Evening Report | April 8, 2024

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Winter wheat conditions unchanged... USDA rated 56% of the winter wheat crop as “good” to “excellent,” unchanged from the previous week, as expected. But there was a one-point increase in the top category. USDA rated 12% of the crop as “poor” to “very poor,” up one point from last week.

USDA reported 6% of the winter wheat crop was headed, one point ahead of the five-year average. The Texas crop was 27% headed (25% average). None of the crop was headed in Oklahoma (1%) and Kansas (0%).

Corn planting advances less than expected... USDA reported 3% of the corn crop was planted as of Sunday, up one percentage point from the previous week and one point ahead of the five-year average. Traders expected corn planting to reach 4%. Across the Corn Belt, corn planting stood at 2% in Illinois (1% average), 4% in Kansas (3%) and 7% in Missouri (3%). None of the other Corn Belt states had planted any corn yet. 

Cotton planting slightly behind average... USDA reported cotton planting advanced to 5%, which was one point behind the five-year average. Planting stood at 8% in Texas (10% average). None of the crop was planted in Georgia, which is normal for this time of year.

Spring wheat planting in line with expectations, average pace... USDA reported 3% of the spring wheat crop was planted as of Sunday, equal to the five-year average and in line with expectations. Top producer North Dakota hadn’t seeded any of its crop yet compared to 1% on average for this date.

China launches campaign to boost grain production... China has initiated a new round of action to significantly increase its grain output in the coming years via an increase in planted area and yield, in the latest effort to ensure food security. According to an action plan published by the State Council, the country aims to boost grain production capacity by more than 50 MMT by 2030. Corn and soybeans will be the major contributors of the grain output increase, the plan said. In terms of rice and wheat, the emphasis is on improving quality.

Major projects from water conservation to high-standard farmland construction and revitalization of the seed industry will be implemented in 720 crucial grain producing counties, under the guidance of the National Development and Reform Commission (NDRC), the country’s top economic planner, and the ag ministry.

China’s grain supply and demand is characterized by a “tight balance” and may tighten in the future, hence the need to further increase output to ensure food security, said an NDRC official.

CDC: HPAI risk to humans remains low... The U.S. Centers for Disease Control and Prevention (CDC) said on Monday highly pathogenic avian influenza (HPAI) risk to the public remains low even as it asked the state public health officials to be prepared to respond. CDC asked for plans to quickly test and provide treatment to potentially impacted farm workers following positive results among cattle herds, which we now reference as Bovine Influenza A Virus (BIAV). CDC also encouraged state health officials to communicate about any challenges they are facing.

AgResource raises Brazil soybean crop, trims corn forecast... AgResource raised its 2023-24 Brazilian soybean crop estimate by 1.54 MMT to 145.46 MMT. The firm trimmed its Brazilian corn crop forecast by 750,000 MT to 114.19 MMT.

UC-Davis analysts warn of significant soybean acreage requirements for SAF... Two UC-Davis analysts in a report highlighted that satisfying sustainable aviation fuel (SAF) goals would require a significant increase in soybean plantings, almost by 50%. Conversely, relying solely on corn ethanol would necessitate a lesser increase in land area, around 9%, due to its higher yields per acre.

Professor Aaron Smith and doctoral student Andrew Swanson, in an article for the American Enterprise Institute, cautioned that a swift expansion into SAF could reignite debates over the food versus fuel dilemma, potentially prompting changes in land use for conservation and crop production akin to those seen during the implementation of Renewable Fuel Standard (RFS) policies.

To produce 3 billion gallons of SAF by 2030, as targeted by the Biden administration, an estimated 8 to 11 million acres of corn or 35 to 50 million acres of soybeans would be required, depending on the rate of crop yield improvements over the next six years. Currently, SAF production stands at 16 million gallons annually.

Corn and soybeans collectively occupy a substantial portion of agricultural land in the U.S., totaling nearly 179 million acres last year. Various strategies can be considered to meet the increased demand for these crops, including reallocating land from other competing crops.

UCO meeting to be held later this week... In last Friday’s “Evening Report” we alerted you to concerns with a surge in used cooking oil imports, particularly from China. A meeting will be held this week to discuss UCO issues. UCO imports, and especially potentially fraudulent imports, are of concern. The ag and biofuel sectors are trying to get their arms around what can be done and what are their “asks.”

Red Sea situation fueling surge in international airfreight demand...  Airborne shipping is experiencing unseasonably strong double-digit growth, the Wall Street Journal reports, due to Red Sea shipping disruptions. Increased demand is attributed to strong business from Asia and the Middle East to Europe. Companies are adjusting supply chains in response to geopolitical shock waves and disruptions, as attacks by Yemen’s Houthi rebels on commercial shipping in the Red Sea are prompting ocean carriers to take longer routes around Africa. Bottom line: Average spot rates from the Middle East and South Asia to Europe were up 71% in March compared to last year, driving up airfreight prices.