Evening Report | April 10, 2023

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Winter wheat conditions slip... As of Sunday, USDA rated the U.S. winter wheat crop 27% “good” to “excellent,” down one percentage point from the previous week and five points lower than last year. Traders expected USDA to keep its good/excellent rating at 28%. The portion of crop rated “poor” to “very poor” increased one point to 37%.

USDA reported 7% of the crop was headed, three percentage points ahead of average. The crop was 31% headed in Texas, seven points ahead of average for the date. None of the crop in Oklahoma or Kansas was headed, according to USDA.

Corn planting inches forward... As of Sunday, USDA reported 2% of the U.S. corn crop was planted, up one percentage point from the previous week and one point ahead of the five-year average. Traders expected corn planting to be 5% done. Across the Corn Belt, corn planting stood at 1% in Illinois (1% on average), 6% in Kansas (4% average) and 7% in Missouri (3% average).

Cotton planting slower than average... USDA reported cotton planting advanced two points to 6% done as of Sunday, one percentage point behind the five-year average. Cotton planting was 11% completed in Texas, one point behind average for the date.

Spring wheat planting off to slower-than-normal start... As of Sunday, USDA reported 1% of the U.S. spring wheat crop was planted, three percentage points behind the five-year average. Planting stood at 2% in Idaho (20% on average) and 11% in Washington (33% average). The other states hadn’t started planting of the spring wheat crop.

April crop reports out Tuesday... Traders expect USDA to lower its ending stocks forecasts for corn and soybeans after March 1 stocks came in lower than anticipated, while wheat carryover is expected to increase slightly from last month. Traders expect USDA to make further cuts to its Argentine soybean and corn crop estimates, while the Brazilian production forecasts are anticipated to edge higher. The following pre-report estimates are from a Reuters survey; Bloomberg for cotton.

Argentina’s ‘soy dollar’ will buy some time, but won’t solve problems... Argentina’s preferential exchange rate for soy exports will generate some much-needed revenue for the government but will do little to solve the country’s financial struggles. The so-called “soy dollar” is expected to spur $15 billion in ag exports in the second and third quarters of the year. Economists say that will buy the Argentine government some time but won’t create extra revenue.

“What (Economy Minister) Sergio Massa is trying to do is buy time and stop the bomb from exploding,” economist Rodrigo Álvarez told local radio.

Economist Roberto Geretto of Fundcorp estimated that in the best-case scenario, Argentina's central bank could gain some $4 billion over the next two months, though then foreign currency income would fall away again given depleted harvests. “This new measure aims to buy two months, which in the current context is not insignificant,” Geretto told Reuters.

Brazil taking advantage of Argentine crop issues... Brazil exported a record 1.929 MMT of soymeal and 230,000 MT of soyoil in March. Soy product shipments through the first quarter of the year were also record-large as exporters took advantage of reduced exports from Argentina due to the country’s severe drought that greatly cut soybean production and slowed farmer sales.

Hungary re-introduces customs duties, strengthens inspections of Ukrainian grain... Hungary will re-introduce customs on Ukrainian grain shipments and toughen controls of the transit of Ukrainian grain via its country to make sure that supplies get to the countries of destination rather than remain in Central European markets, Hungarian Agriculture Minister Istvan Nagy said. “The European Commission said no to the general reinstatement of customs duties on Ukrainian agricultural products,” so Hungary is taking the initiative “to re-introduce customs duties and quantitative limits on a group of products, imports of Ukrainian grain and oilseeds, at least temporarily,” he said.

As we reported in “First Thing Today,” Poland temporarily halted imports of Ukrainian grain, though it will continue to allow grain in transport to other destinations to pass through the country.

Morocco moves to encourage more wheat imports from Black Sea region... Morocco will offer this month almost the same wheat import subsidy for Black Sea shipments as for other origins, eroding an advantage held by European Union supplies, a document published by state grain agency ONICL showed. For milling wheat cargoes shipped in April from Russia, Ukraine and other countries using Black Sea ports, Morocco will offer a subsidy of 70.64 dirhams ($6.92) per quintal (0.1 metric ton), slightly below a 71.58 dirham ($7.02) per quintal rate for other origins, the document indicated.

Black Sea cargoes would receive a subsidy of about $1 per metric ton less than other origins, whereas previously the gap was more than $10.

An ONICL official said the decision was partly aimed at encouraging shipments from the Black Sea region.
 

U.S. renewable diesel production hits milestone... U.S. production of renewable diesel hit 5 million gallons a day for the first time in January, the Wall Street Journal reports, extending a two-year biofuel business boom and offering a potential cleaner alternative to the petroleum product that fuels industrial operations. Annual production tripled between 2019 and 2022, and the Energy Information Administration forecasts it will reach 3.34 billion gallons next year. That pales next to the more than 46 billion gallons of diesel the U.S. transportation sector consumed in 2021. But for the trucking industry, the fuel may offer help in reducing carbon emissions while electrification of long-haul, heavy-duty vehicles remains a long way off. Renewable diesel is made in a way similar to that for conventional fuel powering trucks and trains. Experts say it is similar enough to its petroleum-based cousin to serve as a drop-in replacement.