Evening Report: Feb. 1, 2022

( )

Click here to view the weekly Commitments of Traders charts.

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

 

Hungary Prime Minister: Room for Russia/Ukraine compromise... After meeting with Russian President Vladimir Putin on Tuesday, Hungary’s Prime Minister Viktor Orban sees room for compromise to resolve the crisis at the Ukraine border. However, Putin accused the West of ignoring Russia’s security concerns and trying to lure the country into war.

Also on Tuesday, U.S. Secretary of State Antony Blinken told Russian Foreign Minister Sergei Lavrov it was time for Moscow to withdraw its troops if it is sincerely not planning to invade, according to a senior State Department official. Polish Prime Minister Mateusz Morawiecki pledged Poland would help Ukraine with gas and arms supplies and humanitarian and economic aid during his Ukraine visit.



Consultant cuts South America soybean production estimate by 5 MMT... Crop Consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate by 4 MMT to 130 MMT. He explained soybeans could not recover from record or near-record temps coupled with intense sunlight, which resulted in extreme moisture deficits for southern Brazil areas, including western Parana, southern Mato Grosso do Sul, Santa Catarina and Rio Grande do Sul.

Cordonnier lowered his Argentine soybean production forecast by 1 MMT to 42 MMT. He noted less- than-optimum plant populations and soybean planting was completed later than average as the reasons for his cut. Late last week, soybean planting in Argentina was reported 99.3% complete, compared to 100% last year and 100% average.

Cordonnier left his Paraguay soybean production estimate at 6 MMT. Soybean harvest in the country is approaching 50% complete and yield reports continue to be very disappointing, which is no surprise given the extreme weather they have experienced the last few weeks, according to Cordonnier.

 

Firm slashes Brazil soybean and corn crops...  Due to the continued drought in Brazil, commodity brokerage firm StoneX cut its soybean and corn production forecasts for the country. The firm slashed its soybean crop estimate by 7.5 MMT to 126.5 MMT. It reduced Brazil’s first corn crop by 1.5 MMT to 25.3 MMT. The entire Brazil corn crop is estimated at 116.1 MMT.


 

Brazil corn supplies very tight until June... A reduced first corn crop due to severe drought and record temps means there will be very tight corn supplies in Brazil until June, according to Cordonnier. The lower corn supplies are in the same area where most of the livestock industry is concentrated.

The livestock industry in southern Brazil will need to procure at least 8 MMT of corn in 2022. Most of the corn will be brought in from Brazil’s safrinha crop that will become available in June. Cordonnier says until then, Brazil’s corn prices will remain near record-high levels due to the tight supply. If the safrinha crop has reduced yields like last year, southern Brazil livestock producers will need to import corn from Argentina and Paraguay again.

 

Major snow event not a drought buster... Snow forecasts from a dusting to 6 inches in HRW areas will not be a trend changer and below-average soil moisture will prevail, according to Weather World Inc. Most of HRW areas are predicted to get two to six inches of snow, which would result in 0.10 to 0.35 inches of moisture in the western parts and 0.60 inches in the eastern region. Nebraska will likely get a dusting to two inches of snow.

World Weather says eastern areas of the wheat country will get more snow. Eastern Oklahoma and northwestern Arkansas through central Missouri to the heart of Illinois, northern Indiana, southeastern Michigan and northern Ohio are forecast to get six to 15 inches, with localized totals up to 20 inches. The Ohio River Valley, Tennessee River Basin and northern Delta will get freezing rain, sleet and rain.

After the snow, World Weather forecasts bitter cold temperatures will return to the north-central U.S. Wednesday into Friday, with Thursday being the coldest. Winterkill will be most likely in Nebraska without adequate snowcover.

 

Record soy crush in December... U.S. soy plants processed a record 198.2 million bu. of soybeans in December, according to USDA, which was 700,000 bu. above the average pre-report trade estimate. Crush increased 7.6 million bu. (4.0%) from November and was 5.1 million bu. (2.6%) larger than December 2020.

Soyoil stocks increased to 2.466 billion lbs., which was less than anticipated, despite the stronger-than-expected crush. Soyoil stocks rose 60 million lbs. from November and 355 million lbs. from last year.

 

Corn-for-ethanol use higher than expected... Corn-for-ethanol use increased to 485.8 million bu. in December, according to USDA, up 18.9 million bu. (4.1%) from November and 54.1 million bu. (12.5%) above the previous year. Ethanol use was 7.2 million bu. greater than traders anticipated. Total corn use for ethanol and other industrial purposes rose to 539.3 million bu., up 20.5 million bu. (4.0%) from November and 59.6 million bu. (12.4%) greater than December 2020.

Dried distillers grains with solubles (DDGS) production increased to 2.073 million tons, up 3.8% from November and 16.0% above year-ago.

 

Oil surplus forecast trimmed...The overall oil surplus in 2022 will reach 1.3 million barrels per day (bpd), down 100,000 bpd from the previous report, according to an OPEC+ Joint Technical Committee (JTC) report. World oil demand growth is forecast to be unchanged for this year at 4.2 million bpd with demand expected to return to pre-pandemic levels in the second half of 2022. The committee says oil market risks include commodity markets volatility, oil production constraints, high sovereign debt and geopolitical risks

The committee met before Wednesday’s OPEC+ ministerial meeting. Five OPEC+ sources told Reuters on Tuesday they expected ministers meeting on Wednesday to agree to go ahead with a planned production increase of 400,000 bpd in March, despite high oil prices.


 

Farmer sentiment drops on less income, supply costs... Farmer sentiment dropped six points as the January Purdue University/CME Group Ag Economy Barometer declined to its second-lowest reading since July 2020.

One of the main drivers of decline was farmers’ thoughts about the 2022 financial performance. The Farm Financial Performance Index fell sharply in January to a reading of 83, a 30% decline compared to a year earlier and 27% lower than in December 2021. The report authors explain farmers expect income to decline sharply in 2022.

The Farm Capital Investment Index also weakened this month, falling four points. In January, 52% of respondents said they plan to reduce their farm machinery purchases in the upcoming year. Farmers also expect input prices to increase. Fifty-seven percent of survey respondents expect farm input prices to rise by 20% or more in 2022 and 34% of producers expect prices to increase by 30% or more.

This month, 27% of respondents expect to have a larger operating loan in 2022 than a year earlier, 10 points higher than last year’s survey and 12 points higher than two years ago.

 

Trucker vaccine mandate protest halts beef shipments... More than 150 loads of beef were stuck at the border crossing at Coutts, Alberta on Monday, the Canadian Meat Council told Bloomberg. Due to trucker vaccine mandate protests, traffic between Alberta and Montana had slowed.

After the vaccine mandate took effect for truckers crossing the U.S./Canada border, it has not had a “measurable impact on the volume of traffic crossing our border,” according to Canadian Transport Minister Omar Alghabra. About 100,000 truckers crossed in the first week after the rule was implemented. 

 

Russia temporarily stops ammonium nitrate exports... Russia will ban ammonium nitrate exports from Feb. 2 to April 2, according to Russian news agency TASS. First Deputy Prime Minister Andrey Belousov said the export ban is temporary and will resume after peak domestic demand has passed.

 

Belarus diverts potash shipments... Belarus has switched to shipping its potash exports from Russian ports instead of Lithuania’s Klaipeda port, according to Belarusian Prime Minister Roman Golovchenko. This is after Lithuania stopped shipping Belarus potash to its ports via rail. Higher global fertilizer prices will offset shipping from Russian ports that a longer distance and higher costs to producers.



Nutrien open to increasing potash supplies... The world’s largest potash miner, Nutrien Ltd, could increase potash production by 700,000 MT to 1 MMT in the second half of 2022 at low expense, the company’s interim CEO Ken Seitz told Reuters

The company could restart up to 4 MMT of idled annual capacity in the coming years as it assesses the long-term outlook for sanctions against Belarus and Russia.

If the events translating into higher potash prices are short-lived, he explained the company would not want to spend the money. However, if the circumstances are a longer-term problem, the company could increase production. 

Nutrien has not discussed forming a partnership with BHP Group, which is building a Canadian mine, according to Seitz.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.