Dec 10, 20224 min read

Tidbits, S&D, Markets & Rain Days Update 12/10/22

Tidbits

The biggest surprise on yesterday’s monthly USDA S&D was there were no surprises. The only change on the domestic wheat S&D was the national average price for wheat expected to be paid to US farmers this marketing year was lowered 10 cents to $9.10. Perhaps someone should point that out to the wheat futures traders with Spring wheat futures in that $9 area, but KC wheat about a dollar lower and CBOT wheat $2 lower.

The price of corn expected to be paid to farmers was also lowered 10 cents to $6.70 as the corn export projection was lowered 75 million bushels and the US soybean S&D was left perfectly unchanged as was the South American crop production estimates.

Aluísio Pancracio farms near Rio Verde, Goias, Brazil. He was annoyed that the USDA left the Brazil and Argentine bean and corn crops unchanged. His comments after the report: "If the rest of the season will be favorable, which I doubt, we can already count on 25% less production in Argentina and Brazil for soybeans and corn. If the effects of La Ninã continue in this trend, we will have losses between 35 and 40%..."

Here is the map of Brazil with Rio Verde marked lower center. Aluísio is located where he should know what he is talking about as far as crop conditions.

Argentina’s wheat crop was lowered 3 million mt to 12.5 million, which everyone else is 1 to 3 million below that number. World carryover was reduced slightly, just 17 million bushels.

Ukraine’s 2022 corn crop was reduced 4½ million mt (177 mil bu), which it should have been lowered two months ago. USDA people do not know how disruptive it is to have someone trying to kill you from the air when working in the fields. Half of their corn crop is still in the field.

Pretty much overlooked yesterday was the US Producer Price Index (PPI is inflation at the wholesale level) was up 0.4% in November, double the expectation. For the past twelve months, November PPI is up 7.4%. That rate increase is down a bit from October, but way above the Fed’s target of 2%. Interest rates will be increased next Wednesday.

Belarus, Russia’s buddy, said they will allow Ukrainian grain to move through their territory to be exported out of Lithuanian ports if they would be allowed their fertilizer to be exported, which is currently sanctioned. Belarus is in the top three of the world’s fertilizer exporters. If the world leaders are truly concerned about world hunger, they will jump on that offer; more grain and more fertilizer to grow more grain. It will probably take a couple months to schedule a meeting to discuss the offer.

Crude oil in Russia was up about a dollar yesterday. Hogs in China were down 17% this week. Apparently all those newly freed folks who have been cooped-up for three years do not have enough money to buy pork.

Indonesia, a major exporter of vegetable oil (palm) may increase their biodiesel blend 5% to 35% starting in January.

CG&B in Savage, Minnesota is paying a 60 cent premium for non-GMO corn.

Off-road diesel fuel in southeast Michigan was $4.73 on November 1st; yesterday it was $2.89. Thanks Josh.

Here in West Central Ohio, off road diesel was $5.13 on November 28th; yesterday, priced at $3.65.

Once again, we learn the best cure for high prices is high prices. China is the world’s leading refiner (by far) of crude oil and exporter of refined petro products. Three months ago, China expanded as much as possible refinery capacity and launched construction of new refineries, which will take at least a year to get online. But with the “civilized” countries refusing to allow refineries to be built, China is going to clean-up financially and make the "civilized" countries dependent on China for refined crude oil products

By the way, www.oil.com reported China’s diesel fuel and gasoline exports in November were record all-time highs. Diesel will get cheaper.

Print the attached S&D. Keep all the monthly S&D reports. Someday, you will be glad you did.

Market Data

This morning:

Crude oil settled at $71.59, up $0.13

The dollar index settled at 104.93, up 0.16

July palm oil settled at 3,960 MYR, up 71. The contract high was made September, 1st at 4,365 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

July cotton settled at $80.66, up $0.27 per cwt. The contract high was made September, 1st at $101.64 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas settled at $5.053, up 0.096. The contract high was made September, 6th at $5.938. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD settled at $2.6131 per gallon, down 0.0266. The contract high was made November, 4th at $3.1450. ULSD stands for Ultra Low Sulfur Diesel.

March Dow Futures settled at 33,741, down 302. The lifetime high is 36,832 on January 5th, 2022.