Evening Report | March 28, 2024

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

Wheat producers: Increase old-crop sales... May SRW wheat futures posted strong corrective gains today, hitting our initial sales target for a portion of unpriced 2023-crop bushels. We advise hedgers and cash-only marketers to sell another 10% of 2023-crop in the cash market to get to 80% sold. Be prepared to further trim old-crop inventories on additional price strength.

Your Pro Farmer newsletter is now available... USDA’s Prospective Plantings and Quarterly Grain Stocks Reports tend to produce big price moves – and this year was no exception. The corn data was bullish as March 1 stock and planting intentions both came in well below expectations. That triggered short-covering in the corn market ahead of the extended Easter weekend. The Francis Scott Key Bridge on the Patapsco River in Baltimore Harbor collapsed after being struck by a cargo ship. That indefinitely closed access to the Port of Baltimore. We take a look at potential impacts. USDA reported cattle at three dairy farms in Texas and one in Kansas tested positive for highly pathogenic avian influenza (HPAI). Dairy cows in New Mexico also exhibited symptoms of the illness and were tested. So far, there have been no trade restrictions for U.S. dairy products, but the news helped fuel active fund liquidation in the cattle market. We cover all of these items and much more in this week’s newsletter, which you can access here.

Good Friday schedule... Grain and livestock markets are closed for Good Friday, so there will be no Pro Farmer updates on March 29. Government offices are open, though there are no USDA reports. Pro Farmer wishes everyone a blessed Easter!

Bullish data for corn... March 1 corn stocks and planting intentions came in lower than traders anticipated. Soybean planting intentions and March 1 stocks were about as expected. Wheat planting intentions and March 1 stocks topped expectations. Corn strengthened amid corrective buying, as would be expected, while soybeans came well off their session lows and winter wheat markets firmed on spillover from corn. Click here to view the report details.  

H&P Report: Negative compared to expectations... USDA estimated the U.S. March 1 hog herd at 74.571 million head, up 435,000 head (0.6%) from both year-ago and the average pre-report estimate. The market hog inventory increased 566,000 head (0.8%) from year-ago, while the breeding herd declined 130,000 head (2.1%). The fall pig crop increased only 1.9%. While fall farrowings declined 2.6%, litter size jumped 4.6% to a record 11.53 head, as farrowing house efficiency continues to surge.

Market hog inventories were higher than expected in all but the heaviest category. Based on this data, slaughter should run steady to 1.5% above year-ago into fall.  

Looking forward, hog producers intend to farrow fewer sows in the next two quarters, with spring intentions down 0.9% and summer intentions down 1.7%. But if pigs per litter continue to mark record highs, the spring and summer pig crops would likely top the previous year.

USDA made notable revisions to past data. Those included: The Dec. 1, 2023 hog population was revised up 845,000 head to 75.816 million, with all of the increase coming in two pig weight categories. The number of hogs weighing 180 lbs. or over was revised up 485,000 head, while the number of pigs weighing between 50 and 119 lbs. was increased 360,000. The Sept. 1, 2023 population was revised up 810,000 head to 76.133 million head. The increase was confined to the three lighter-weight pig categories. Pigs weighing less than 50 lbs. were boosted 430,000 head; those weighting between 50 and 119 lbs. were increased 390,000 head; and those weighing between 120 and 179 lbs. were reduced 10,000 head.

Those changes reflected upward revisions to summer and fall 2023 sow farrowings and the resulting pig crops. Fall 2023 farrowings were boosted 15,000 head, with the fall pig crop rising 378,000 head. Summer 2023 farrowings increased 60,000 head, which translated into a 699,000-head jump in the pig crop.

With nearly every category above the average pre-report estimates, the report data is negative and will weigh on the market next Monday. But with markets closed on Friday, traders will have to wait an extra day, which may tame some of the bearishness by the time markets reopen.

Still waiting on SAF announcement... Exxon Mobil Corp. is urging the Biden administration to establish clearer policies regarding sustainable aviation fuel (SAF) to stimulate investment and reduce emissions in the aviation sector. While the White House aims to boost production of SAF, it has faced challenges in defining rules for tax credits, particularly for crop-based forms of the fuel. The administration has delayed setting these rules due to conflicting interests from environmentalists and farmers, especially during an election year.

Exxon believes that implementing a market-driven policy would encourage innovation and incentivize profit-seeking investments in green technologies. Jack Williams, a senior vice president at Exxon, emphasized that such policies are essential for projects like the company’s Baytown hydrogen project to qualify for tax credits.

Exxon has committed over $20 billion to low-carbon technologies, including ventures such as producing renewable diesel in Alberta from crops like canola. SAF, which is derived from waste oils or agricultural feedstock, is seen as crucial for the aviation industry to achieve its goal of net zero emissions by 2050.

Various approaches are being explored to produce SAF, including using corn-based ethanol or integrating captured carbon in refining processes. Exxon is evaluating potential SAF projects, with a particular focus on locations like Joliet, Illinois, where the company operates a refinery.

Winter wheat drought expands but still well below year-ago... As of March 26, the U.S. Drought Monitor showed 42% of the U.S. was covered by abnormal dryness/drought, down two percentage points from the previous week. USDA estimated 17% of U.S. winter wheat areas were covered by drought, up five points from the previous week but well below 48% on this date last year. HRW areas showed general improvement, with notable increases in dryness/drought in some SRW states.

In HRW areas, dryness/drought covered 64% of Kansas, 34% of Colorado (virtually none in wheat-heavy eastern areas of the state), 34% of Oklahoma, 45% of Texas, 29% of Nebraska (all in the eastern half of the state), 52% of South Dakota and 94% of Montana.

In SRW areas, dryness/drought covered 76% of Missouri, 46% of Illinois, 16% of Indiana, 5% of Ohio, 74% of Michigan, 31% of Kentucky and 32% of Tennessee.

Click here to view related maps.

Xi expresses optimism for U.S./China relations... Chinese President Xi Jinping expressed optimism about the future of U.S./China relations, signaling potential progress in resolving the protracted trade war. During a meeting with CEOs of American companies in Beijing, Xi emphasized the importance of cooperation between the two nations in various areas such as trade, agriculture, climate change and artificial intelligence. Xi’s remarks likely aim to bolster foreign investment in China, which has seen declines recently. The mention of artificial intelligence may be significant for U.S. chip makers like Nvidia, especially given previous export restrictions imposed by the U.S. government. Despite past expressions of goodwill between Xi and President Joe Biden, tangible results in improving relations are yet to materialize, indicating the need for concrete actions moving forward.

First climate-smart rice unveiled... AgriCapture, a USA Rice Enterprise Partner, received $7.5 million to establish a market for eco-friendly rice via USDA’s Partnerships for Climate-Smart Commodities Program. This endeavor involved pioneering a measurement and verification process, resulting in the certification of reduced greenhouse gas emissions. AgriCapture collaborated with around 30 rice growers across Arkansas, Missouri and Mississippi, cultivating rice under their Climate-Friendly Rice Standard, covering an estimated 20,000 acres in 2023. Subsequently, the rice was preserved with its identity intact and distributed to buyers like Columbia Grain International. Great River Organic Milling repackaged it into retail and wholesale packaging, clearly indicating its Climate-Friendly Certified status by AgriCapture. In Fountain City, Wisconsin, USA Rice joined USDA Secretary Tom Vilsack at Great River Organic Milling to celebrate the debut of the inaugural “Climate Smart” rice on store shelves.

DOE rejects API appeal on LNG export suspension, ensures review continues... The Department of Energy (DOE) has declined a request by the American Petroleum Institute (API) and others to lift the suspension on new liquefied natural gas (LNG) export approvals. DOE stated the request did not meet the requirements for a rehearing and the decision did not qualify for review as it was not an order. The agency emphasized its decision was part of ongoing updates to prior environmental reviews and economic analyses. Despite concerns raised by the groups about violations of administrative and natural gas laws, DOE reiterated its review process would be completed by the end of the year and existing LNG exports have not been affected. Legal action may be pursued by those seeking to restore approvals for new or pending LNG export applications.