Evening Report: Jan. 18, 2022

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Check our advice monitor on ProFarmer.com for updates to our marketing plan.
 

Livestock producers: Cover meal needs through January… The break below $400 in March soymeal futures is an opportunity to extend short-term meal coverage. We advise livestock producers to cover all meal needs in the cash market through the end of this month. We are targeting a drop to the $385 area (50% retracement of the November-to-January rally) to further extend coverage. You remain hand-to-mouth on corn-for-feed needs. Our target for extending corn coverage would be a drop to the $5.75 area.

 


White House: Russia could launch Ukraine invasion at any point... The Ukraine crisis is dangerous, and Russia could launch an attack at any point, said White House spokesperson Jen Psaki said today.   However, the senior official said U.S. Secretary of State Antony Blinken would meet Russian Foreign Minister Sergei Lavrov in Geneva on Friday to seek a diplomatic off-ramp with Moscow. They spoke on the phone on Tuesday to try to de-escalate the situation.

Blinken will also meet with Ukrainian
leaders in Kyiv and European officials in Berlin.

Blinken will “discuss recent diplomatic engagements with Russia and joint efforts to deter further Russian aggression against Ukraine, including Allies’ and partners’ readiness to impose massive consequences and severe economic costs on Russia,” the State Department said in a statement.

Blinken’s travels come amid concerns voiced by Ukraine and its Western allies over the tens of thousands of Russian troops amassed in and near Ukraine. Russia denies planning a new military offensive.

 


Oil futures hit seven-year highs... Oil traders are concerned about the tight oil supplies and geopolitical issues after drone and missile strikes in the United Arab Emirates (UAE) overnight. The attacks on oil facilities were not significant, but traders question tighter supplies from the area, according to Rystad Energy's senior oil markets analyst Louise Dickson.

Both Brent and U.S. West Texas Intermediate (WTI) crude futures firmed to the highest price since October 2014.

Traders question future oil supplies as some OPEC+ producers struggle to pump increased production of an additional 400,000 barrels per day each month.  Goldman Sachs analysts said they expect oil inventories in OECD countries to fall to their lowest since 2000 by the summer.

Geopolitical issues are also a concern with higher tensions between OPEC+ member Russia and Ukraine.
 


December NOPA soybean crush record-large... Members of the National Oilseed Processor Association (NOPA) crushed 186.4 million bu. of soybeans in December, up 7.0 million bu. from November. That was the highest NOPA crush for any month ever and topped the average pre-report estimate of 184.5 million bushels. The NOPA data implies a total soybean crush for December of 197.5 million bu., which would top the current record of 196.9 million bu. set in October.

NOPA’s soyoil stocks totaled 2.031 billion lbs., up 199 million lbs. from November and 159 million lbs. above the pre-report estimate. The bigger-than-expected crush accounts for some of the increase, but this implies domestic demand was weaker than anticipated.

 


Brazil harvest progress below expectations, ahead of last year... Brazil’s soybean harvest continues to be ahead of last year, according to various agricultural consultants.  Patria Agronegocios estimated 1.7% of the country’s soybeans have been harvested, compared to 0.22% last year. AgRural pegged harvest at 1.4% this year, compared to 0.4% last year.

The progress is slower than expected due to recent rains in Mato Grosso. The rains have led to isolated reports of damaged beans. However, yields in the leading Brazil soybean growing state are 72 60 kg bags per hectare in the western part of the state, according to AgRural. Yields in Parana are as low as three bags per hectare. Harvest in the Rio Grande do Sul has not started.



Brazil farmers look for herbicide for harvest progress... Aprosoja Brasil, a Brazilian farmer group, is requesting permission to directly import Diquat, an herbicide mainly used as a desiccant to help speed the crop’s shutdown. The group says there is a shortage of product and Syngenta is not delivering even sold product

Brazil’s health watchdog banned the use and marketing of Parquat starting in September 2020. According to the group, the price of Diquat tripled from last year due to the lack of a desiccant with the same function and quality.

 

Argentina harvests a record 21.8 MMT wheat crop... Argentine farmers harvested a 21.8 MMT wheat crop, according to a Buenos Aires Grain Exchange report. The completed harvest production is steady with the grain exchange’s latest estimate. The previous record was 19 MMT in 2018-19.

The harvest, which ended this month, came in 2.8 MMT higher than the exchange’s initial estimate with a national average yield of 3.44 MT per hectare, or 21.9% higher than the previous season and 11.5% better than the five-year average.

The exchange estimates Argentina’s 2021-22 corn crop at 57 MMT and soybeans at 44 MMT. Last week, the Rosario Grain Exchange cut its 2021-22 corn crop forecast to 48 MMT and the bean crop to 40 MMT.



EU soft wheat exports running below last year... EU soft wheat exports reached 15.3 MMT by Jan. 16, according to the European Commission. This is down 760,000 MT for the same period last year.  Barley exports are up 760,000 MT from a year ago to 4.9 MMT.

 


Philippines rebuilding swine herd... The Philippines swine herd has grown by 700,000 head in the past year to 9.1 million head, according to the Philippine Department of Agriculture’s Bureau of Animal Industry.  The country’s herd declined by more than 3 million head from 2019 to 2020 due to culling from African swine fever (ASF).

The seventh-largest pork importer had been required to increase pork imports due to reduced domestic production and fight food inflation. Only 45 villages in the country had an active ASF case as of Jan. 13.  Since it was first detected, 3,582 villages reported an ASF case.


Indonesian palm oil exporters required to get permits... Starting on Jan. 24, Indonesian palm oil exporters will be required to obtain licenses from the government, according to trade ministry officials.  To get the permits, exporters will need to disclose how much production was supplied to domestic buyers. The Indonesian government is trying to control cooking oil prices in the world’s top palm oil exporter.


Algeria’s government increases wheat, barley prices... The Algeria government announced it would pay farmers more for wheat and barley to encourage more production and have more food security. The government increased the price it pays farmers 33% more for durum wheat and 36% more for barley. 

 

Canada’s largest renewable diesel facility and canola processing facility announced... Federated Co-operatives Limited and AGT Foods announced plans to build Canada’s largest renewable diesel and a canola processing facility near Regina, Saskatchewan. The $2 billion investment in the renewable diesel plant will have a production capacity of 15,000 barrels per day or about 1 billion liters per year.

The canola processing plant could process 1.1 MMT of canola seed to produce 450,000 MT of oil, supplying approximately half of the feedstock required for the renewable diesel plant. Additional feedstock for the renewable diesel will be contracted from other canola crush facilities.

 


U.S. renewable diesel is likely less than half of 2025 estimates... From 2024 to 2025, U.S. renewable diesel is forecast to grow by 4 billion gallons to 5 billion gallons per year, according to the Energy Information Administration (EIA). However, renewable diesel production will likely only reach 2 billion gallons by 2025, according to a study done by Cerulogy, an independent consultant for International Council on Clean Transportation.

The study says only about 2 billion gallon of capacity will likely get built. It says, two billion gallons of annual production will be a “high-end estimate” without substantial market distortions.

The study notes that current policies like the U.S. Renewable Fuel Standard and California’s Low Carbon Fuel Standard are not strong enough to promote renewable diesel to 5 billion gallons.



Suez Canal expansion targets July 2023 deadline...  A project to expand parts of the Suez Canal is expected to be completed after two years of work in July 2023, the chairman of the Suez Canal Authority (SCA) said. After the Ever Given container ship ran aground and blocked the waterway for six days last year, plans to extend a second channel and enlarge the current channel were accelerated.

Project plans include making the southernmost 30 km of the canal 40 meters wider to the east and 6 feet deeper to 72 feet.  Starting in July, the second lane will increase capacity by six ships.



Germany plans animal welfare label on meat...  Germany’s new government will introduce plans this year to label meat with improved animal welfare, according to the country’s ag minister. While some supermarkets provide animal welfare labels, a national label will provide a clear national standard. The label is expected to be announced in 2022. The improved animal welfare will involve fewer animals in cages and increased costs to farmers, Oezdemir said. Farmers will need to be compensated for the extra costs. 

Other agricultural goals for the country include having 30% organic production by 2030.

 

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