Pro Farmer Evening Report: Dec. 22, 2021

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

U.S. third-quarter GDP revised higher... U.S. Department of Commerce revised U.S. GDP from July to September to 2.3% annualized growth from the previous reading of 2.1%.

However, GDP was the lowest since the second quarter of 2020 and well below the 6.7% growth rate for the second quarter. Supply shortages, a decline in government aid, and a natural disaster slowed GDP.

Increased consumer spending, exports, and lower unemployment numbers are signs economists see in the fourth quarter that could propel GDP to best performance since 1984.

However, looking into the first quarter of 2022, economists are cutting GDP growth forecasts due to the latest Covid-19 wave, the delayed action on government spending and slowing labor market recovery.

U.S. consumer confidence perks up for a more robust 2021 finish ... U.S. consumer confidence continued to improve in December, according to Conference Board. The consumer confidence index increased to 115.8 this month, up from 111.9 in November. Economists polled by Reuters expected the index to rise to 110.8 from the previously reported reading of 109.5.

More consumers plan to buy a house, big-ticket items and go on vacation over the next six months. Inflation concerns eased a bit while consumers remained upbeat about the labor market. The increased confidence sets the stage for continued growth in 2022.

Cold storage Report: Beef stocks climb, pork inventories decline less than normal... USDA’s Cold Storage Report showed U.S. beef stocks rose contra-seasonally in November. Pork stocks declined, as is normal, but not nearly as much as the five-year average.

Beef stocks totaled 493.3 million lbs., up 19.8 million lbs. (4.2%) versus the end of October. The average over the past five years was a 300,000-lb. decline in beef stocks during November. Beef inventories fell 18.1 million lbs. (3.5%) from year-ago and were 10.8 million lbs. (2.1%) below the five-year average.

Pork stocks totaled 406.7 million lbs. at the end of November, down 35.1 million lbs. (-7.9%) from October. Pork inventories fell 13.1 million lbs. (3.1%) from November 2020 and were 98.0 (19.4%) below the five-year average.

Total frozen poultry stocks fell to 886.0 million lbs. at the end of November, down 175.1 million lbs. (16.5%) from October and were 191.4 million lbs. (17.8%) below year-ago. Chicken breast meat stocks at 152.1 million lbs. dropped 9.4 million lbs. (5.8%) during November and were 102.8 million lbs. (40.3%) below last year’s record.

Feedlot supplies expected to remain in line with year-ago... USDA’s Cattle on Feed Report is expected to show the Dec. 1 feedlot inventory equal to year-ago at 12.036 million head, according to the average estimate from a Reuters survey. But there’s a 10-point range of estimates for November placements, which means that category will likely be the key to the report. Based on the average estimates, analysts expect placements rose 3.2% and marketings increased 4.4% from year-ago in November.

South Korea suspends Canadian beef imports after BSE case... South Korea has halted beef imports from Canada. South Korea is seeking more information about the recent atypical BSE case Canada reported before allowing beef imports from the country to resume, according to the Canadian Food Inspection Agency.

South Korea was Canada’s sixth-largest beef export market at 1.3% of beef exports in 2019, according to the Canadian Cattlemen’s Association (CCA). It doesn’t think the ban will last long. The halting of exports stems from Canada’s particular export agreement with South Korea requiring verification of information of BSE cases by Seoul.

“We would expect this suspension to be lifted very quickly,” said the CCA’s executive vice-president Dennis Laycraft. “It shouldn’t affect any of the product that’s been processed, going to be processed or shipped.”

At the moment, no other countries have informed Canada they plan trade actions.

U.S. ethanol production drops... U.S. ethanol production fell by 36,000 barrels per day (bdp) to 1.051 million bpd for the week ended Dec. 17, according to the Energy Information Administration. Production was up 7.7% from year-ago, but 3.0% lower than the same seek in 2019 (pre-pandemic).

Weekly ethanol stocks dropped 178,000 barrels to 20.71 million barrels.

Ukraine considers milling wheat export curbs in 2022... Ukraine might decide in mid-January to limit milling wheat exports for the rest of the 2021-22 marketing year to protect domestic supplies and keep prices from rising, according to the two sources cited by Reuters. They indicated milling-quality wheat shipments could be limited to 4 MMT through June.

The current quota sets 2021-22 wheat exports at 25.3 MMT, without differentiating between feed or milling quantities. The country has already exported 15.6 MMT of wheat.

“A plan to restrict exports sounds reasonable since there are about 4 MMT of milling wheat in stocks. This will last until April-May, then there may be a threat to food security,” a market source said.

Ukraine’s flour makers association recently told the government a milling wheat shortage could significantly affect the country’s flour and flour products.

Some German farmers giving up raising pork... Over the past year, 7.8% of German farms have given up raising pork and the country’s hog numbers are at their lowest level in 25 years. In November, Germany had around 2.45 million hogs on farms, down 9.4% from the previous year, according to Germany’s national statistics office. Only 18,800 farms are involved in pork production, down 39.1% in the last ten years.

“The reasons include the low demand from retailers and for export along with low pork prices,” the office said.

Export disruptions due to African swine fever (ASF), anti-pandemic, and a general trend away from eating meat have reduced pork demand and prices.

U.S. projected to become to be world’s biggest LNG exporter... From 2022 until 2025, the U.S. could pass Qatar and Australia to become the largest liquefied natural gas (LNG) exporter, according to the Energy Information Administration and industry experts. In 2022, the U.S. is predicted to export 11.5 billion cubic feet per day (bcfd), 22% of world demand of 53.3 billion bcfd.

Strong demand in Asia and Europe for power generation and heating has pushed natural gas prices to record levels.

Qatar might overtake the U.S. as the largest LNG exporter when its expansion enters service. However, the U.S. might continue as the largest LNG exporter longer if current developments in Texas and Louisiana continue.

Many Chinese buyers have signed long-term contracts that allow companies to complete their U.S. projects.

Eurochem to buy Brazilian fertilizer producer Heringer... Eurochem plans to purchase a controlling interest of Heringer, a Brazilian fertilizer producer, for $96.5 million, the company said. After acquiring shares owned by the holding company, Eurochem plans to buy out minority shareholders and delist Heringer. The deal is subject to the approval of antitrust officials.