Evening Report | March 22, 2024

Evening Report
Evening Report
(Pro Farmer)

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

 

Your Pro Farmer newsletter is now available... Results of our annual acreage survey indicate corn acres will fall a little more than 3% and soybean plantings will rise nearly 4% this year, due mainly to crop rotations, especially in the Corn Belt. We break down all of the survey results in our News page 4 feature. USDA officials responded to our questions on why its Brazilian crop estimates are far higher than those from Brazilian crop estimating agency Conab. FAPRI released its baseline projections for 2024, which suggest downward price pressure could continue this year and beyond without a bullish weather event. Speaking of weather, El Niño has basically ended and conditions will trend neutral during spring. But La Niña could develop by summer. On the monetary policy front, the Fed kept interest rates unchanged, as widely expected, and still expects three rate cuts this year. But fewer officials now expect more than three cuts. We also look at key farm bill issues that will help determine if/when new farm legislation gets completed this year. We cover all of these items and much more in this week’s newsletter, which you can access here.

 

 

Cattle on Feed Report: USDA data is likely to cause a weak cattle futures opening Monday morning. USDA estimated there were 11.838 million head of cattle in large feedlots as of March 1. The indicated 1.3% annual rise modestly exceeded the average of pre-report estimates around 100.9% of last year. Having the total top expectations largely reflected February feedlot placements at 1.89 million, up 9.7% from year-ago, surpass the pre-report estimate at 106.4% of last year is likely to provoke a negative futures reaction. And while the added placements are unlikely to exit the lots before early summer, they increased supplies likely to be available down the road.

Cattle on Feed Report

USDA
(% of year-ago)

Average Estimate

(% of year-ago)

On Feed on March 1

101.3

100.9

Placements in February

109.7

106.4

Marketings in February

103.4

103.8

 

February feedlot marketings also topped the year-ago total, although the 0.4% dip below expectations wasn’t helpful to bulls since it essentially confirmed ideas producers need to become more aggressive in marketing their animals. Indeed, the addition of a February workday due in the form of leap day would in many instances boost marketings by 4%-5% annually. Traders may also be disappointed by the implied increase in the number of animals available for slaughter, especially with steer dressed weights having surged from 909 pounds per head in early February to 922 in early March. Bulls have to worry the negative report reaction will trigger a technical breakdown.   

 

 

Survey says: Notable shift from corn to soybeans in 2024... Results of the annual Pro Farmer/Doane planting intentions survey signaled there will be a notable shift from corn to soybean acres this year, due mostly to crop rotations, but the overall mix of those crops will be little changed. We project total corn and soybean plantings at 178.5 million acres, which would be down 900,000 acres (0.5%) from last year. Total acres planted to the big four crops (corn, soybeans, wheat and cotton) are expected to decline 1.946 million acres (0.8%) from last year.

Our analysis of survey responses signals producers intend to plant 91.75 million acres to corn this year, down nearly 2.9 million acres (3.1%) from last year. Of those farmers who plan to shift acres, 56% indicated they would plant less corn.

States east of the Mississippi River are expected to see the sharpest drop in corn acres, with plantings falling 4% to 5%. Corn plantings west of the Mississippi are likely to fall 1% to 2%, except for the Dakotas, where corn plantings are projected to rise. Our survey showed corn plantings will increase 6.7% in North Dakota and 2.3% in South Dakota. Corn plantings in the Corn Belt are seen as falling 2.6% overall.

The Northern Plains is the only region expected to gain corn acres from last year.

With corn plantings expected to fall the most in the Corn Belt and less productive acres being seeded to corn, it points to a potential drag on yields regardless of weather.

Producers indicate they intend to plant 86.75 million acres to soybeans in 2024, up 3.15 million acres (3.8%) from last year. Of those farmers who plan to shift acres, 59% of respondents will increase soybean plantings.

Soybean plantings are expected to broadly increase in the Corn Belt, aside Missouri and Minnesota, which indicated lower bean acres from last year. The largest increase will be east of the Mississippi, with an 8% to 9% rise, where corn saw the greatest decrease. West of the Mississippi, soybean acres are seen rising around 2%. Soybean plantings across the Corn Belt are expected up 4% to 5% overall. Iowa, Illinois, Indiana, Ohio each signaled an increase in a range of 5% to 7% from last year. Soybean acres are expected to drop in cotton states, where producers are taking advantage of higher prices.

Soybean plantings in the Northern Plains are projected to rise around 1%, as more acres come back into production.

Producers in the Northern Plains will favor durum over other spring wheat. That’s similar to results from the Canadian government’s acreage survey, so it’s not surprising. Overall, spring wheat seedings are expected to drop 201,000 acres (1.6%) from last year to 12.675 million acres. That includes 10.9 million acres of other spring wheat and 1.775 million acres of durum, which would be down 300,000 acres (2.7%) and up 99,000 acres (5.9%), respectively.

Using USDA’s winter wheat acreage estimate of 34.425 million acres, that would put total wheat plantings at 47.1 million acres, down 2.475 million (5.0%) from last year.

Survey responses signal producers intend to plant 10.5 million acres to cotton this year, up 270,000 acres (2.6%) from 2023. That runs counter to the National Cotton Council (NCC) survey, which indicated cotton acres would decline 3.7% to 9.8 million acres. However, the NCC survey was collected from mid-December to mid-January after which prices rallied significantly.

Several producers that did not grow cotton in 2023 intend to do so this year. Nearly every survey from cotton areas signaled an increase in acres. Importantly, acres are expected to increase in top producer Texas.

Our survey projected sorghum plantings at 7.6 million acres, which would be up 405,000 acres (5.6%) from last year. Sorghum plantings are expected to rise across most of the Plains from Texas to South Dakota.

There’s a slight tendency for our survey to underestimate corn acres and overestimate soybean plantings compared with USDA’s March intentions. Over the past 10 years, our spring acreage survey on average has been 372,500 acres too low for corn and 403,500 acres too high for soybeans. As that would suggest, our survey has been really close on combined corn and soybean acres over the past decade.

 

 

Sustainable aviation fuel costs much be lower, Exxon VP says… Costs are the main obstacle to increasing the use of sustainable aviation fuel (SAF), Exxon Mobil Senior Vice President Jack Willams said earlier today.

SAF accounts for just 0.2% of the jet fuel market but policymakers including President Joe Biden see its adoption as a way to meet goals on lowering carbon emissions. But SAF, a biofuel made from plant or animal materials including used cooking oil or agricultural waste, is up to five times more expensive than regular fuel.

“There’s one big negative and that’s cost,” Williams said at a conference near Chicago. “As we think about how we want to grow SAF…we have got to focus on how do we minimize costs?”

Williams said demand for SAF could increase from 7 million barrels a day now to 12 million barrels a day in 2050 and described the Biden administration’s Inflation Reduction Act as the catalyzing action for biofuel production as well as carbon capture/storage and low carbon hydrogen.

 

 

Three words describe what’s coming in new House farm bill: Creative, creative, creative... That’s what insiders inform. House GOP lawmakers and staffers have mined what they could regarding creative approaches in finding some additional $40 billion to $50 billion in funding beyond the $1.51 trillion 10-year baseline. “There will be no robbing of one title to help another,” one source said, although there will be some changes in SNAP that generated additional funding, something that if confirmed, will be fiercely opposed by Democrats. As previously reported, there will be increases in reference prices but not via uniform percentage, with some commodities getting a bigger boost than others on a percentage basis. Other areas seeing funding gains and/or reform include MAP/FMD programs, crop insurance and biosecurity.

Timing of the House farm bill is between post-Easter and around Memorial Day. House Ag Chair Glenn “GT” Thompson (R-Pa.) reportedly wants to unveil text and then hold a House Ag Committee markup on the bill within the following week, with House floor actions around two weeks after that.

As for the Senate, Ag Chair Debbie Stabenow (D-Mich.) attended the left-leaning League of Conservation Voters’ annual dinner in D.C. She told the audience: “I can assure you that I’m not going to let one dime of our climate-smart agriculture, conservation money to be used for anything else.”

 

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