Evening Report | February 15, 2024

Evening Report
Evening Report
(Pro Farmer)

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Record NOPA January crush but below expectations... Members of the National Oilseed Processors Association (NOPA) crushed 185.8 million bu. of soybeans in January. While that was a record for the month, it was well shy of the average pre-report estimate of 189.9 million bu., as arctic temps midmonth slowed operations more than anticipated. NOPA implies the full January crush will be about 196.0 million bushels. At that level, crush would be on pace to meet or exceed USDA’s forecast of 2.300 billion bu., though the pace will slow once Argentina’s soy processors have new-crop supplies.  

Soyoil stocks at the end of January totaled 1.507 billion lbs., which topped expectations, likely due to reduced use because of the bitterly cold weather.

 

Extended forecast favorable for rapid spring planting... The 90-day forecast from the National Weather Service covering March through May calls for increased chances of above-normal temps over most of the northern half of the country, including all but the southwestern Corn Belt. There are also elevated chances for above-normal precip over the southeastern quadrant of the country. The extended forecast suggests spring planting should advance rather rapidly and favors early crop development. The one area of concern could be the northern Corn Belt, which is expected to see above-normal temps and “equal chances” for above-, below- and normal precip during the period. Drought is already established over a portion of this region – and likely to persist or develop through spring.

Click here to view related maps.

 

Winter wheat drought footprint continues to shrink... As of Feb. 13, the U.S. Drought Monitor showed 40% of the U.S. was covered by abnormal dryness/drought, down two percentage points from the previous week. USDA estimated 12% of U.S. winter wheat areas were covered by drought, down two points from the previous week. Importantly, there is virtually no D3 or D4 drought in winter wheat areas.

In HRW areas, dryness/drought covered 51% of Kansas, 37% of Colorado (none in wheat-heavy eastern areas of the state), 17% of Oklahoma, 39% of Texas, 34% of Nebraska (mostly in southeast and east-central areas), 24% of South Dakota and 88% of Montana.

In SRW areas, dryness/drought covered 55% of Missouri, 20% of Illinois, 24% of Indiana, 10% of Ohio, 55% of Michigan, 0% of Kentucky and 56% of Tennessee.

The Seasonal Drought Outlook calls for drought improvement or removal across most winter wheat areas. The exceptions are in southwestern Texas and Montana, where drought is expected to persist or develop.

Click here to view related maps.

 

IGC raises global corn production but cuts ending stocks... The International Grains Council (IGC) raised its forecast for 2023-24 global corn production to a fresh record high although the impact was offset by an improving outlook for use. IGC now forecasts global corn production at 1.234 billion MT, up 4 MMT from last month and 71 MMT (6.1%) above year-ago. But it also raised consumption 4 MMT. Global corn ending stocks are forecast to be 1 MMT lower than last month, though still up 11 MMT (4.0%) from last year.

IGC made no changes to its global wheat production forecast, with it expected to drop 15 MMT (1.9%). But IGC trimmed global ending stocks, which are now projected to also decline 15 MMT (5.4%).

IGC lowered its 2023-24 global soybean production forecast 1 MMT to 391 MMT, though that would still be up 18 MMT (4.8%) from last year. Global soybean carryover was reduced 1 MMT, though that would still be up 8 MMT (14.0%) from last year.

 

Ukraine’s grain, oilseed crop may fall as much as 20%... Ukraine’s combined grain and oilseed production may fall 15% to 20% this year because of lower planted acreage, Kyiv-based UCAB business association said. “The volume of planted areas will become clearer after the start of the spring sowing season. However, it is already known that 4.8 million hectares of winter crops were planted in autumn, which is 6% less than last year,” UCAB noted.

 

Strategie Grains trims EU wheat crop forecast... Strategie Grains forecasts EU soft wheat production at 122.6 MMT, down 100,000 MT from last month and 2.5% below last year. “Excessive autumn rains, having already hampered plantings, are still causing concern in terms of the impact on yield potential,” Stategie Grains said.

The consultancy trimmed its forecast for EU barley production this year to 53.1 MMT, down 300,000 MT from last month, though that would still 12% above last year’s drought-hit level.

EU farmers are expected to increase sowing of spring barley and corn after rain prevented some growers from completing seeding of winter grains.

 

Southern Ag Today: Farm bill debate stuck in neutral... The farm bill, a crucial piece of legislation encompassing both farm and nutrition policies, historically requires a delicate balance to pass due to the need for both rural and urban support, according to an article written by Dr. Bart Fischer and Dr. Joe Outlaw in Southern Ag Today. Here are some key observations, according to Fischer and Outlaw:

  • For 40 years until 2001, spending on SNAP and the farm safety net remained roughly equivalent.
  • However, in the last two decades (2002-2021), SNAP spending has surged ahead of farm safety net spending by 242%.
  • The Biden administration’s revision of the Thrifty Food Plan market basket in 2021 is expected to further increase SNAP spending, exacerbating the gap between SNAP and farm safety net spending.
  • In contrast, farm safety net spending has remained flat over the past two decades, even declining in inflation-adjusted terms.

These observations highlight the challenges in passing a farm bill, the authors note, as the increasing disparity between SNAP and farm safety net spending strains the historic coalition necessary for its passage. Moreover, concerns from growers about the lagging farm safety net further complicate the debate.

 

U.S. export, import prices rise in January... U.S. export prices unexpectedly rose 0.8% month-over-month in January, defying market expectations of a 0.1% decrease. This rebound follows three consecutive months of declines. Nonagricultural export prices increased by 0.9%, marking the first monthly advance since September 2023, driven by higher prices for industrial supplies and materials, capital goods, automotive vehicles and nonagricultural foods. Conversely, agricultural export prices fell 1%, primarily due to lower prices for soybeans, animal feeds, corn, vegetables and fruit. On an annual basis, export prices declined 2.4%.

U.S. import prices in January also rose 0.8% from the previous month, marking the end of a three-month string of declines and the largest monthly rise since March 2022. Import fuel prices saw a notable 1.2% uptick, rebounding from sharp declines the previous months, with petroleum costs rising by 2.7% despite a significant drop of 24.5% in natural gas prices. Additionally, nonfuel import prices rose by 0.7%, the largest monthly increase in nearly two years, driven by elevated costs for consumer goods, capital goods, automotive vehicles, and foods, feeds, and beverages. Import prices recorded a 1.3% decline on annual basis in January.

 

Momentum for House-passed tax bill diminishes in Senate... Despite wide bipartisan approval in the House last month, the Tax Relief for American Families and Workers Act of 2024, which includes temporary revival of three business tax breaks and enhancements to the refundable part of the child tax credit, has hit some hurdles in the Senate, as we alerted a few weeks ago. The delay is attributed to the Senate’s focus on other pressing matters. Also, some Senate Republicans are pushing for alterations to the tax bill while others such as Sen. Chuck Grassley (R-Iowa) want to wait until after Nov. 5 elections and a new Congress to ink a new tax cut package. While optimism remains among congressional tax writers for eventual passage, it is clear any action on the bill will likely be postponed for weeks or even into spring.

 

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