Evening Report: Jan. 20, 2022

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Rains boost Argentine soil moisture but not crop conditions... Recent rains across areas of Argentina improved soil moisture conditions a little but didn’t boost crop ratings. As of Jan. 20, the Buenos Aires Grain Exchange rated soil moisture conditions as 48% “adequate” (up from 40% the previous week) and 52% “drought” (down from 60%) for soybeans. The soil moisture ratings for corn stood at 56% “adequate” (up from 47%) and 44% “drought (down from 53%).

The exchange rated the country’s soybean crop as 30% “good/excellent” (down from 31% previously) 43% “fair” (up from 40%) and 27% “poor” (down from 29%). It rated the corn crop 22% “good/excellent” (down from 23%), 41% “fair” (unchanged) and 37% “poor” (up from 36%). Because of the development stage, the earlier planted soybeans and corn are faring worse than later planted acres.

 The exchange maintained its crop estimates at 44 MMT for soybeans and 57 MMT for corn.

 

Attaché cuts Brazilian soybean production, export forecasts...  USDA’s attaché in Brazil lowered its estimate for the country’s soybean exports and production compared to the January World Agricultural Supply and Demand Estimates (WASDE) by USDA’s World Agricultural Outlook Board. The attaché reduced Brazil’s total soybean production forecast to 136 MMT, compared to 139 MMT projected by USDA in last week’s WASDE Report. The production reduction was due to a cut in soybeans planting to 40.4 million hectares and unfavorable weather conditions. 

The attaché cut Brazil’s export forecast for 2021-22 soybeans to 88 MMT, which would be 500,000 MT under the estimate for 2020-21. In the Jan. 12 WASDE Report, USDA projected 2021-22 Brazilian soybean exports at 94 MMT.

 

Drought conditions improve slightly for winter wheat...The amount of winter wheat considered in drought conditions dropped one percentage point to 68%, according to this week’s U.S. Drought Monitor. USDA said 27% of the winter wheat was considered in moderate drought, 22% moderate drought, 17% extreme drought, and 2% of the winter wheat area was considered in exceptional drought. In the previous week, USDA reported 29% of the winter area is in moderate drought, 22% in severe drought, 16% in extreme drought and 2% in exceptional drought.

Most of the improvement occurred in SRW areas. The amount of land in North Carolina considered abnormally dry/drought was down 11 percentage points to 82%. The amount of land abnormally dry/drought in Illinois increased by two percentage points to 16%. The area in Missouri considered abnormally dry/drought was up one percentage point to 38%. Michigan, Indiana, Ohio and Arkansas had the same percentage of area considered abnormally dry/drought as the previous week.

In HRW areas, Texas had a one-point drop in the area considered abnormally dry/drought to 96%. The amount of land classified as abnormally dry/drought in Kansas (81%), Oklahoma (95%), Montana (93%), Colorado (100%), Nebraska (82%) and South Dakota (78%) was unchanged.



No HRW relief in extended forecast... The National Weather Service’s (NWS) 90-day forecast continues to give elevated odds of above-normal temps and below-normal precip across HRW areas of the Southern Plains. Below-normal precip is likely over nearly all of Texas and the western half of Oklahoma for February through April, unchanged from the previous 90-day forecast for January through March. The predicted bubble of below-normal precip is expanded to now include all of Colorado, the western half of Kansas and most of the western portion of Nebraska. NWS expects above-normal temps from Nebraska southward and eastward.

While the forecast offers little hope for relief from moisture stress for the HRW crop, NWS calls for above-normal precip over the bulk of SRW production areas from February through April, along with above-normal temps. Late-winter/early spring precip would not only support SRW development as the crop breaks dormancy, it would also provide beneficial soil moisture ahead of spring planting in the eastern Corn Belt.

The late-winter/early spring forecast gives mostly “equal chances” for above-, below- and normal precip and temps across nearly the entire western Corn Belt through April.

White winter wheat areas of the Pacific Northwest should see some improvement in drought conditions, as precip is expected to be above normal. But temps are also expected to be below normal across the region through April.

Click here to see related maps.

 

Jan. 1 feedlot supplies expected to be near year-ago levels... Traders expect USDA’s Cattle on Feed Report at 2 p.m. CT on Friday to show around 11.9 million head of cattle were in large feedlots (1,000-plus head) as of Jan. 1, which would be down 0.2% from year-ago, based on a Reuters survey. December placements likely increased around 2.6% from last year, with all analysts surveyed expecting steady or higher numbers to have moved into feedlots. The range of pre-report estimates for placements is relatively tight for that category at five percentage points. Marketings are expected to be up 0.8%.

Cattle on Feed

Avg. Trade Estimate

(% of year-ago)

Range
(% of year-ago)

Million head

On Feed on Jan. 1

99.8

99.5-100.1

11.943

Placements in December

102.6

100.0-105.0

1.892

Marketings in December

100.8

100.0-102.1

1.868



 

Ethanol stocks at record level in the Midwest... U.S. ethanol stocks increased 681,000 barrels to 23.59 million barrels for the week ended Jan. 14, a 48-week high, including record inventories in the Midwest (PADD 2), according to the Energy Information Administration (EIA). Ethanol production was up 47,000 barrels per day (bpd) to 1.053 million bpd for the week, an increase of 11.4% from the same week last year. EIA implied gasoline demand increased 4% and net inputs of ethanol expanded by 7%.

 


EPA: More RINs generated in December... The U. S. generated about 1.30 billion ethanol blending credits (RINs) in December compared to 1.26 billion credits in November, according to EPA data. About 576 million biodiesel blending credits were generated last month, up from 464 million the month prior. Oil refiners and importers use the credits to show compliance with the Renewable Fuels Standard. RINs are generated with every gallon of biofuel produced.



California accepting comments on renewable diesel affecting greenhouse gas emissions... California state regulators are accepting public comments on a study that stated newer diesel engines emit more NOx when running on renewable diesel, especially when blended with 35% biodiesel or more, compared with conventional diesel.

“The real question is what amount of NOx is emitted by NTDE engines at volumes of 10% and 20% biodiesel blend levels, and that is not reported by the study,” said Tristan Brown, associate professor of energy resource economics at SUNY and advisor on New York’s Climate Action Council.

NTDEs are present in only 43% of the state’s commercial vehicle registrations, but power more than 75% of the miles traveled among the state’s heavy-duty fleet.

The California Air Resources Board (CARB) released the study in November and noted it has “identified several questions about the study results: that require further evaluation. The study results can affect how California’s Low Carbon Fuel Standard (LCFS) is revised and possibly increase investment in renewable diesel.

 

U.S. weekly jobless claims at three-month high... The number of Americans filing new claims for unemployment benefits jumped for the third straight week to a three-month high, according to the Labor Department. Initial claims for state unemployment benefits increased by 55,000 to a seasonally adjusted 286,000 for the week ended Jan. 15, the highest level since mid-October. The weekly increase was the largest since last July. Unadjusted claims fell 83,418 to 337,417 last week. However, the decline was less than the 138,773-decrease anticipated because of seasonal factors.

The unemployment rate is at a 22-month low of 3.9%, a sign the labor market is at or close to maximum employment. However, the government’s model to iron out seasonal fluctuation is normalizing and Covid-19 cases are showing signs of subsiding.

 

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