Highlights
The USDA made no changes on the domestic corn and soybean S&D other than increasing the average price expected to be paid to farmers for the 2024 crop corn by 10¢ to $4.35 and lowering the price for 2024 soybeans by 10¢ to $10.10. Wheat for flour in the U.S. was increased slightly.
The USDA reduced both Brazil and Argentine corn production by one million mts. Chinese wheat imports were cut by 2.5 million to 8 million mts and Chinese corn imports were reduced by 3 million to 10 million tons, but, as we wrote, U.S. corn and soybean exports were left unchanged.
Argentina’s bean crop was reduced by 3 million to 49 million mts and Paraguay’s bean crop was reduced by a half million to 10.7 million. China’s soybean imports were left unchanged at 109 million mts.
The world carryout for both corn and beans were lower than the lowest pre-report estimate and both closed lower; corn was substantially lower.
The Tech Guy thought it was "buy the rumor and sell the fact" trading. Maybe it was something Trump said or improving weather in South America.
Joe Mauck is an analyst with ADM. He may have the answer for the lower close when he wrote yesterday morning before the USDA report:
“A relief to Argentina, rain is falling in Buenos Aires, Argentina this morning as storms work across major growing areas, and the weather is clearing up in central Brazil to help move bean harvest along. A slow soybean planting season in Brazil as well as the recent stormy weather has slowed the pace of Brazil's harvest. As weather begins to cooperate, South American harvest pressure will begin to put pressure on board prices here in the US.”
Note: Although Buenos Aires is the name of the capital city of Argentina, there is also a province named Buenos Aires. It is a bit larger than the country of Italy and is Argentina's primary agricultural producer.
In any case, nothing in today’s report changes the longer-term price outlook.
Tidbits
Brazil’s soybeans were 16.7% harvested as of late last week compared to 23.8% last year and 21.4% average according to Patria Agronegocious. Soybeans in Mato Grosso were 28.5% harvested.
The safrinha corn in Brazil was 20% planted compared to 38% last year according to AgRural. Mato Grosso was 23.4% planted.
The EU trade ministers are expected to agree today on their initial retaliatory measures to Trump's tariffs that will go into effect for the EU and Canada on 12 March. The EU is preparing sectoral and personal restrictions to be enforced on the same day. The restrictions, as in 2018, are expected to impact Harley-Davidson, Levi Strauss, and Deere & Company. The restoration of tariffs for U.S. agricultural products is also being worked out.
Also today, retaliatory measures will be discussed by European Commission President Ursula von der Leyen and Canadian Prime Minister Justin Trudeau.
By the end of the week, the price of natural gas in the EU will break $700 per 1,000 m³. The reason is colder than normal weather in Northern Europe and supply restrictions. Gas reserve in underground storage facilities has declined to 49% of capacity. This winter, the EU countries rate of gas withdrawal from reserves is 8% higher than the 5-year average. The cold snap next week is expected to result in gas reserves declining to less than 30% by April. Natural gas is the major cost of producing nitrogen fertilizer.
The U.S. energy department said on Tuesday that it approved the disbursement of a loan guarantee to Calumet for the expansion of a sustainable aviation fuel refinery in Montana, which had been finalized days before Trump took office.
The Montana Renewables refinery in Great Falls opened in late 2022 and produces about 140 million gallons a year of biofuels. The loan will allow it to expand production to 315 million gallons per year, and produce about half of North American SAF, an aviation fuel made from seed oils and tallow fats that is lower in greenhouse gas emissions than conventional jet fuel.
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Market Data
Prices are as of 1:00 AM ET:
Crude oil is at $72.97, down $0.35
The dollar index is at 108.05, up 0.09
July palm oil is at 4,415 MYR, up 84. The contract high was made November, 11th 2024 at 4,576 MYR. Palm oil owns 61% and soybean oil owns 14% world market share.
July cotton is at $69.41, down $0.06 per cwt. The contract high was made April, 3rd 2024 at $85.63 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas is at $3.931, down 0.012. The contract high was made November, 21st 2022 at $4.364. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $2.3509 per gallon, down 0.0059. The contract high was made January, 23rd 2023 at $2.6729. ULSD stands for Ultra Low Sulfur Diesel.
March Dow Futures is at 44,677, down 31. The contract high was made December, 4th 2024 at 45,642.
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
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