Pro Farmer Evening Report: April 6, 2022

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

Old-crop corn, soybean stocks expected to tighten... USDA’s April Supply & Demand Report typically is a virtual yawner, featuring only minor fine tuning to the old-crop balance sheets. Global supply issues due to the war between Russia and Ukraine, and potential impacts that could have on demand for U.S. products creates a little more uncertainty for Friday’s report. Heading into the reports, analysts expect U.S. old-crop corn and soybean ending stocks to tighten from month-ago, while wheat carryover is expected to inch up. Global ending stocks for corn, soybeans and wheat are all expected to tighten a little from last month. The following expectations are from a Reuters survey (Bloomberg for cotton).

Beef exports stay strong, pork exports slump... The U.S. exported 254.4 million lbs. of beef in February, down 33.2 million lbs. (11.5%) from January but up 4.1 million lbs. (1.6%) from last year and only 1.2 million lbs. below the record for the month posted in 2020. Through the first two months of this calendar year, the U.S. shipped 542.1 million lbs. of beef, up 45.7 million lbs. (9.2%) from the same period last year.

U.S. pork exports totaled 486.2 million lbs. in February, down 24.0 million lbs. (4.7%) from January and 105.7 million lbs. (17.9%) below last year’s tally. In the first two months of 2022, the U.S. shipped 996.5 million lbs. of pork, down 201.5 million lbs. (16.8%) from last year. U.S. pork shipments to China in the first two months of the year plunged 199.6 million lbs. (71.1%) from last year.

IEA nations to release an additional 60 million barrels of oil... International Energy Agency (IEA) members will release 60 million barrels of oil from their emergency stockpiles, adding to the 180-million-barrel release of crude reserves previously announced by President Joe Biden. Officially, the coordinated IEA stockpile release will amount to 120 million barrels of oil – half from the U.S. and half from other members. IEA expects Russia’s oil production to slump this month, leaving a gap of 3 million barrels per day in global energy supplies.

Fed minutes: Officials considered a 50-basis point interest rate increase... Many members of the Federal Open Market Committee would have preferred a 50-basis point increase in the target range for the federal funds rate at its March meeting, according to the meeting minutes released on Wednesday. However, members decided a 25-basis-point increase would be appropriate due to greater near-term uncertainty associated with Russia’s invasion of Ukraine. The committee has signaled that six more interest rate hikes are possible this year to cool inflation. Investors have priced in the possibility of more than seven rate increases in 2022 and see a high chance the Fed will raise rates by 50-basis points next month.

The committee also agreed to reduce its bond holdings to a maximum $95 billion per month. The last time the Fed trimmed its balance sheet, it did it at the maximum rate of $50 billion per month. The FOMC is also expected to start trimming its balance sheet at its next meeting on May 3-4.

EU grain exports and production to increase... The European Commission predicts grain production and exports in the European Union (EU) in 2022 will increase. EU grain production is projected to reach 297.7 MMT for the 2022 harvest. Grain exports are expected to increase by 14% this marketing year (until June 30), primarily driven by an additional 5.6 MMT of soft wheat shipments compared to the previous season. Grain exports for the 2022-23 marketing year that starts on July 1 could increase by almost 40% to 41.4 MMT. EU oilseed production is not a concern, as it is estimated to increase by 6.5% to 30.2 MMT this marketing year and increase to 32.2 MMT in 2022-23. The latter would include 11.2 MMT of sunflower seeds.

China’s zero-Covid policy risks causing agricultural crisis and food shortages... China’s strict Covid lockdowns are exacerbating severe fertilizer shortages, labor and seeds, just as many of its biggest agricultural provinces prepare for their crucial spring planting season, reports the Financial Times. According to official data, as many as a third of farmers in China’s northeastern Jilin, Liaoning and Heilongjiang provinces have insufficient agricultural inputs after authorities sealed off villages to fight the pandemic. The three provinces account for more than 20% of China’s grain production. According to the Jilin provincial government, about one-third of farmers did not have enough fertilizer at the end of March — only about three weeks before they were supposed to begin planting. Farmers and factory managers have blamed the disruption on China’s strict zero-Covid policy, under which authorities have adopted rigid controls ranging from traffic bans to local business shutdowns.

Livestock manure demand increases... Limited supplies and higher prices for commercial fertilizers have increased demand for manure. In the past, some farmers have had trouble giving it away. Now they have crop farmers calling them, some of them having waiting lists. As U.S. livestock herds and poultry flocks shrink, the manure supply might be limited, and prices could rise even more. However, the Iowa Department of Agriculture notes birds killed due to the bird flu can be composted and applied as fertilizer. Demand for manure handling equipment has also increased, with some farm equipment and implement dealers sold out for months.

Indian farmers holding back rapeseed crushing... Indian farmers produced a record 11 MMT rapeseed crop, up 28% from a year ago. However, industry sources report farmers are holding back sales during a time that they typically flood the market. Some farmers are holding back rapeseed sales as the price rallied after they made sales last year. This means rapeseed oil production might be limited and the country might have to import more than 1 MMT of vegetable oils every month to meet demand. Six months ago, rapeseed oil was available at a premium of 35% over soyoil, sunflower and palm oil. Now it is trading at par with other edible oils, according to a trader.

Iraq allows food imports for three months... Iraq will allow food imports for three months, the state news agency INA reported, citing the country’s prime ministry. The major grain importer wants to enhance food security by increasing wheat stocks and supporting local food subsidy programs. On Tuesday, the trade ministry said it is working to allocate 2 MMT of wheat for Iraq’s strategic reserves, which would be enough for six months.

Argentine farmers looking at switching wheat to sunflower acres... Argentine farmers might plant as many as 2 million hectares (4.9 million acres) of sunflowers for the 2022-23 growing season, Bloomberg reported. That would be a 20% increase from last year and the most in 14 years, according to the Buenos Aires Grain Exchange. Some of the factors driving the acreage change include higher sunflower oil prices, less export taxes on sunflower oil and less fertilizer. However, the acreage shift might be limited by available sunflower seeds to plant. Seeds just can’t be imported as the seed would not be bred for the Argentine environment. Normally, Argentine farmers plant wheat and barley in May. In July, sunflowers get planted in the northern regions of the country. Farmers on the Pampas plant sunflowers in October.

Argentina raises domestic biodiesel prices... Argentina’s government raised domestic biodiesel prices to 179,451 pesos ($1,608) per MT and will rise further increase them to 182,143 pesos ($1,632) in May and 185,785 pesos ($1,664) in June. The price will rise to 198,143 pesos ($1,775) per MT by August, according to a resolution in the official Gazette. The price had been 143,265 pesos per ton ($1,283) until March.

Australian state seeks to double soybean production... Queensland government scientists are working to double soybean production in high rainfall coastal and hinterland areas within three years. The project is working to make soybeans and sugarcane perfect partners. In the past five years, Queensland has produced an average of 21,680 MT of soybean per year with a gross value production of $14.5 million. The projected future demand in the region is for 200,000 MT of soybean per year for proposed new Australian processing facilities. Some of the efforts include training farmers to produce and maintain a quality product.

Turkey prices soar... Bird flu is causing turkey prices to soar, Bloomberg reported. Before the bird flu, one commodity researcher noted that turkey supplies were already predicted to be tight due to pandemic supply issues. More than 2 million turkeys, or about half a week’s slaughter, have already been lost due to the bird flu. Buyers are already vying for Thanksgiving turkey supplies.