Evening Report: April 11, 2022

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Winter wheat conditions improve slightly... USDA rated 32% of the U.S. winter wheat crop as “good” to “excellent” as of Sunday, up two points from the previous week. Traders surveyed by Reuters expected crop conditions to be unchanged. USDA rates 36% of the crop as “poor” to “very poor,” unchanged from the previous week. The “good” to “excellent” rating was 21 points below year-ago.

USDA reported 5% of the wheat crop has headed, equal to last year and one point behind the five-year average.


Corn planting behind expectations... USDA reports 2% of the U.S. corn crop was planted as of Sunday, the same as last week and a point behind the five-year average. That was two points slower than traders expected. In the top 12 production states of the Corn Belt, only Kansas at 5% (equal to the five-year average) and Missouri at 1% (4% on average) had any corn planted, according to USDA.

Texas had 63% of its corn crop planted, six points ahead of a year ago and five points ahead of the five-year average.

Spring wheat planting progress matches expectations... The U.S. spring wheat crop was 6% seeded as of Sunday, compared to 3% last week and 10% a year ago, USDA reported. Analysts expected 6% of the spring wheat would be planted in a Reuters survey. Spring wheat planting is running one point behind the five-year average for this date.

Washington had 32% of its crop planted, a point ahead of the five-year average. Top producer North Dakota has planted 2% of its crop, equal to the normal pace for this time of year. Planting hasn’t started yet in Minnesota.

Sworn testimony sought from meatpackers regarding pricing practices... House Ag Committee has requested the CEOs from the top five meatpackers to appear before the panel on April 27, Pro Farmer has learned. They will reportedly be sworn in before making comments and the panel will take “other measures” if the CEOs say they will not attend, contacts advise. Meanwhile, some lawmakers are pushing for a general counsel at USDA to investigate meat industry competition. On April 26, the Senate Ag Committee will have a hearing on livestock pricing bills.

U.S. economy now ‘facing rocky waters’... The U.S. economy is facing a lot of uncertainty and “rocky waters,” according to President Joe Biden’s top economic adviser. Brian Deese, director of Biden’s National Economic Council, said on Bloomberg Television the U.S. is in a better position than other major countries to deal with economic issues. He refused to place any odds on a recession risk. However, he said other economies have a higher recession risk than the United States. Deese said inflation would likely be elevated in the March consumer price index, which will be released on Tuesday. However, he predicts inflation will be lower by the end of the year and next year. He added the government is working to improve container processing at ports, releasing oil supplies to lower gas prices and monitoring the Chinese Covid shutdowns.

New York Fed: Consumers expect more short-term inflation... Consumers expect another increase in short-term inflation but a decline in medium-term price pressure, according to the Federal Reserve Bank of New York’s March 2022 Survey of Consumer Expectations. The median one-year-ahead inflation expectations increased to a new series high of 6.6% from 6.0% in February, while median three-year ahead inflation expectations decreased to 3.7% from 3.8%. Expectations about year-ahead price changes increased by 0.8 percentage points for gas prices (to 9.6%) and by 0.4 points for food prices (to 9.6%). Labor market and income growth expectations receded somewhat, and respondents turned less optimistic about their year-ahead household’s financial situation.

OPEC says it can’t replace Russian oil... OPEC officials signaled the cartel would not pump more oil in a meeting with EU officials if the EU sanctions Russian oil. OPEC said current and future sanctions could create one of the worst oil supply shocks ever. The EU and other countries have asked OPEC countries to pump more oil to offset potential Russian oil sanctions. The EU has not sanctioned Russian crude oil yet. However, EU officials sanctioned Russian coal last week. Some EU officials say oil is next and plans for sanctions are being prepared. 

Fed’s Evans thinks interest rates target should be 2.25% to 2.5% ... Chicago Federal Reserve Bank President Charles Evans signaled he would not necessarily oppose getting interest rates up to a neutral setting of 2.25% to 2.5% by the end of the year. That would require a couple 50 basis-point rate hikes at upcoming Fed meetings. He noted the Fed should not raise rates too fast, and it should assess inflation pressures and adjust as needed.

Argentine grain truckers strike starts... Argentine truckers today started their indefinite strike to demand higher rates for transporting grain and livestock. There are no negotiations underway, according to union officials. The truckers want higher rates to offset inflated diesel prices. They have also complained about fuel shortages. The government and rural associations agreed on new rates for grain transportation in early February. Since then, fuel prices and the inflation rate in the country have increased due to Russia’s invasion of Ukraine. About 85% of Argentina’s grain volume is transported to the country’s ports by truck from fields. If the strike continues for several days, grain exports can be affected, as the country is in the midst of its harvest.

Australia believed to export record amount of wheat in February...  Australia exported 2.8 MMT of wheat in February, which is thought to be a monthly record for the country, according to the Australian Bureau of Statistics (ABS). In January, the country exported 2.7 MMT. In February 2021, the country shipped 2.6 MMT of wheat. From December 2021 to February 2022, Australia exported 6.94 MMT of wheat, compared to 6.76 MMT a year before. The country was expected to ship around 3 MMT in March. However, excessive rains affected some of the country’s ports and likely held wheat shipments under February’s total. 

India to have excess wheat to export... India should have extra wheat to help supply the world market, according to government officials. Indian farmers are currently harvesting what is expected to be a record 111.32 MMT wheat crop. It would be the sixth straight year that India produced more wheat than needed. India needs 25 MMT of wheat every year for its food welfare program. Last year, the Indian government purchased 43.34 MMT of wheat. As of April 1, the government had 19 MMT in storage, above its target of 7.46 MMT. This year, government wheat purchases will likely drop as the market offers farmers higher prices. Government officials are also working with port and railway authorities to prioritize wheat exports.

Residue burning bans pose another Chinese crop production hurdle... Chinese farmers are saying crop residue-burning bans might limit crop production, Bloomberg reported. Typically, Chinese farmers burn the crop residue in the fields as the quickest and cheapest way to clear the land. The government has adopted strict anti-pollution rules such as crop residue burning bans to reduce dangerous air particles. Beijing wants farmers to use machines to collect crop residue and take it to electric plants to burn for fuel. Farmers say the collecting machines result in poorer land conditions and more pests, potentially affecting seed emergence. The country has called for more crop production this year. There are other factors such as Covid shutdowns and higher fertilizer and fuel costs that farmers must contend with to increase production.

Xi: Seed independence key for Chinese food security...  Independently controlled seed sources and self-reliant technology are the keys to China’s food security, Chinese President Xi Jinping said during a trip to a Sanya seed lab in Hainan province, according to a Xinhua news report. Last month, Xi told delegates to the annual parliament meeting that China must not rely on the international market for food. In late 2020, the central leadership said the country’s seed industry was a weak link in the food chain and needed to make better use of science and technology to achieve a turnaround. One researcher noted most of the focus on seeds has been on rice and wheat, and more work is needed on vegetables and fruits and corn.

Bird flu has killed more than 13 million birds in France... Since the end of November, more than 13 million birds have been culled due to bird flu in France, according to the country’s agriculture ministry. As of April 8, France reported 1,230 outbreaks of avian influenza. The country has seen a 10% rise in outbreaks in the past eight days.