in other countries — particularly China — expanded textile and apparel product exports. Most U.S.-grown cotton is now destined for foreign mills and subject to increased competition from other countries. In recent years, Brazil has gradually become a major cotton export competitor, as domestic production expanded in the Center-West region. On favorable conditions, Brazil’s 2023/24 cotton crop is estimated at a record 14.6 million bales, while U.S. production decreased because of drought in the Southwest. USDA’s June S&D report forecast Brazil’s 2023/24 cotton exports at 12.4 million bales, surpassing U.S. exports to become the largest global exporter. However, for 2024/25, the United States is projected to reclaim the leading export role due to rebound in production.
Audio Version
Broilers & Ethanol Update
Ethanol production decreased, but last week’s total came within 2,000 bpd of the highest production level ever. Year to date production is behind the USDA pace. Stocks have been pretty much sideways over the past nine weeks. Ethanol Margins decreased by 10¢ to $0.85 this week. These are the best sustained margins since October. Lower corn prices are fueling the strong margins.
Last week:
Broiler egg set was up 3% than the same week a year ago.
Broiler egg hatch was up 2% than the same week a year ago.
Average daily ethanol production:
1,095,000 barrels last week.
1,106,000 barrels the previous week.
1,094,000 barrels the same week a year ago.
1,021,000 barrels the same week two years ago.
Ethanol inventory was 23.723 million barrels compared to 23.160 million barrels the previous week.
This corn marketing year to date accumulated ethanol production is 340.781 mil barrels, up 3.5% from the same period last year, compared to the USDA's corn ethanol crush projection of +5.3% for the whole year.
Market Data
Prices are as of 2:05 AM ET:
Crude oil is at $76.97, down $0.62
The dollar index is at 104.23 down 0.16
December palm oil is at 3,900 MYR, down 14. The contract high was made April, 4th at 4,152 MYR. Palm oil owns 61% and soybean oil owns 14% world market share.
December cotton is at $68.38, down $0.27 per cwt. The contract high was made June, 9th 2022 at $91.38 per cwt. Cotton competes with soybeans and corn for acres.
December natural gas is at $3.240, down 0.017. The contract high was made September, 1st 2022 at $5.627. Natural gas is the primary cost to manufacture nitrogen fertilizer.
December ULSD is at $2.4583 per gallon, down 0.0146. The contract high was made June, 9th 2022 at $2.8058. ULSD stands for Ultra Low Sulfur Diesel.
September Dow Futures is at 40,179, up 69. The contract high was made July, 18th at 41,672.
Rain Days Update
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days