Evening Report: April 8, 2022

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Your Pro Farmer newsletter is now available... With USDA’s March planting intentions known, markets will start to look more toward weather for near-term price direction, especially the corn market since acreage is expected to be down sharply from last year. We feature outlooks from four prominent meteorologists in our News page 4 feature this week. Weather will also be important for the suffering U.S. winter wheat crop, which started spring rated only 30% “good” to “excellent” by USDA. Aside from weather, traders remain focused on global grain trade and impacts to U.S. ending stocks given the building global food crisis. EPA remanded 36 small refinery exemptions (SREs) from 2018, saying they were wrongly authorized. However, EPA will not require 31 of the facilities to buy compliance credits to fulfill the quotas. U.S. beef exports stayed strong in February, while pork slumped due to sharp reductions in shipments to China. We cover all this and much more in this week’s newsletter, which you can access here.


WASDE note on Russia... In its April World Agricultural Supply and Demand Estimates (WASDE) Report, USDA noted the following: “Russia’s recent military action in Ukraine significantly increased the uncertainty of agricultural supply and demand conditions in the region and globally. The April WASDE represents an ongoing assessment of the short-term impacts as a result of this action.”


U.S. corn, wheat carryouts higher than expected... USDA left its projection of old-crop corn ending stocks at 1.440 million bu., 25 million bu. more than traders expected in the WASDE Report. U.S. old-crop wheat ending stocks were increased by 25 million bu. from last month to 678 million bu., 22 million bu. above the average pre-report estimate. The old-crop soybean ending stocks forecast was cut by 25 million bu. from last month to 260 million bu., which was basically in line with traders’ expectations of 262 million bushels. Old-crop cotton carryout stocks were unchanged at 3.5 million bales, whereas traders expected a modest 40,000-bale increase. Click here fore more details.

 

USDA raises global corn, cotton ending stocks... USDA raised its forecast for 2021-22 global corn ending stocks to 305.46 MMT in the WASDE Report, up 4.49 MMT from last month and 3.55 MMT more than the average pre-report estimate. Global cotton stocks were increased to 83.38 million bales, 810,000 bales more than the March estimate and 740,000 bales more than the average pre-report estimate. Global soybean carryout stocks were estimated at 89.58 MMT, down 380,000 MT from last month and 790,000 MT higher than the average pre-report estimate. Global wheat carryout stocks were projected at 278.42 MMT, down 3.09 MMT from March and 2.99 MMT below the average pre-report estimate.

 

USDA cuts Brazil, Paraguay soybean production... USDA trimmed Brazil’s soybean production to 125.0 MMT, down 2.0 MMT from its March report and 14.5 MMT below last year. Paraguay’s soybean crop was estimated at 4.2 MMT, down 1.1 MMT from the March report and 5.7 MMT below last year. Argentina’s soybean crop was unchanged from the March report at 43.5 MMT.

USDA increased Brazil’s corn crop by 2.0 MMT from March to 116.0 MMT. Its corn production estimates for China, Argentina, Ukraine and South Africa were unchanged from March.

For global wheat production, USDA increased Argentina’s production by 500,000 MT from the March report to 21.0 MMT. The EU crop was estimated at 138.42 MMT, down 580,000 MT from March. It left the production forecasts for China, Russia, Australia, Ukraine and Canada unchanged.


Meteorologists: La Niña and Pacific Decadal Oscillation major factors for growing season weather... Meteorologists agreed La Niña would be a weather factor for the third consecutive year. Drew Learner, World Weather senior meteorologist, says there is a 22-year pattern of multi-year La Niñas. Joe Woznicki, Commodity Weather Group meteorologist, notes previous episodes of multi-year La Niñas were 1998 to 2000, 1973 to 1975 and 1954 to 1956. The forecasters say there is a multi-year period of negative Pacific Decadal Oscillation (PDO), as well. Historically a negative PDO means higher odds of warmer- and drier-than-normal weather from June through August in the Corn Belt. Jon Davis, Everstream chief meteorologist, says the PDO will strongly impact summer weather. Jan Dutton, Prescient Weather CEO, expects the PDO weather influence to increase as La Niña wanes.

Lerner: Late-summer dryness in Western Corn Belt. World Weather’s Drew Lerner expects potential planting delays in the Delta and Tennessee Basin in April due to flooding. In the western Corn Belt, April will be cool, which could limit fieldwork. The eastern Corn Belt will have cool temps in May. The Upper Midwest will have plenty of moisture during the planting season.

Lerner says June weather in the eastern Corn Belt will be favorable, though he expects the region to dry out in July and August. He predicts the western Corn Belt will be drier during summer as drought in the western U.S. persists and potentially expands. While La Niña will continue, it should diminish in importance.

Lerner expects September and early October to have a drier bias across the Corn Belt, while precip should be close to normal in late October and November.

Woznicki: Only slightly above-average temps. Commodity Weather Group’s Joe Woznicki says spring conditions across the Midwest look to be favorable. However, the Delta might experience too much moisture.

La Niña will continue but will be weak to moderate through summer. He expects June to be the hottest month. However, it will also have the most precip to help offset any stress. There will be patchy dryness developing in late summer across the eastern Midwest. While there will likely be a warmer-than-normal pattern, severe heat is unlikely. The Southern Plains are forecast to be the hottest and driest area in the country, while he expects the Delta and Northern Plains will see normal to above-normal summer rainfall.

Heading into September, Woznicki says cooler-than-average temps are possible in the Northern Plains and Great Lakes region. He does not see an overly wet pattern for the fall. However, the Atlantic hurricane season will likely be a wildcard for early fall weather. He expects an active hurricane season similar to last year. But Woznicki says it is too early to tell where hurricanes will develop, either in the Gulf of Mexico or the Atlantic Ocean.

Davis: PDO a factor; 2022 weather generally favorable. Everstream’s Jon Davis says the negative PDO will likely continue through spring and summer, just like last year and expects it to play a significant role in the 2022 growing season.

Overall, Davis is optimistic about spring planting weather. He notes no area in the U.S. is overly saturated and adds the Upper Midwest does not have a lot of snowpack. For most of the U.S., he has a drier bias for spring but expects no extreme dryness, which likely means there will be minimal planting issues.

Davis says there are higher risks of dryness and heat in the western U.S. during the growing season. However, he does not expect problematic temps or moisture deficits for most U.S. crop areas. “We don’t see any long-term issues and expect generally favorable weather for the 2022 crop,” he says. 

Dutton: La Niña to weaken in late summer. Prescient Weather’s Jan Dutton notes soil moisture levels in the western Corn Belt are drier than average to start the growing season, with Nebraska, South Dakota and North Dakota getting below-average precip the past 60 days. The eastern Corn Belt has received above-average precip over the same period.

He expects La Niña will continue to influence weather into summer. That means warm, dry, windy and sunny conditions will likely prevail across the Southwest and Southern Plains, with warm conditions in the Southeast during late spring. Cold and wet conditions are more likely in the Pacific Northwest and Great Lakes region.

However, he expects La Niña to weaken into late summer/early fall and the PDO will start to have more influence on the weather pattern. He says a waning La Niña and negative PDO usually lead to warmer and drier conditions during summer and early fall.



China to sell soybean reserves next week... China’s National Grain Trade Center announced it will sell 500,000 MT of imported soybeans from its state reserves on April 15. This follows a sale of the same amount this week. The soybean sales are aimed at helping ease tight supplies in the domestic market. China’s government started releasing soybeans from state reserves in mid-March when South American soybean imports were delayed. However, South American soybean imports have recently increased and lowered soybean prices.

 

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