Evening Report | February 1, 2024

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Soy crush hits all-time record, though shy of expectations... U.S. processors crushed 204.3 million bu. of soybeans in December. While that was 2.2 million bu. less than expected, it set a record for any month and was up 4.2 million bu. (2.1%) from November and was 16.9 million bu. (9.0%) from December 2022. Through the first four months of 2023-24, the crush pace topped the same period last year by 5.3%. To reach USDA’s forecast of 2.3 billion bu., the pace during the final eight months must run 3.3% above year-ago.

Soyoil stocks totaled 1.823 billion lbs. at the end of December, up 232 million lbs. from November but 483 million lbs. below year-ago.

Corn-for-ethanol use surges in December Corn-for-ethanol use totaled 481.7 million bu. during December, 3.3 million bu. above the average pre-report estimate, but the highest monthly total since August 2018. Ethanol use jumped 24.4 million bu. (5.3%) from November and 55.9 million bu. (13.1%) from last year. Through the first four months of 2023-24, corn-for-ethanol use topped the same period last year by 7.1%. To reach USDA’s forecast of 5.375 billion bu., corn ethanol use run 2.2% above year-ago over the final eight months. Based on U.S. Energy Information Administration weekly ethanol production data, the pace lagged year-ago by 5.1% in January, due largely to the mid-month artic temps.

Production of dried distillers grains with solubles (DDGS) totaled 1.951 million short tons in December, up from 1.797 million tons in November and 1.680 million tons last year.

StoneX cuts Brazil soybean crop forecast... Agribusiness consultancy Stonex lowered its Brazilian soybean crop estimate 2.45 MMT (1.6%) to 150.35 MMT. At that level, production would be 4.8% lower than last year’s record crop. StoneX cut its 2023-24 Brazilian soybean export forecast by 2 MMT to 93 MMT.

StoneX forecasts total Brazilian corn production at 124.5 MMT, down 100,000 MT from last month. The estimate for Brazil’s first crop was increased 100,000 MT to 25.9 MMT, but the firm cut the safrinha crop forecast 200,000 MT to 96.4 MMT.

Argentina’s grain exports soar in January... Argentina’s grains exports hit $1.25 billion in January, up 64% versus a year earlier and about 25% from the previous month, a boost for new President Javier Milei who sharply devalued the peso currency after taking office in December. Grains export group CIARA-CEC said, “The inflow of foreign currency for the month of January is the result of the new agricultural dollar regime and the macroeconomic movements of the new government that impact the decisions to sell grains.”

Winter wheat drought footprint dwindling... As of Jan. 30, the U.S. Drought Monitor showed 44% of the U.S. was covered by abnormal dryness/drought, down six percentage points from the previous week. USDA estimated 17% of U.S. winter wheat areas were covered by drought, down five points from the previous week.

In HRW areas, dryness/drought covered 67% of Kansas (virtually no D3 or D4), 58% of Colorado (2% D3, no D4), 22% of Oklahoma (no D3 or D4), 43% of Texas (2% D3, no D4), 39% of Nebraska (no D3 or D4), 29% of South Dakota (no D3 or D4) and 80% of Montana (no D3 or D4).

In SRW areas, dryness/drought covered 59% of Missouri (no D3 or D4), 17% of Illinois (no D3 or D4), 29% of Indiana (no D3 or D4), 14% of Ohio (no D3 or D4), 55% of Michigan (no D3 or D4), 22% of Kentucky (no D3 or D4) and 68% of Tennessee (2% D3, no D4).

The Seasonal Drought Outlook calls for drought improvement or removal across the Central and Southern Plains through April, especially in the northern two-thirds of Kansas. Aside from central and northeastern Missouri, where drought is expected to persist, drought improvement or removal is also expected in SRW areas.

Click here to view related maps.

Outlaw: Stabenow’s farm bill proposal raises concerns about expanding farmer safety net choices... Senate Ag Chair Debbie Stabenow (D-Mich.) has proposed strengthening the farm safety net in the new farm bill with five key principles, including providing farmers with choices and flexibility. However, a Southern Ag Today article says there are concerns about expanding safety net choices without addressing the existing challenges faced by cotton producers. The choice between ARC/PLC and STAX has been a source of difficulty for cotton producers, it says, and forcing this choice on other crops may not be the best solution. Instead, writer Dr. Joe Outlaw says there is a need to improve both reference prices in Title 1 and area-wide coverage in crop insurance to provide better support for all farmers.

States express concerns over banks’ net-zero commitments impacts on ag, food security... In a letter addressed to several prominent banking executives, the chief agriculture officers of various states express their concerns regarding the commitments made by these banks as part of the Net-Zero Banking Alliance (NZBA). They highlight potential negative impacts on the agriculture sector, specifically on food availability, consumer prices, credit access for farmers and the overall economy. The letter underscores their commitment to safeguarding the interests of consumers, American farmers and food security.

The agriculture officers requested more information from the banks regarding their environmental commitments within NZBA, which include transitioning all lending portfolios to align with net-zero emissions pathways by mid-century or sooner. They expressed concerns about the impact of such commitments on American farmers, which may entail significant changes in farming practices, including transitioning to electric machinery, installing renewable energy sources and altering fertilizer use.

The letter warns these changes could lead to increased food costs, decreased food production and potential economic hardships, especially for lower-income individuals. It highlights the negative consequences experienced by Sri Lanka after adopting similar measures, including a significant drop in agricultural production and food insecurity.

The agriculture officers expressed unease about the role of the United Nations Environment Program (UNEP) in reviewing and monitoring the banks’ climate targets, emphasizing concerns these targets could jeopardize American agriculture and food security.

The ag officers requested detailed information and documents related to the banks’ NZBA commitments, their plans to achieve net-zero emissions in agriculture lending and their consideration of greenhouse gas emissions in lending decisions. They seek clarity on the banks’ current membership status with NZBA and their level of involvement.

Enviro groups concerned about EPA's priorities... Environmental groups have expressed concerns EPA is prioritizing expanding meatpacking capacity over protecting water quality in its proposed slaughterhouse effluent standards. These standards aim to control slaughterhouse effluent in the Chesapeake Bay and other waterways nationwide by revising wastewater discharge guidelines for meat and poultry producers to reduce nitrogen and phosphorus pollution under the Clean Water Act. Environmental advocates argue EPA’s preferred option in the proposed regulations is the least protective of the three options considered and may allow the meatpacking industry to continue polluting waterways. EPA is expected to finalize these guidelines in 2025.

Argentina raises prices for biodiesel and bioethanol... The new pricing structure sets biodiesel prices at 940.334 pesos ($1.11) per liter, up from the previous 923.590 pesos per liter. Ethanol derived from sugarcane will now be priced at 584.18 pesos per liter, up from 465.84 pesos, while corn-based bioethanol prices increased to 536.983 pesos per liter, compared to the previous 463.911 pesos.

Additionally, the notice outlines payment terms, specifying that biodiesel payments must not exceed seven days, and bioethanol payments cannot extend beyond 30 consecutive days. Argentina has been grappling with inflation and has taken several measures under the new Milei administration to address rising prices and rebuild the country’s economy.