Evening Report | April 23, 2024

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Weather pattern lining up with El Niño-to-La Niña transition years... Despite the recent wet pattern, including an abundance of moisture in some areas of the Corn Belt, Delta and Southeast, spring weather is lining up with past years that have featured warmer- and drier weather across the central U.S. midyear. World Weather Inc. says, “With the additional heavy rain that is slated for the heart of the Midwest in the coming 10 days to two weeks, the environment looks quite familiar with other years in which a strong El Niño event in January followed by La Niña by mid-year. If this parallel continues, there is likely to be improved potential for below-average precipitation during the summer months in the Plains and Midwest as well as the Delta based on these analog years.” Also, of six analog years, only one did not have an anomalously great number of 100-degree temperature days in the summer across the Central and Southern Plains and a part of the western Midwest, World Weather notes. However, the forecaster says that doesn’t mean there will be a serious drought this summer.

World Weather concludes, “There is a greater-than-usual potential that 2024 could induce a more harsh weather environment for crops in the Plains and western Midwest threatening production, but it is only a ‘potential’ and this is one year that everyone should be closely monitoring the weather until it becomes obvious that production will be fine. There is a fine line between below-normal rainfall that is timely without heat and below-normal rainfall that is not timely with periods of excessive heat and that is the line we are on this year.”

World Weather believes the difference between this year and 2023 will be in the distribution of rainfall and the number of days with extreme heat.

Mexico expects GMO corn dispute settlement with U.S. by September... A resolution on the trade dispute panel over Mexico’s limiting of U.S. genetically modified corn imports is expected by September, Mexican Economy Minister Raquel Buenrostro said on Tuesday. The U.S. requested the panel under the U.S.-Mexico-Canada Agreement. Mexico is currently waiting to hear the U.S. response to its arguments in favor of the curbs, Buenrostro said.

Optimism for improved transport through Panama Canal... As the rainy season arrives at the Panama Canal, there is optimism the trade bottleneck will ease, coinciding with the busy period for shipping. Data from IMF PortWatch shows the daily vessel crossings at the canal have increased, with the seven-day moving average reaching 25 last week, up from a low of about 21 in late January. However, this is still below the long-term average of about 35 crossings per day before the drought.

To accommodate increased traffic, the canal authority announced plans to lift booking slots to 31 daily transits in the second half of May and to 32 starting in June. Additionally, maximum draft rules, which limit the weight of a ship’s cargo, will increase starting in June.

The Institute of Meteorology and Hydrology in Panama has reported the country is transitioning to a wetter seasonal pattern, which is expected to continue through mid-May. While Gatun Lake, a key water source for the canal, is not projected to reach healthy levels, it is forecast to recover somewhat over the next two months. The added rainfall combined with increased ship crossings is expected to gradually alleviate the restrictions on global trade resulting from canal disruptions since last year, particularly ahead of the peak shipping season from July to September.

Maersk announced its OC1 container-line service can resume using the canal from May 10, ending a workaround established in mid-January involving bypassing the canal using rail transit. However, a full return to normal operations at the Panama Canal may take until the end of the year or next year, according to an official with the canal authority, Argelis Moreno Lopez. He told Bloomberg he anticipates the rainfall beginning this month will help reverse the situation, ultimately restoring normalcy in the coming months.

CDC confirms seasonal flu meds effective against H5N1 in dairy cattle... The Centers for Disease Control (CDC) reported that antiviral medications typically used to treat seasonal flu are effective against the H5N1 virus, which has been found in dairy cattle. The virus has been confirmed in 33 dairy herds across eight states since its first identification on March 25.

CDC confirmed the H5N1 virus is susceptible to FDA-approved neuraminidase inhibitor antivirals, such as oseltamivir, zanamivir and peramivir, commonly used to treat seasonal influenza. Testing for the effectiveness of the antiviral baloxavir marboxil is ongoing.

Since February 2022, outbreaks of highly pathogenic avian influenza (HPAI) have resulted in the deaths of nearly 91 million birds in domestic U.S. flocks, primarily egg-laying chickens and turkeys raised for human consumption. In the current month alone, 8.7 million birds have died or been culled due to HPAI infections.

While HPAI is milder among dairy cattle, symptoms such as reduced appetite, decreased milk production, lethargy, and fever are observed, particularly in older cows. However, affected cattle typically recover within a few weeks.

Some poultry farmers are employing various methods, including lasers, drones, air horns, and balloons, to deter wild birds from their properties. The New York Times reported dairy farmers are also adopting such measures, with some utilizing roof-mounted laser systems manufactured by Bird Control Group.

Beijing cautiously preparing retaliatory sanctions against United States... As the U.S. escalates economic sanctions against China, Beijing is preparing its retaliatory measures while cautiously considering the potential economic repercussions, the Wall Street Journal reports. The Biden administration’s recent moves, including tariff hikes and investigations into Chinese trade practices, signal a tougher stance on China ahead of the presidential election.

Beijing’s response to these actions is expected, given President Xi Jinping’s previous directive to retaliate against U.S. pressure. However, Beijing is also mindful of the economic impact on its own country, especially as it seeks to recover from economic challenges.

China has already retaliated by imposing levies on U.S. imports of certain chemicals and is likely to take further steps. However, it aims to balance its response to minimize damage to its economy. Beijing’s retaliation tactics have so far included measures like restricting popular apps in China, which serves both as a response to U.S. actions and as a means of bolstering censorship control.

Despite its desire to retaliate, China faces challenges in responding without causing harm to its own interests. Its reliance on Western high-tech products, for instance, constrains its ability to retaliate against certain U.S. actions without disrupting its own supply chains. While Beijing has developed tools for retaliation, such as its version of an export blacklist and an anti-foreign-sanctions law, it has been cautious in deploying them to avoid significant economic costs.

Bottom line: The mere existence of these tools serves as a deterrent to multinational companies operating in China, potentially increasing the cost for the U.S. in imposing further sanctions on China.

Renewable diesel facility to run on Alberta canola... The Imperial Strathcona Refinery in Alberta is receiving a 12% tax credit for its $720 million under-construction canola-based renewable diesel facility that is said to need millions of metric tons of canola seed per year. The credit comes from the Province of Alberta’s Agri-Processing Investment Tax Credit, which offers a 12% non-refundable tax credit when corporations invest $10 million or more in a project to build or expand a value-added agri-processing facility in the province.

RJ Sigurdson, provincial minister of agriculture and irrigation, described the facility, claimed to be the largest of its kind in Canada, as good news for provincial canola producers and a boost for the Province’s greenhouse gas reduction efforts. “When the facility is fully operational it will transform canola and other seed oils into renewable diesel that is lower in emissions than conventional fuels. To make this happen, Imperial will be sourcing most of its feedstock from canola producers right here in the province,” he said.

Chris Vervaet, executive director of the Canadian Oilseed Processors Association says, “This facility represents demand for canola seed that could be as large as 2.5 MMT per year. That’s the size of some of our largest export markets today. Simply put, a project of this magnitude is a game changer for our industry and a win-win for all parties involved.”