Evening Report | Oct. 1, 2021
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Your Pro Farmer newsletter is now available… USDA’s higher-than-expected Sept. 1 soybean stocks estimate was a game changer for the bean market, but the corn market showed resilience. The harvest and stocks data were price-supportive for wheat. You’ll find plenty of coverage of USDA’s Sept. 30 reports as well as its latest H&P Report, updates on infrastructure, the debt limit and other key issues out of Washington and plenty of market analysis and advice in this week’s newsletter. Access it here.
Signals RFS announcement nearing… Our sources have told us EPA Administrator Michael Regan met with three separate ag groups via virtual meetings this morning — the Renewable Fuels Association, National Farmers Union and Growth Energy. That signals an announcement regarding the Renewable Fuel Standard is likely coming soon.
Soyoil stocks build despite lower-than-expected crush… The U.S. crushed 168.2 million bu., or 5.05 million short tons, of soybeans during August, which was up 1.1% from July but down 3.7% from year-ago levels. The August crush was a bit lighter than the 169 million bu. (or 5.07 million short tons) analysts surveyed by Reuters anticipated on average. The crush yield 1.99 billion lbs. of soyoil, which was up 0.9% from July but down 1.1% from year-ago.
Soyoil stocks at the end of August totaled 2.184 billion lbs., which was a bit higher than anticipated despite the lighter-than-expected crush. That’s a concerning demand signal. Stocks were up 5.5% from July and 12.3% from year-ago.
Corn ethanol use also lighter than anticipated in August… A total of 470.7 million bu. of corn was consumed for alcohol and other uses in August, which was a 6.1% retreat from July but a 2.1% rise from year-ago levels. Of that tally, 417.3 million bu. of corn were used for ethanol production, which was a 6.9% decline from July and a 1.5% increase from August 2020. Corn use for ethanol was also nearly 5 million bu. lighter than analysts surveyed by Bloomberg anticipated, on average.
The report also showed a total of 1.83 MMT of distillers dried grains with solubles (DDGs) were produced in August, which was down 7.2% from July but up 1.2% from year-ago.
StoneX raises already high crop forecast for Brazil… Commodity brokerage StoneX now estimates Brazil’s 2021-22 soybean crop at 144.26 MMT, a 930,000-MT increase from its previous outlook. The firm also raised its full-season corn crop forecast by 250,000 MT to 30.05 MMT. Planting of both crops is currently underway, with strong prices expected to boost planted acreage.
Brazil’s corn exports tank vs. year-ago, but its shipments of beans and meat up from year-ago… Brazil exported just 2.86 MMT of corn during September, a sharp retreat from 6.37 MMT in shipments for the month last year. The country’s soybean exports climbed 570,000 MT (13.4%) year-over-year to 4.83 MMT in September. Brazil’s shipments likely got somewhat of a boost from U.S. shipping woes due to damage wrought by Hurricane Ida.
Brazil’s exports of poultry climbed 21.7% from last year to 388,951 MT in September. It’s beef shipments also climbed 31.4% from year-ago to 187,017 MT.
Inflation remains high even as consumer spending increased… Inflation as measured by the personal consumption expenditure (PCE) price index rose 0.4% in August, putting it up 4.3% on an annualized basis which marks the highest rate of inflation since 1991. Minus energy and food, prices rose 0.3% during August, slightly ahead of expectations, while the annual rate maintained at 3.6%, also a 30-year high. But consumer spending rose 0.8% for the month, above expectations and the July rate was revised down to a decline of 0.1% after initially having been reported as an increase of 0.3%. Fed officials have indicated the rate of inflation is still likely to be temporarily above their 2% target, but officials acknowledged this week the rise in prices could last into 2022 as supply chain constraints remain a key factor that has increased prices across the U.S. economy.
India hikes incentive on sugar used for ethanol production… The Indian government has doubled its incentive for sugar diverted toward ethanol production in an attempt to encourage sugar mills to divert excess sugar to ethanol and meet targets for ethanol blending in gasoline and reduce its need for crude oil imports. India is targeting a 10% blend of ethanol in gasoline by 2022 and a 20% mix by 2025. The country typically produces between 32 MMT and 33 MMT of sugar each season, which tops domestic consumption of around 26 MMT.
USDA reports one of its vaccines shown to prevent and protect swine from current Asian ASF strain… Researchers at USDA’s Agricultural Research Service (ARS) said one of their African swine fever (ASF) vaccine candidates “has been shown to prevent and effectively protect both European and Asian bred swine against the current circulating Asian strain of the virus.” New research published in the journal Transboundary and Emerging Diseases shows ARS has developed a vaccine that “ability to be commercially produced while still maintaining its vaccine efficacy against Asian ASF strains when tested in both European and Asian breeds of swine.
The findings also show that a commercial partner can replicate experimental level results and prevent the spread of the virus.”
ARS said that the onset of immunity happened in one-third of swine by the second week after being vaccinated and that full protection in all swine was seen by the fourth week. "We are working carefully to see our vaccine candidate commercialized through the joint efforts of the U.S. government, and our commercial partner, the Navetco National Veterinary Joint Stock Company,” said ARS researcher Manuel Borca.
USDA finally sends plan for supplemental DMC payments, other farm programs to OMB for review… USDA has said for months that it will be making supplemental payments to some dairy producers under the Dairy Margin Coverage (DMC) program, an effort our contacts have indicated needed to go through a rulemaking process before they can be made. That appears to be getting closer as USDA has forwarded to the Office of Management and Budget a rule to amend the DMC to allow for the supplemental payments that were approved last December in the Consolidated Appropriations Act of 2021.
“Eligible dairy operations with less than 5 million pounds of established production history may enroll supplemental pounds based upon a formula using 2019 actual milk marketing,” according to a summary of the information sent to OMB. “Supplemental DMC coverage is applicable to calendar years 2021, 2022, and 2023. Participating dairy operations with supplemental production may receive supplemental payments in addition to payments based on their established production history.”
The package also includes changes to the Marketing Assistance Loan (MAL) and Loan Deficiency Payment (LDP) regulations to make them consistent with the 2018 Farm Bill.
The rule also covers the $9 million in assistance that was in the Consolidated Appropriations Act of 2019 to make payments to producers impacted by an Oriental Fruit Fly Quarantine in Florida. There was $9 million appropriated for the payments that may cover crops intended to be harvested in the 2015 and/or 2016 crop growing seasons.
Rural Americans are dying of Covid at more than twice the rate of urbanites... While the initial surge of Covid-19 deaths alluded much of rural America — where around 15% of Americans live — nonmetropolitan mortality rates outpaced those of metropolitan areas as the virus spread nationwide before vaccinations became available, according to data from the Rural Policy Research Institute.
