Evening Report: April 19, 2022
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Best Midwest planting conditions thus far next week... World Weather Inc. says the best planting conditions for the Midwest will be next week. However, it notes temps will be trending lower by that time. Some warming is expected in the second half of this week. However, Midwest drying conditions will be poor between storm systems through next week. For the Delta region, World Weather predicts planting progress is expected to slowly improve with less frequent precip and warmer temps.
On Monday, USDA reported corn and soybean planting was behind normal for mid-April.
Dry central Brazil conditions raise concern... Crop Consultant Dr. Michael Cordonnier reports Brazil’s safrinha corn is fine for now, but there are warning signs on the horizon. The driest areas extend from the state of Sao Paulo northward into Minas Gerais, Goias, Bahia, northern Mato Grosso do Sul and eastern Mato Grosso. World Weather Inc. says topsoil moisture is already rated short in Mato Grosso and central Bahia while its short to very short in northern Minas Gerais. Ten days of drying will result in crop moisture stress for Mato Grosso and a few neighboring areas, harming safrinha corn and cotton production potentials. The Brazilian National Weather Service (Inmet) forecasts below-average rainfall for April-May-June for most of central Brazil.
Argentine ship workers to strike, grain ports unaffected... Argentine ship works plan to strike for 24 hours on Thursday to protest government delays in awarding bids for maintenance of the Parana River. The strike is not expected to affect grain shipments as the union does not have a significant presence in the areas of Timbues, Puerto General San Martin, San Lorenzo and Rosario. The Parana River is a main agricultural shipping route for Argentine agricultural exports.
China to purchase 40,000 MT of pork... China’s government will buy 40,000 MT of pork for state reserves on April 22, according to a China Merchandise Reserve Management Center notice. This is the fifth batch of government purchases this year. China’s pork prices have remained low in recent months due to higher supplies and softening demand.
Chinese consumers switching from pork to seafood... Chinese consumers are switching from pork to seafood for their protein needs, according to Bu Rui Ke (which also trades as China Brick), a research consultancy focused on agricultural commodities and publicly listed agricultural and food firms. Seafood Source reported the change is driven by higher incomes, health concerns and an aging population. The report notes average Chinese pork consumption peaked in 2014 at 43 kilograms (kg) per person, up from 11.7 kg in 1981. It is now under 40 kg. Pork has long been considered the bedrock protein of the Chinese diet and is typically cheaper than seafood. However, higher incomes mean consumers are better able to purchase seafood. The firm found seafood is facing a battle with beef to become the protein of choice. However, the report says pork can regain market share by focusing on higher-value products.
U.S. diesel exports continue to soar... U.S. Gulf Coast diesel exports increased to 1.3 million barrels per day so far this month, according to oil analytics firm Vortexa. That is the most exports since January 2016, when it started tracking shipments. U.S. government data shows weekly national diesel exports increased to 1.74 million barrels per day in April, the highest since June 2018. Most of the diesel exports have been shipped to Latin America. However, Europe has also been making purchases to offset the reduction in Russian diesel imports. Increased exports have helped push U.S. diesel stocks to their lowest level since 2014.
OPEC+ misses production goal, again... OPEC+ countries produced 1.45 million barrels per day (bpd) below its March production targets, reported Reuters. In February, the cartel missed its production target by more than 1 million bpd. In March, Russia’s oil production was 300,000 bpd below its 10.0 million bpd target. The International Energy Agency (IEA) expects Russia’s April output to drop by 1.5 million bpd and 3 million bpd in May. Other countries, including those in West Africa, are having trouble increasing oil production to meet the cartel’s target.
IMF forecasts 3.6% growth in 2022, 2023... The International Monetary Fund (IMF) expects the global economy to grow by 3.6% in both 2022 and 2023. That would be a 0.8-percentage-point cut for 2022 and a 0.2-point cut for 2023 from its January forecast. This is the second time IMF has cut its global economic growth forecast this year. The international lender estimates 2022 inflation at 5.7% in advanced economies and 8.7% in emerging market and developing economies — 1.8 and 2.8 percentage points higher, respectively, than it projected in January.
For advanced economies, IMF projects 3.3% growth in 2022 and 2.4% growth in 2023. For the U.S., it forecasts 3.7% growth in 2022 and 2.3% GDP in 2023. Japan is projected to grow 2.4% in 2022 and 2.3% in 2023. Canada’s growth is forecast at 3.9% this year and 2.8% in 2023. China’s economy is expected to grow 4.4% in 2022 and 5.1% in 2023.
Interest rate tone gets more hawkish... Chicago Fed President Charles Evans, a dovish policymaker, said he’s open to discussing a half-point increase, and said he doesn’t see a big risk in waiting to get to neutral by a few months. He called the March FOMC projections for a year-end rate of 1.9% reasonable. Sometimes-hawk Kansas City Fed President Esther George has urged a “steady, deliberate approach.” Meanwhile, St. Louis Fed President James Bullard discussed the idea of the Federal Reserve’s first 75-point basis hike since 1994. Bullard is the most hawkish official and the only person to vote against a 25-basis point increase, as he wanted a 50-point hike in the March meeting.
Pierre-Olivier Gourinchas, International Monetary Fund chief economist, also weighed in on U.S. interest rate hikes. He noted the Ukraine war has made the U.S. interest rate hike cycle more urgent and necessary.
Lawmakers join ag/farm groups in filing brief at Supreme Court supporting WOTUS challenge... A group of 45 senators and 154 House members have filed an amicus brief with the U.S. Supreme Court calling for it to reverse a lower court ruling on Waters of the US (WOTUS) under the Clean Water Act (CWA). The lawmakers, led by Senate Environment and Public Works Ranking Member Shelley Moore Capito (R-W.Va.) and House Transportation and Infrastructure Ranking Member Sam Graves (R-Mo.), detailed several arguments for the nation’s top court to narrow the determination of what counts as navigable waters under the CWA. They indicated the case marks the chance for the nation’s top court to “put the genie back in the bottle” on WOTUS and reverse the lower court ruling as failing to do so would mean “the definition of ‘waters of the United States’ will continue to whipsaw from one administration to the next.” A separate filing by the American Farm Bureau Federation and 13 other groups notes the organizations grow “virtually every agricultural commodity produced commercially in the United States, including much of the U.S. wheat, corn, rice, soybean, cotton, wool, sugar, milk, poultry, egg, pork, lamb, and beef supply,” adding that producers face “significant problems” from the shifting definitions of WOTUS. The Supreme Court is expected to hear arguments in the case later this year.
