Evening Report | Sept. 14, 2021

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Cargill reopens one Louisiana grain terminal… Cargill Inc. today announced it restarted operations at its Westwego, Louisiana, grain export terminal roughly two weeks after Hurricane Ida hit. The terminal unloaded its first grain barge since the hurricane yesterday, Cargill said. The company also said power has been restored to its Reserve, Louisiana, terminal, which sustained major damage from the storm. Cargill is still working to assess damage and develop a “phased reopening plans,” said spokeswoman April Nelson.

Louis Dreyfus Co. and Archer-Daniels Midland Co. have been loading export shipments for several days, while a facility owned by Bunge Ltd. remains shuttered, according to a report from Reuters. Louisiana officials say heavy rains from Nicholas are complicating recovery efforts in some areas.

StatsCan slices its crop estimates, again… Statistics Canada (StatsCan) now estimates Canada’s 2021 total wheat crop at 21.715 million metric tons (MMT), based in part on satellite and agroclimatic data. That would be a 38.3% plunge from 2020-21 and a 1.233-MMT decline from its forecast at the end of August. The new estimate was near in line with analysts’ expectations for a 21.9 MMT all wheat crop, according to a Reuters poll. The statistics agency also noted harvest is well advanced across the Prairies thanks to advanced development of the drought-stricken crop.

Canada’s spring wheat crop is now estimated at 15.321 MMT, 40.7% under year-ago levels, with the durum wheat crop estimated at 3.545 MMT, which would be a 46.1% year-over-year nosedive. Analysts surveyed by Reuters expected the USDA-equivalent to peg the spring wheat crop at 15.2 MMT and the durum wheat crop at 3.8 MMT.

Adverse weather also had a major impact on Canada’s canola crop, which StatsCan now estimates at 12.782 MMT, 34.4% under year-ago levels and well under its 14.749-MMT forecast two weeks ago. This would be the smallest canola crop since 2010. StatsCan’s forecast was also lighter than the 13.6-MMT canola crop analysts polled by Reuters anticipated.

StatsCan now estimates Canada’s barley crop at 7.141 MMT, which would be a 33.5% drop from year-ago and a bit lighter than the 7.5 MMT analysts expected for 2021 on average. On Aug. 30, StatsCan estimated Canada’s barley crop would total 7.836 MMT.

“Lower production has largely been driven by ongoing drought conditions in Western Canada, which has severely punished yield potential,” MarketsFarm Editor Mike Jubinville said. “Today’s numbers fall in much closely to MarketsFarm ideas.”

Argentine exchange says next corn crop could be a record-breaker… Argentina will likely produce a 44 MMT soybean crop in the upcoming 2021-22 growing season, which would be a 900,000 MT increase from the previous season, the Buenos Aires Grains Exchange projected. The exchange expects corn production to rise to a record 55 MMT, and it estimates the country’s 2021-22 wheat crop at 19.2 MMT, a 200,00-MT increase from its forecast last season.

Brazil’s soybean-free period ends this week… Brazilian producers in Parana, Santa Catarina and Rio Grande do Sul got the green light to start planting soybeans on Sept. 13 and Mato Grosso, Mato Grosso do Sul and Sao Paulo can start planting on Sept. 16. “The rainfall in Brazil since the end of August has been better this year compared to last year, so farmers are hopeful for a good start to the planting season.  The most recent forecast is for the rains to arrive on time on October, but central Brazil will be dryer-than-normal in November and December,” crop consultant Michael Cordonnier reported.

Brazilian port regulator launches investigation regarding Bunge and two port agencies… Brazil’s port regulator, Antaq, has ordered a probe of the grain merchant Bunge and port agents Litoral and Inlogs regarding allegations of irregularities in a contract to move grain cargoes at public terminals in the port of Sao Francisco do Sul. This is the latest twist in a lengthy dispute regarding commercial use of the port’s public areas. Antaq’s decision gave administrators at the port three alternatives to select companies able to use its public grain terminals. This could threaten Bunge and its long-time partner Litoral’s near dominance of the port.

FAPRI expects net farm income to retreat from 2021’s strong level in 2022… The University of Missouri’s Food & Agricultural Policy Research Institute (FAPRI-MU) in its latest report says “Higher commodity prices contribute to a sharp increase in U.S. net farm income in 2021.” But it adds, “Under current policies, farm income could drop again in 2022, as government payments decline and production expenses continue to rise.”

The report utilizes commodity supply, demand and price projections released earlier this month and it reflects policies in place as of late August of 2021, including assumptions farmers will receive around $18 billion in 2021 from pandemic-related assistance programs. No further ad hoc assistance is assumed for 2022 and later years. FAPRI highlights the following results:

• Projected 2021 net farm income reaches the highest level since 2013. Relative to 2020, a sharp increase in receipts from sales of crop and livestock products more than offsets the impact of higher production expenses and reduced government payments.
• At $122 billion, projected 2021 net farm income exceeds that reported by ERS by several billion dollars. FAPRI-MU and ERS estimates of 2021 livestock sector receipts, government payments and production expenses are similar, but FAPRI-MU estimates higher receipts for corn, soybeans and other crops.
• Total projected government spending on farm-related programs reaches a record $52 billion in fiscal year (FY) 2021. Spending on pandemic-related programs accounts for most of the outlays. Spending on 2018 farm bill commodity and crop insurance programs account for less than one-third of total expenditures on the selected programs in FY 2021.
• Under current policies, government outlays drop to $22 billion in FY 2022, and government payments to farmers fall from $29 billion in calendar year 2021 to $6 billion in 2022. Conservation programs account for most 2022 government payments.
• Projected market prices for several crops peak in the 2021-22 marketing year. As a result, feed grain and oilseed market receipts decline after 2021, but remain well above the levels of 2020.
• In contrast, receipts for cattle, dairy and poultry all continue to increase each year. Hog receipts jump in 2021, with sharply higher barrow and gilt prices and then fall back in 2022 as prices moderate.
• Higher costs for feed, purchased livestock, fertilizer and other farm inputs raise farm production expenses by $27 billion in 2021, and a smaller increase is projected for 2022.
• In 2022, net farm income declines by $23 billion and net cash income falls even more sharply. Reduced government payments and higher production expenses explain the decline, as there is little net change in farm receipts.
• In later years, projected net farm income remains fairly steady in nominal terms at just under $100 billion each year. After adjusting for inflation, real net farm income declines each year, and the projected value in 2026 is similar to that in 2019.
• Rising asset values and slower growth in debt reduce the sector’s debt-to-asset ratio in 2021 and 2022, temporarily reversing the trend of previous years. Lower projected farm income halts the rise in farm real estate values in 2023, and the debt-to-asset ratio again begins to increase.

Chevron increasingly optimistic about its low-carbon unit… Chevron Corp. is tripling spending in its new low-carbon unit, which Chief Executive Mike Wirth said he increasingly sees as a viable business, the Wall Street Journal reports. The San Ramon, California, oil giant is pledging to spend $10 billion through 2028 on biofuels, hydrogen production, carbon capture and other technologies, up from a prior commitment of around $3 billion. Wirth said in an interview that the spending boost reflects optimism in Chevron’s new energies unit, announced in July to oversee the company’s low-carbon investments. Chevron now expects the unit to generate more than $1 billion in operating cash flow by 2030, he said. “We’ve reached a point where we’ve got enough knowledge of the technologies,” Wirth said.

Potty-trained cows?... Researchers have taken a small step toward reducing agriculture’s greenhouse gas emissions by potty-training a herd of cows. Scientists at an animal research lab in the German town of Dummerstorf trained the group of young cows to use a “MooLoo,” a designated pen for the animals to urinate in —a process that took only 15 days. “The cows are at least as good as children, age 2 to 4 years, at least as quick,” Lindsay Matthews, the study’s senior author told the Associated Press. The eight gallons of urine a cow passes per day can wreak havoc for the environment, creating ammonia when mixed with cow dung and polluting the air with nitrous oxide. Matthews is confident the same training method could be applied to deal with cow dung but conceded that stopping cows’ flatulence — a significant source of methane emissions — was beyond the realm of behavioral training. “They would blow up,” Matthews said.

Workers wary of public transport… Some workers aren’t ready to return to commutes on public transportation, posing a challenge for companies looking to reopen big-city offices. Many workers say they are reluctant to ride subways, trains and buses into city centers, particularly when they could be in close quarters with unmasked or unvaccinated people. It’s a reason why some are asking to continue working from home. Some people are opting to bike where they need to go, helping to fuel a boom in bicycle sales; others are planning to drive or carpool. But some workers have no alternatives to public transportation, which can be the fastest or only affordable option.