Evening Report | January 18, 2024

Evening Report
Evening Report
(Pro Farmer)

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

 

Senate passes bill to avert gov’t shutdown; House vote ahead... Senate approved a stopgap measure to fund the federal government through early March and avert a partial government shutdown, sending it to the House for final passage. This third continuing resolution (CR) would extend last fiscal year’s spending levels until March 1 for some agencies, including USDA, and March 8 for the others. In the House, the measure could face opposition from some GOP members who oppose such stopgap funding bills without deep spending cuts.

The House is scheduled to vote on the measure later today. The House accelerated its vote because of a forecast winter storm.

 

WTO: Wheat shipments via Suez Canal plunge amid attacks... Wheat shipments via the Suez Canal fell by almost 40% in the first half of January to 500,000 MT due to attacks in the Red Sea and Gulf of Aden, the World Trade Organization (WTO) said. Earlier this week, shipping sources said they expected some grain cargo diversions but that most would continue to risk passing through the Suez Canal, which is the shortest shipping route between Europe and Asia.

In December, around 8% of wheat shipments from the European Union, Russia and Ukraine that would typically travel via the Suez Canal followed alternative routes, the WTO said. That surged to around 42% in the first half of January, it noted.

However, WTO said it appeared that few if any shipments were being cancelled altogether.

 

Ukraine’s maritime grain exports may fall 20% in January... Ukrainian maritime grain exports are expected to fall by around 20% in January from the previous month due to the crisis in the Red Sea and the New Year holidays, a senior Ukrainian government official told Reuters. As we reported last week, Ukraine’s ag exports via its alternative Black Sea humanitarian corridor reached a record 4.8 MMT in December.

Ag ministry data showed grain exports had reached 20.9 MMT as of Jan. 17 versus 25.1 MMT at that time last year. That volume included 11.2 MMT of corn and 8.3 MMT of wheat.

 

KC Fed: Smaller loan sizes keep farm lending activity muted... New non-real estate farm lending activity at commercial banks continued to decline in the fourth quarter, according to the Federal Reserve Bank of Kansas City. According to its Survey of Terms of Lending to Farmers, the volume of new non-real estate farm loans was about 15% less than a year ago during the final months of 2023. The number of new loans increased from a year ago, but average loan sizes were notably lower, with the average loan size adjusted for inflation was the lowest since 2017. The sharp climb in farm loan interest rates abated during the quarter as average rates increased modestly for some types of loans and dropped slightly for others.

Despite a reduction in new loans made over the past year, outstanding farm debt balances reported by commercial banks grew steadily through the third quarter of 2023. Many lenders continued to report subdued demand for farm loans, while others highlighted growing demand. Elevated production costs, higher interest expenses and lower commodity prices have increased financing needs of many producers, however, strong liquidity built up in recent years likely supplemented borrowing needs of some operations throughout the year.

 

Drop on placements expected in Cattle on Feed Report... Analysts polled by Reuters expect USDA’s Cattle on Feed Report Friday afternoon to show the feedlot inventory up 2.1% from year-ago at 11.927 million head. That would be the fourth straight month of year-over-year increases in feedlot numbers. After aggressive placements of calves into feedlots early last fall, analysts anticipate that category will be down 4.6%, which would be the second straight month with a year-over-year decline. Marketings in December are expected to be down 0.7%.

Cattle on Feed

Avg. Trade Estimate

(% of year-ago)

Range
(% of year-ago)

Million head

On Feed on Jan. 1

102.1

101.4 – 102.5

11.927

Placements in December

95.4

91.5 – 98.0

1.702

Marketings in December

99.3

98.2 – 100.7

1.729

 

 

Drought footprint shrinks to just over one-quarter of U.S. winter wheat areas... As of Jan. 16, the U.S. Drought Monitor showed 51% of the U.S. was covered by abnormal dryness/drought, down four percentage points from the previous week. USDA estimated 27% of U.S. winter wheat areas were covered by drought, down six points from the previous week.

In HRW areas, dryness/drought covered 77% of Kansas (virtually no D3 or D4), 62% of Colorado (2% D3, no D4), 34% of Oklahoma (no D3 or D4), 59% of Texas (4% D3, no D4), 39% of Nebraska (7% D3, no D4), 28% of South Dakota (no D3 or D4) and 75% of Montana (no D3 or D4).

In SRW areas, dryness/drought covered 83% of Missouri (virtually no D3 or D4), 38% of Illinois (no D3 or D4), 81% of Indiana (no D3 or D4), 33% of Ohio (no D3 or D4), 52% of Michigan (no D3 or D4), 85% of Kentucky (no D3 or D4) and 100% of Tennessee (24% D3 or D4).

Click here to view related maps.

 

IMF’s Gopinath warns central banks against fueling market hopes for rapid interest rate cuts... International Monetary Fund (IMF) first Deputy Managing Director Gita Gopinath warned central banks need to move cautiously on cutting interest rates this year, the Financial Times (FT) reported. Gopinath told FT that inflation is set to decelerate less sharply than it did last year because of tight labor markets and high services inflation in the U.S., euro area and elsewhere. “Based on the data we have seen, we would expect rate cuts to be in the second half, not in the first half,” she added.

 

IEA raises 2024 oil demand forecast but lags OPEC outlook... The International Energy Agency (IEA) further raised its 2024 global oil demand growth forecast, though its projection remains lower than OPEC’s expectations. IEA also said the market looked well supplied because of strong growth outside the producer group.

IEA forecasts global consumption will rise by 1.24 million barrels per day (bpd) in 2024. This was its third upward revision in as many months. IEA’s latest upward demand growth revision, up 180,000 bpd from its previous projection, was linked to improving global economic growth and lower crude prices in the fourth quarter plus China’s expanding petrochemicals sector.

IEA expects world oil supply to rise by 1.5 million bpd to a new high of 103.5 million bpd in 2024, fueled by record output from the U.S., Brazil, Guyana and Canada.

OPEC expects demand growth of 2.25 million bpd this year. It expects global oil demand to remain robust in 2024 and 2025 due to a strong global growth forecast and slowing inflation.

 

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