All wheat up by 7+% to ~32 mmt. Canola saw a 5.5% jump to 18.3 mmt. Futures priced in a lot of this?

Wheat production is estimated at 25.5 mmt, -37% lower Y/Y. Canola off -33% Y/Y to 5.5 mmt.

44% in at least D1 drought, +2% wk/wk. Kansas winter wheat at 65% (+3% wk/wk) with 5% in extreme drought (D3). Drying this early is not good with an El Nino milder/dry winter forecast.

It's an overall bearish report near-term but the markets focus will soon turn back to trading South America weather.

.....with long-term support at $65.00 despite war in Israel-Hamas.

.....greenhouses by 50%. Field trials will look for a 25% boost in yield, starting in Manitoba, Sask, and Montana in spring of 2024.

Spec funds (as of 31 Oct) are only long 735 contracts from high of 19,486 as of mid-June. A break below long-term support $235 could see $217.05/cwt by year-end.

.....& a lower bias. This reduction could be first ever for this time of the year. Markets do not have this priced into futures.

.....after dropping to record lows for 2nd starlight year, near -12 feet ft. Welcome news as it could improve export demand, barge activity, & increase basis.

.....the popularity of Beyonce tour & Barbie/Oppenheimer films, both of which some think contributed to U.S. 4.9% GDP Q3 growth rate.

Most of the damage is considered to be minimal but drought did more damage & USDA wheat estimate at 24.50 mmt is 10% too high.

.....Ukraine's Infrastructure Ministry denied that there is a suspension, adding ports in the Odessa region are still processing ships.

.....as the biggest sun oil producers take a bigger market share, capitalizing on currency depreciation. This weighs on canola & soybean oil values.

Sizable global potash supply in jeopardy as Israel’s key port operations impacted. Add higher US & European natural gas, fertilizer prices go even higher!

Some ECB states lagging. Early farmer focus more on beans, corn will get its turn soon. But harvest expected to slow down due to rain thru upper Midwest.

The drop comes after the 10-year treasury bill rose to a 16-year high of 4.8% as a result of the Fed's promise to keep rates higher for longer.

https://www.cnbc.com/2023/10/02/stock-market-today-live-updates.html

Similarly, Ohio saw a 27% increase in D1, which has sat at 0% since mid-August. Some relief was seen in IA and WI but extreme drought remains.

Stats Canada 2023 July Grain Stocks Estimates

Source: Stats Canada, QTPLus

40% soybeans vs 38% LW & 21% LY. North & Central Illinois turned very dry again. It'll get worse next week? 7 worst states MO, IA, NE, MN, WI, KS & TX make up 50% of US corn crop.

IA corn good-excellent is -17% worse vs 2022 (IA accounted for 18+% of US crop); soybeans G-E also -17% off Y/Y. IA currently is 99.49% in drought.

Best corn crop that Ontario farmers have ever produced! Variability & white mold in soybeans could be an anchor on yield but a great finish could offset.

Record-breaking corn & soybeans yields across the province, with the east & southwest leading. Compared to 2021, many of the counties outperformed on yield.

Pro Farmer released their crop tour estimates with a corn yield of 172 bpa (USDA 175.1) for a crop of 14.960 bil bu (USDA 15.111 bil bu) and a soybean yield of 49.7 bpa (USDA 50.9 bpa) for a crop of 4.110 bil bu (USDA 4.205).  

If the hot dry finish continues into September, the U.S. final national corn yield could be a sub-165 bpa and the U.S. soybean yield sub-49. This will create a story in corn and send futures back to $6.00 as ending stocks fall to 1.5 - 1.6 billion bushels. Soybean futures will need to ration demand with ending stocks at 150 million bushels or less and futures could see $15 - $16/bu. The lows are in!

US crop & soil moisture conditions will be impacted. Soybean development will be impacted the most but it can also affect corn grain fill.

UBS expects deficit of 1.5+ mil bpd in Sept, following ~2+ mil bpd deficit in July & Aug.

https://cnbc.com/2023/08/04/oil-prices-set-for-sixth-weekly-gain-as-producers-pledge-output-cuts.html

Yields higher with 10-year Treasury yield trading ~4.18% & near its highest since Nov 2022.

https://www.cnbc.com/2023/08/02/stock-market-today-live-updates.html

Illinois saw a +4% increase to 47% S-VS while Indiana saw a -3% drop (41%). Iowa also saw +4% increase to 67% S-VS, +21% higher Y/Y.

.....constrained by deep production cuts from OPEC leader Saudi Arabia, providing support for prices which are expected to rise in coming months.

https://www.reuters.com/business/energy/oil-inventory-drops-set-stage-higher-prices-2023-07-31/

59% (+4% wk/wk) of corn & 53% (+3%) of soybeans are now in at least D1 drought conditions. These numbers are up from 29% & 26% last year respectively.

Central & Southern IA is expected to see heat index values up to 110 F, KS up to 104-112 F. Bad news for yields if this extends into mid August.

Increases in D1, D2, & D3 affected areas. Wisconsin and Minnesota both saw significant regression. WI saw a 4% increase in both D2 & D3 conditions, while MN say 10%+ increases in D1 & D2 areas!

US drought continues to weigh on the crop. Spec fund net length in cotton is climbing.

If heat & dryness next week is confirmed for end-July & August with below avg. soil moisture, it could create fireworks.

23/24 global corn production up to 1.220 bil MT, +9.0 MMT vs. prior.
And Black Sea grain trade issues raise market volatility.

Almost the entirety of the US is forecasted above normal temperatures. Combining that with below normal precipitation throughout the eastern corn belt, crop conditions may take a hit.

MO & MI corn poor-very poor ratings now at 33% (-6%) & 14% (-8%). IL & MI beans saw significant improvement as their P-VP sit at 22% (-7%) & 15% (-12%).

US becomes a little more competitive globally, providing a tailwind for exports near-term.

Support from ideas that US Fed could finally slow interest rate hikes, better demand outlook...

https://oilprice.com/Energy/Crude-Oil/OPEC-Raises-2023-Oil-Demand-Forecast.html

Imports dropped to 1.45 MMT, off 400,000 MT vs. last month. Consumption expected to drop -100,000 MT to 7.4 MMT.

As of last week, there were no areas in WI under D3 conditions and just 16.67% in D2.

Minimal rains expected for upper Midwest, while lower corn belt and Delta may receive more precipitation. Dryness worries persist in northern Midwest despite recent rains.

Despite a bearish USDA report, technical signals suggest a long-term buy, with potential for further upside towards $106.57 - $116.05/cwt before seasonals wind down.

.....increased probabilities in Ontario, Quebec, northern Manitoba, and BC interior. Normal precipitation for most southern ag regions, drier bias in north.

USDA June Hogs & Pigs next week- June 29. Market is trading a tighter supply outlook both near term & longer term due to liquidation. Higher feed prices on account of drought = further liquidation.

More price increases & food inflation, a major concern during El Nino. Govt. output est. up to record 112.74 MMT vs 107.7 LY. Annual consumption @ 108 MMT.

https://www.reuters.com/markets/commodities/indias-wheat-output-10-lower-than-government-estimates-trade-body-2023-06-21/

SovEcon cut 23/24 Russian wheat harvest est, EU cuts in various regions, US drought expands, India crop lowered. Will wheat takeover leadership from corn?

Lower conditions (worse vs expected), & no drought busting rains forecasted with an expanding drought by end of week continues. Some "more" rain than earlier expected will keep volatility alive?

Corn harvest 37.5%, production 36 MMT (-30% Y/Y). Lowest number of trucks with soy & corn in at least 22 years seen at major grain ports!

While signaling more rate increases, they said they are not far away from target. Expect rate to top @ 5.6% this year, implying 2 more +0.25% hikes in 2023, up from last 5.1% est in March.

https://www.reuters.com/markets/currencies/dollar-droops-bets-build-fed-pause-yuan-6-mth-low-2023-06-14/

Insufficient recent rains, & in near-term forecast, will keep the premium intact. Fund buying is accelerating? New crop #corn futures aiming to break above the recent downtrend line.

Similarly, Soybeans 59% G-E vs LW 62% & expected 60%. Subsoil moisture short-V. short up +3% to 47%, Topsoil moisture S-VS up +2% to 46%. Both supportive of higher futures.

Jan-April pork export vol up +14%, valued $2.62 billion (up +13%).

Beef export vol -10% Y/Y, value -18%. Jan-April export vol down -8% & -21% value ($3.21 billion) vs last year’s record pace.

NOAA expects influence on US to be weak in summer but more in late-fall thru spring. By winter, 84% chance of moderate++ strength & 56% of strong El Nino.

https://www.cnbc.com/2023/06/08/el-nino-is-here-and-could-bring-warmer-temperatures-extreme-weather.html

Government is trying to boost Rice production during slow monsoon season. Purchasing price of new-season rice raised +7%, highest increase in 5 years!

ECB topsoil 67% short-V. short vs LWs 47% & early April’s 6%.
US subsoil 44% vs 37% LW & early April’s 33%. ECB 57% vs LW’s 39% & early April’s 11%.
MI continues to struggle the most!

ABARES projected 2023/24 winter canola production at 4.9 MMT, off -41% Y/Y but still above the 10-year average! Is dry weather taking on a global significance in 2023, impacting Ag in multiple geographies?

This week's crush data showed meal inventories in April were largest since May 2021. But US meal export demand has been strong due to Argentina's dire bean crop situation his year.

.....while trade weighed merits of US Fed possibly skipping a rate hike in June. Payrolls up 339K in May vs 190K forecast, & following +253K rise in April.

https://www.cnbc.com/2023/06/02/dollar-sags-as-fed-bets-ebb-debt-bill-passes-aussie-soars.html

Not enough moisture for the young 2023 crops. Today's mid-day runs tilted drier for the "I" states & next week's market open will be weather inspired!

Drought continues to bake US cattle country as grazing supply dries up with no real improvement in outlook, accelerating cattle contraction.

Jeopardy rising. N0 rain in the 10-day forecast. Iowa City temps hitting near record highs, not seen since 1934! ECB topsoil 47% short/very short!

Will export demand suffer without the Chinese market, especially as they continue to try & shift purchasing Ag away from US?

https://www.nbcnews.com/news/world/china-covid-second-wave-xbb-variant-omicron-rcna86171

.....that China's economy continues to stumble out of the gate, post-Covid.

https://financialpost.com/commodities/mining/copper-price-plunge-china-economic-growth

ECB conditions worse in top crop producing states MN, IA, IL, IN & NE! Soil moisture concerns mean that June & July rains are critical. Spark for higher prices? Comparisons to 2012...

Drought weighed but limited disease. The N/E yields will not offset lower S/W yields on Day 2. Yields/abandoned acres will be lower than USDA. Next stop $10.00/bu.

.....as US Fed holds interest rates higher for longer before they start to pivot lower.
Risk of US default over debt ceiling higher vs. prior stand-offs.

.....the latest sign of uncertainty around China’s economic recovery.

92 million corn looks high! Minnesota also lags due to heavy weekend rains soys at 10%. Farmers eye potential replanting in June before conditions dry up.

Some regions even facing D2 severity! Most of Saskatchewan is dry as well. Manitoba not that far behind.

The beef industry feels the heat too, as 1/3 of beef cows graze in TX, OK, NE, and KS with 37% of pastureland rated P-VP. Central Missouri now in D3!

It is unlikely to bring heavy rains to Argentina Ag area before Sept & the drought-hit soil will likely see slow recovery.

https://www.reuters.com/business/environment/more-than-90-chance-el-nio-through-winter-says-us-cpc-2023-05-11/

It caused shut in of 319,000+ barrels of oil/day (3.7% of Canada's production). 88 wildfires were burning across Alberta, with 24 out of control. Ag affected too.

https://www.cbc.ca/news/canada/edmonton/farmers-rush-to-save-livestock-as-wildfires-rip-through-alberta-1.6834470

Canada’s April CPI data is set to be released on May 16th after a decline to 4.3% in March. Great news for the stock market, as concerns of higher inflation hindering economic growth ease up.

Supportive for both canola & spring wheat futures as Canadian central Prairies expected to get very little over next 10 days.

.....& sustained its stellar rally driven by bets for pause in US #Fed rate hikes. Spot climbed to $2,072.19, shy of record $2,072.49. https://cnbc.com/2023/05/04/gold-hovers-near-record-high-levels-as-fed-hints-rate-hike-pause.html

Reports of drone attack on Kremlin that threatens to escalate ongoing fighting between Russia & Ukraine and further jeopardize the impending Black Sea grain corridor deal extension.

.....projects Asia-Pacific GDP to expand +4.6% in '23 after +3.8% in '22, & to be the most dynamic of the major global regions. What recession?

https://www.cnbc.com/2023/05/01/imf-asia-outlook-china-india.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

No deal yet. Recently, global crude oil traders sought payments in other currencies. Western sanctions on Russia & shortage of US$ weigh!

Fundamentals, led by drought on the Plains, supporting fund length. No renewal of Black Sea Grain Initiative also tightening global stocks- more talks scheduled.....

Slumping inventories & drop in pvt. investment held back early year gains. Inflation higher vs expected. IMF forecasting +1.6% growth in 23. But big tech stocks +34%, NASDAQ +14%, & S&P500 +6%, what recession?

2023 Farms.com Risk Management Ontario survey estimated intended corn acres at NEW RECORD 2.277 mil, soybean 2.95 mil, & All wheat 1.168 mil. Stats Canada reported acreage intentions for the province very close to those estimates.

As is the trend, futures response to the report could see another 2 days (at least) of upside?

Soy oil was also pressured by weaker global veg oil & crude oil. Macro recessionary fears attacking all markets! A $2.4- $3 discount in Brazil soybeans an anchor as well.

Take the over on this number but spring weather outlook may have shaved some acres? All wheat @ 26.3 mil vs 22's 25.38- take the over on spring wheat?

.....from low of USDA March planting intentions report to summer high of $1.05/bu and it works 14 out of 15 years? Summer 23 high could be $9.50 - $10.00/bu.

89-yr drought cycle is alive & well but when will it hit I-States? Could happen next 3-5 yrs as Mother Nature repeats but does not necessarily rhyme.

But are these lower prices on borrowed time as they may have bottomed. Would not be surprised if US natural gas prices trade back above $4.00 by summer?

China’s economy grew by faster-than-expected 4.5% in Q1 while oil refinery throughput rose to record levels in March. https://cnbc.com/2023/04/18/oil-steady-as-markets-look-ahead-to-china-gdp-data.html

But the fundamentals need to turn higher soon. Domestic & export demand needs to come to the rescue like in the last 2-years!

We are not out of the woods yet & if China demand fails to pick up, crude prices could fall once again despite the OPEC cuts.

https://www.cnbc.com/2023/04/05/oil-edges-up-as-opec-cuts-us-inventories-brighten-outlook.html

S&P dropped -0.58% today, Dow off 200 points, & Nasdaq down -0.52%. But expect markets to pause & continue higher on resilient US economy?

https://www.cnbc.com/2023/04/03/stock-market-futures-open-to-close-news.html

KS G-E off -3% to 16% & P-VP up +3% to 57%. OK also dropped while TX steady-lower. Weather continues dry this week with temps warming to raise crop stress in some parts.

Friendly report as funds were fearful of more supplies. Lock for a hard bounce for futures (V-SHAPE BOTTOM) from oversold conditions! But Dec 2022 inventory revised +1.8%.

Oil prices supported by lower US crude stockpiles & halt to exports from Iraq’s Kurdistan region... 
https://cnbc.com/2023/03/30/oil-steadies-us-crude-draw-offset-by-russian-supplies-stronger-dollar.html

KC HRW broke above recent 5+ month downtrend yesterday. Chicago SRW & MN spring what also recovered in March.

Texas conditions improved, rest were off. HRW wheat weather in Southwestern Plains expected to continue to be dry/mostly dry for next 10 days.

With funds record short let the "short squeeze" begin! Look for a bounce back to mean/avg $848.7/MT the 200-day moving average in coming months.

But Russian sources then said govt. does not want to ban wheat exports but will try to ensure exporters pay farmers enough to cover avg production costs, supporting prices @ $275+/mt.

.....but 108 mil bu biz was gained from China in last 8 days! The reductions will stop & ending stocks could drop again?

.....following the discovery of an atypical case of mad cow disease earlier.

https://www.bloomberg.com/news/articles/2023-03-23/china-agrees-to-resume-brazilian-beef-imports-after-mad-cow-case#xj4y7vzkg

Inflation has fallen 7 out of past 8 months since reaching a high of 8.1% in June 2022. On the right track, interest rates have peaked with a pivot to lower rates by 2024. Hopefully US CPI is on the same track.

11.59 MMT from US vs 10.04 MMT prior. Brazil fell -36% to 2.24 MMT.

.....& fears of more bad banking news near-term? Biggest weekly rise in 4 months, & expectations rise for less aggressive US Fed interest rate hikes as it tries to rein in inflation.

On Feed 96%, as expected & same as prior month. Placements during Feb 93% vs expected 94% & prior 96%. Marketings 95% vs expected 96% & prior 104%.

HRW wheat areas continue to miss most of the noteworthy precip over the next 10 days.

This follows Friday's collapse of Silicon Valley Bank- the biggest failure since the 2008 financial crisis.

https://www.reuters.com/markets/rates-bonds/us-federal-reserve-governors-hold-closed-door-monday-2023-03-12/

.....most contracts saw levels not seen since July 2022. Argentina's corn crop downgrades are supportive but Brazil could offset?

Some recovery to start next week?

Rosario cut 22/23 soybeans to 27 MMT vs prior 34.5, corn by -7.5 to 35. Buenos Aires cut soy to 29 from 33.5, corn 37.5 from 41. USDA @ 33 & 40 resp. Crop conditions drop further.

Tight supply outlook & drought continue to provide support.

.....it is already priced in and Kansas wheat futures held the January lows, and funds too short Chicago.

Is this CRP acres on steroids?

https://www.pnas.org/doi/10.1073/pnas.2301355120

.....drones and other technology to help counter an expected Ukraine offensive later this year

https://www.wsj.com/articles/as-china-calls-for-peace-u-s-believes-beijing-is-mulling-artillery-and-drone-deliveries-to-moscow-aee2b62a

Too much moisture across Great Plains in 2nd week of forecast today? More snow for northern Plains & upper Midwest Saturday night & Sunday; follow up precip likely later next week.

.....in some of the Italian city’s smaller canals dropped because of unusually low tides. Mountains have very little snow.

https://www.cnbc.com/2023/02/24/gondolas-left-stranded-as-venices-canals-run-dry.html

.....western sanctions to be removed. But the peace plan imploded. Will the next shoe to drop be a nuclear flex?

https://news.sky.com/story/ukraine-war-china-unveils-12-point-peace-plan-as-it-calls-for-ceasefire-12818707

New low on the street! Will it drop to sub-30 MMT? They lowered corn to 41 MMT off -3.5 from 44.5 MMT (USDA @ 47). Argentina production has more downside risk.

Incredibly intelligent, highly elusive beast capable of surviving cold climates by tunneling under snow. Result of cross-breeding domestic pigs with wild boars.

https://www.theguardian.com/us-news/2023/feb/20/us-threat-canada-super-pig-boar

Last year, higher demand saved the industry's bacon!

Soy output low on the street is 34 mmt (Oil World), down from 55 mmt, but could we see sub-30? USDA still too high at 41. Arg + Brazil total soy much lower vs expected?

.....(biggest m/m PPI increase since early summer). US Fed on track for additional rate hikes of +25 bps in March, April & May? Gold set to fade some more?

.....become endemic for 1st time in some wild birds that transmit to poultry. It is now a year-round issue & record outbreaks cannot be solved quickly on farms

https://www.reuters.com/world/bird-flu-spreads-new-countries-threatens-non-stop-war-poultry-2023-02-15/

It was up by 6.4% in Jan Y/Y (more than expected) but down vs 6.5% in Dec. 7th straight month of cooling since peaking @ 9.1% in June. US Fed will want to see steeper easing?

Higher Matif wheat in 2022 drove Chicago prices higher. Is a short squeeze underway now? corn will also garner support from this.

Dairy products supply is growing across major exporters. Milk futures have been on a downtrend since peaking last spring, but are we bottom-forming?

.....(1.47 MMMT up +2% vs. prior record in '21, value $11.68 bil up 10% Y/Y). pork exports finished lower Y/Y but value 3rd biggest, only trailing highs from 2020 & 2021.

https://www.usmef.org/news-statistics/member-news-archive/2022-beef-exports-set-annual-records-strong-finish-for-pork-exports/

Canadian Quarterly Grain Stocks as of Dec. 31, 2022

(in MMT)	Stats Canada- Dec. 31, 2022	Trade Est.- Dec. 31, 2022	Stats Canada- Dec. 31, 2021	Y/Y Change
All Wheat	22.294	22.3	16.816	+32.58%
Durum	3.695	3.9	2.533	+45.87%
Wheat ex-Durum	18.599	N/A	14.283	+30.22%
Canola	11.356	11.7	8.786	+29.25%
Barley	5.072	4.5	3.152	+60.91%
Oats	3.591	3.6	1.882	90.81%
Corn	11.862	N/A	11.530	+2.88%
Soybeans	3.654	N/A	3.205	+14.01%
Peas	2.115	N/A	1.593	+32.77%
Flaxseed	0.454	N/A	0.253	+79.45%
Lentils	1.439	N/A	1.212	+18.73%
Rye	0.344	N/A	0.259	+32.82%

Source: Stats Canada, QTPlus

2nd season corn 12% planted of expected acres, lagging LY's 24%. If wet delay continues in the next 2 weeks, trendline corn yields in Brazil will not be possible!

.....although they did not expand any. Until profitability perks up, expansion is likely on hold, but drought volatility remains.... Feed demand to fall.

.....canola 11.7 vs 8.79 LY. Despite sharply higher Y/Y stock expectations, we could get a market surprise with lower than expected stocks, given strong demand?

US beef inventory 29.8 mil (lower vs 2014), new record low, off -4% Y/Y. Beef replacement heifer off -6% vs expected -3.5% drop. Milk heifer replacements off -2% vs expected +0.1% gain! Baked in?

In 2022, futures hit all-time high @ $8.11, & then fell -60% in 8 months. Demand for oats remains very strong & will continue in 23/24. Overdue bounce finally happening.

.....housebuilding demand dropped given very high interest rates. Futures nearing highest since Oct 2022, supported by tight supplies & likely demand recovery?

.....biggest EU-supplier Russian diesel. At stake is a renewed rise in oil prices, & commodities along with it?

https://www.ft.com/content/ea2ea6b2-00ce-4971-858c-bfb1b0f8be4c

Additional rain expected over the next 10 days, but mid-day model took some of the forecasted rain out. More consistent rain needed..... Brazil crops downgraded further.

.....limiting cattle into feedlots near-term. But weather will clear, so bottom is near? USDA 2023 Jan Cattle on Feed report- further herd reduction?

It sent tons of water into stratosphere, which could warm Earth. Some say we could exceed 1.5°C of global warming in next 5 yrs.

https://www.npr.org/2022/08/03/1115378385/tonga-volcano-stratosphere-water-warming

Anec said Brazilian supplies are needed after soy dollar program depleted local Arg stocks, & fears of the punishing drought reducing their soy production in 2023.

https://www.reuters.com/markets/commodities/brazil-making-atypical-soy-sales-argentina-anec-says-2023-01-12/

They increased 22/23 global #wheat output est to 796 MMT (new record supported by record Aussie crop!), up from their prior 791 MMT est.

Will tomorrow's USDA WASDE surprise & swing it in corn's favor? Trade estimates are in a wide range with the avg favoring the bears for now?

The bias heading into the Jan 12th Winter Wheat report is that USDA will release bearish data- bigger than expected acreage, but the range is wide, so someone will get surprised?

US Fed will rely on CPI updates (next one up on Thursday) to decide on further interest rate hikes. Inflation has been gradually tracking lower?

Severe US drought prompted herd liquidation, & need for feed is pushing cattle northward from the southern regions.

.....in Kansas, Montana, Nebraska & the Dakotas. Market attention shifts to next week's Jan WASDE & winter wheat seeding reports...

The new year started with sell pressure in grains but fundamentals should take over longer-term.

Drought & herd reduction weighs on supply. Meat demand will hold up in 2023 even as global supply of meat continues to shrink?

Nov daily crush rate 6.31 mil bu/day, close to Oct 6.34 mil bu/day.

Late frosts & ongoing severe drought caused Buenos Aires Grain Exchange to cut crop to 12.4 MMT vs. initial 20.5 MMT seen at beginning of season.

Corn off -2% wk/wk to 15% G-E; P-VP up +3% to 26% (LY 76% G-E & 1% P-VP).
Soybeans off a steep -7% wk/wk to 12% G-E; P-VP up +5% to 25% (LY 73% G-E & 4% P-VP).
Drought expanding in southern Brazil!

Tighter feeder supplies still impact the market. Extreme cold in cattle regions, in western Midwest, US Plains & western Canada, fuel livestock stress & impacts producers' marketing plans.

Pork bellies up +35% m/m & up +116% Y/Y @ 54.359 mil lbs.
Beef up +2% m/m & up +6% Y/Y @ 521.869 mil lbs.
Total red meat down -4% m/m but up +10% Y/Y.

.....weighing on gasoline & all crude products as well. China is the wildcard & if & when they reopen for business, crude could trade back to $100 in 2023?

.....& second biggest exporter US business. La Nina continues & South American cropping not out of the woods, tightening 2023 global supplies. This is just the start of the 2022/23 weather scare in South America!

.....on Friday with lower corn exports. We could see reductions in the Argentina crops?

Barley oats higher, corn slightly lower, soybeans as expected.

Stats Canada 2022 Dec. Grain Production Report

Source: Stats Canada, QTPlus

.....despite US Fed's aggressive interest rate hikes to tackle inflation. But a lower US$ is friendly future export pace.

.....leading the grains complex. Some China easing of zero COVID policy & continued Argentina crop concerns support.

.....corn slightly lower, soybeans & oats steady. Canola though could come in lower based on Prairie provinces' yield est?

Geopolitics taking over from demand-supply fundamentals! Heating oil tracking crude lower on demand destruction near-term?

..... to encourage farmer sales of old crop soybeans held as inflationary hedge. Headwinds once again for US sales that dominate seasonally at this time ahead of Brazil's new crop availability.

This tops the previous record of 50.5 mil in 2015. Meat supply tightened, raising demand for pork, beef, lamb?

https://www.reuters.com/business/healthcare-pharmaceuticals/avian-flu-outbreak-wipes-out-5054-mln-us-birds-record-2022-11-24/

Cases surged to new record forcing Govt to curb movement & delay recovery in 2nd biggest global Crude Oil importer. IMF says China needs to keep recalibrating COVID Zero strategy. Bearish crude oil near-term!

72% of Prairie abnormally dry/in drought (including 80% Ag land) @ end-Oct, up vs 70% prior. Temps higher than average. Many wary of planting winter wheat on dry soil.

.....due to concern over lower demand in China, stronger US$, & US supply availability. Baker Hughes raised US rig count +3 to 782, up +219 Y/Y.

Nearby futures has failed to break above 100 DMA in 6 attempts in past year only to resume downtrend & trade to new lows! Seasonal high in Oct. & weakens in Nov.? We will flirt with $0.68-$0.70 by year-end?

Chinese refiners already began slowing down Russian oil imports from next month. Reduced buying by the Asian giants would leave Russia chasing, & depressing prices?

https://www.reuters.com/business/energy/indian-refiners-becoming-wary-buying-russian-oil-eu-sanctions-loom-sources-2022-11-16/

.....during war with Ukraine. 2 people were killed in explosion in eastern Polish village, Warsaw held emergency meeting.

https://www.theguardian.com/world/2022/nov/15/stray-russian-missiles-feared-landed-poland-ukraine

.....to remove obstacles for Russian grain & fertilizer export, & lifting sanctions on Russian banks & allowing freight insurance at normal rates?

https://www.ft.com/content/85ffe3ea-c713-4c0d-8b6d-80da3c328c1f

.....peak in shelter inflation & slower wage growth. They expect core personal consumption expenditure (PCE) falling to 2.9% by Dec 2023 from 5.1% now.

https://www.reuters.com/markets/us/goldman-sachs-expects-significant-decline-us-inflation-2023-2022-11-14/

.....pressuring poorest countries more, who likely imported less food. World food prices soared to record levels this year.

https://www.fao.org/newsroom/detail/FAO-Food-Outlook-highlights-rising-food-import-bills/en

.....with a transition to ENSO-neutral favoured in February-April 2023, 57% chance (up from 54%). So, 75% chance that South America could get a crop weather scare in 2023?

.....on better export news (#China is back to buying) & record crush margins. There is no room for errors, Brazil remains a wildcard but its still too early.

Soybeans, corn, beef, & dairy sales lead the way, with top markets being China, Canada, Mexico, Japan, EU, South Korea. Tremendous demand continues!

After topping in late Sept, it broke below its old resistance/now new support @ $110. But US CPI on Thursday @ better than expected +7.9% could see the global reserve currency reverse course once again!

But recessionary fears & demand destruction concerns remain headwinds. Futures are creeping out of oversold territory after falling 46% from peak in May!

Yara said it was now operating at 65% of European ammonia capacity (it had cut output to just over 1/3 of total capacity for much of second half of the year).

.....U.S. Fed continues aggressive rate-hikes. Support provided by recent bullish EIA inventory draw & tight stocks.

.....71% soybean area, 70% corn, 74% winter wheat & 75% spring wheat. Very concerning- ECB getting too dry since Aug 1, farmers reporting dust & little moisture 3 feet into ground.

Has the commodity currency bottomed for now and the U.S. $ Index peaked? US Fed likely to follow suit sooner rather than later?

Brazil cane harvest delayed in center-south. But sugar market expected to be well supplied next year. Global macro concerns weigh as well.

More earnings data to be released...

Conducive weather in major producer Brazil provides excellent conditions for crop flowering. Brazil Arabica coffee exports in Sept. up +18% Y/Y.

But US Fed could now get more aggressive with future interest rate hikes & keep rates higher until price increases cool of...

https://www.cnbc.com/2022/10/12/stock-futures-are-up-as-investors-await-inflation-data.html

.....demand concerns remain in a recessionary scenario. RBC says it could fall to $60/barrel next year in the most bearish demand destruction scenario...

Ending stocks could drop even lower in upcoming USDA updates?

.....hinders West's attempt to cap Russia prices. Next OPEC meeting set for December, to determine next adjustment.

https://www.reuters.com/business/energy/opec-heads-deep-supply-cuts-clash-with-us-2022-10-04/

Grazing on pastures expected to be lower vs. prior years. Future beef demand concerns weigh due to high interest rates, energy costs & inflation.

Palm oil & Soybean oil recovery continues. Strong Canadian crush margins & price-competitive exports, including China business, support.

Most of the cut in corn was from lower expected US production at 354.2 MMT vs prior 364.7 MMT.

Some forecasting a 30-40% drop vs. 2022? European Matif wheat futures up 16% since hitting a low on Aug 18, 2022.

Core inflation (ex-food & energy) fell to 5.2%. Some relief for Bank of Canada (which raised interest rates 3% thus far this year)?

Downward sloping downtrend creates new lows & lower highs. US Fed expected to raise interest rates by 75bps this week (if not more?). More US$ strength = lower CDN$ & higher basis.

High temps for parts of Midwest & S. Plains support cooling demand. La Nina winter deep freeze could raise heating demand, supporting gas prices? Soaring LNG could take fertilizer prices up as well.

Including corn, feed remains elevated. If China returns to buying from US, add more risk premium? South American production also at risk with 3rd straight La Nina?

Up 15+% this year, it is crushing the #euro & #yen to 2-decade lows & #pound to lowest in ~40 years.

Tighter monetary policies to tame inflation hurt energy consumption outlook. Hit lowest since January earlier this month.

US Fed committed to interest rate hikes (Bank of Canada too). Lower CDN$ is supportive for Canadian Ag basis...

US$ strength a headwind. Stats Canada #wheat production est. was higher vs expectations & prior est.

.....along with all wheat & barley. Despite tighter inventories, veg oil/palm oil weakness weighs on canola.

All wheat, barley, oats, soybeans & corn higher vs prior. All Prairie crops significantly higher vs last year's drought disaster!

At current stage in growing season, soybeans will benefit more (vs corn) from conducive weather. Buy corn, sell soy!

This follows China's halt on meat shipments from 2 other US plants in the past month, citing the presence of ractopamine.

https://www.bloomberg.com/news/articles/2022-08-29/china-halts-some-meats-imports-from-u-s-processor-tyson-foods#xj4y7vzkg

.....but lower vs expected for canola, barley & oats. All much higher Y/Y after last year’s western Canadian drought disaster.

US Fed says aggressive rate hikes on the cards to cool inflation. Recent higher job openings data suggests economy is strong despite 2 straight quarterly GDP drops.

This will be the 3rd time that La Nina has continued for 3 years in a row in ~70 years of records! 3 consecutive La Ninas happened in 1973-76 & 1998-2001.

Next year ~50 US counties (8 mil people) expected to experience temps 125+ F. 30 years later, extreme temps will be experienced in 1000+ counties (108 mil) mostly in South & Midwest. TX & FL will bear brunt of climate change, + Midwest.

https://www.cnbc.com/2022/08/15/south-midwest-will-see-worst-increases-in-extreme-heat-by-2053.html

Rain along valley fell 30% in July & Aug is ~60% lower. Temps soar & expected to last another couple weeks, they will pump water & look to seed clouds.

https://www.reuters.com/world/china/chinas-yangtze-river-shrinks-heatwave-drought-threaten-crops-2022-08-15/

NOAA says TX had warmest spring-summer, Oklahoma July was 4th warmest. KS July in top 20%. US 76.4F was 3rd warmest. '23 wheat planting in jeopardy as 3rd consecutive La Nina takes hold?

https://www.dtnpf.com/agriculture/web/ag/blogs/ag-weather-forum/blog-post/2022/08/11/continued-la-nina-unfavorable-wheat?referrer=NLSnapshot

Production 12.6 mil bales, lowest since 09/10, high abandonment in Southwest. Carryout 600,000 bales lower, 12.6% stock/use ratio -8% lower Y/Y & lowest since 1924/25!

Worsening drought & successive heatwaves in France, Romania & Hungary strained crop during crucial summer growth. Will they import US corn?

2014 high of $118.35/cwt was on July 7! Marketing hole ahead? Oct could narrow discount next Monday as it remains wide historically. This despite recession fears, given elastic meat demand.

.....but it remains +13.1% higher Y/Y. Steep drop in veg oil & cereal, while sugar, dairy & meat also fell some.

UK's grim economic outlook also pushing some safe-haven buying as Bank of England raised interest rate by +0.5%, largest since 1995?

Phase 1 deal was likely already dead, now it's surely buried? Demand will be a problem moving forward, especially into 2023 without China? Who will replace them?

Job openings fell most in 2+ years in June as labour demand eased in retail & wholesale, but labour market remains tight, hence more rate hikes likely.

.....off 0.4% & 0.7% vs April forecast. World Bank in June cut 2022 global growth to 2.9% vs earlier est. 4.1% due to similar macroeconomic pressures.

Furthermore, OPEC+ to raise output by 100,000 barrels a day in September. More proof that inflation trade is unwinding into recession trade?

.....mostly due to increased China import demand as domestic prices climb. ASF, inflation & global growth concerns are still risks to meat demand.

Midwest will face dryness & excessive heat? Bullseye on Iowa. Drought Monitor showed dry conditions form west & south rapidly spreading east.

USDA is @ 51.0 bpa. Strong crop in the making but still 6 weeks left before harvest- all will be weather-watching!

US crude is @ big discount vs international Brent. US crude stocks dropped 4.5 mil barrels (vs expected 1 mil drop) last week to 422.1 mil.

60% (& rising) of cattle in drought area. 50% of pastures in P-VP condition. 2022 so far, #beef cow slaughter highest since 1996- 2nd lowest beef cow herd in 50 yrs!

They increased 22/23 global wheat production to 770 MMT, up +1 MMT vs prior outlook.

DB runs trains with aid cargoes to Ukraine, & now will load grain on return journey.

https://www.reuters.com/world/europe/germanys-deutsche-bahn-plans-trains-ukraines-grain-exports-2022-07-21/

.....above 0.7 mil bpd after export restrictions lifted in recent days- expected to return to 1.2 mil bpd in a week/10 days.

https://www.bnnbloomberg.ca/oil-slumps-with-stuttering-u-s-fuel-demand-libya-ramp-up-1.1794771

This despite milk supplies remaining tight worldwide. Global Dairy Trade price index fell -5%, now lowest since Sept 7, 2021 auction.

This despite Bank of Canada raising interest rates by a historic full percentage point yesterday to fight inflation. US$ Index continues march higher, testing 1.09, & is a headwind.

Central banks are resorting to steep interest rate hikes to rein in runaway inflation, and the tighter monetary policy in turn weighs on growth prospects...

USDA raised 2022 & 23 US beef export prospects as demand strengthens. 2022 average US cattle price expectations also raised. Livestock futures generally buoyant.

Look for US Fed to follow suit at their July meeting? US CPI @ 4 decade high 9.1% vs 8.8% expected & 8.6% prior.

Following the volatility of last 24 months or so, with record spikes & steep corrections, do we see a more stable market ahead?

.....exports unchanged at 75.23 MMT. Total corn production increased from 115.22 MMT to 115.66 (USDA @ 116), exports increased from 37 MMT to 37.5.

.....exports unchanged at 75.23 MMT. Total corn production increased from 115.22 MMT to 115.66 (USDA @ 116), exports increased from 37 MMT to 37.5.

Crisis due to 3 yrs of drought & warmer temps. & this year, crop seeding reduced due to high input costs!

https://www.cnbc.com/2022/07/05/italy-declared-a-state-of-emergency-because-of-drought-in-the-po-river.html

.....as all run for cover on recession fears. Covid-19, Russia-Ukraine conflict (black swan events), inflation push world further into uncharted territory?

Weather takes back seat at the moment for prices...

June 2022 Canadian crop areas (Mil Acres)

Source: Statistics Canada, QTPlus

.....(their longest river), doing more damage to crops hit by an early summer #heatwave; makes irrigation impossible.

https://news.sky.com/story/italy-looming-agricultural-catastrophe-as-saltwater-from-adriatic-damages-crops-12642432

57% of topsoil is rated adequate-surplus vs 75% mid-June & 59% LY. Subsoil is 59% adequate-surplus vs 72% mid-June & same level LY.

What a wild ride! End of month, end of quarter, margin calls and expiration all played a role. It appears to be pricing in reduced demand due to anticipated economic slowdown.

Worsening crop progress + bullish crop reports + return to extreme heat = potential 2022 summer "melt up"?

.....; it was the first to peak, first to fall & now bottom. Look for a similar pattern in all other grain markets. If "flash drought" in July verifies, corn will become the leader!

This would create more demand? But we need more global supplies! Saudi Arabia is increasing monthly supplies, next OPEC meeting June 30th.

Add wheat market drop, & global food inflation eases some? But we are in weather markets & with summer ahead, concerns linger...

https://www.bloomberg.com/news/articles/2022-06-21/global-food-inflation-gets-reprieve-as-wheat-to-palm-oil-tumble

.....& 90s in Canada's E. Prairies. Extreme 105-110F possible in parts of Central Plains. Week 2 keeps high pressure ridge in Great Plains.

Just adds to their export handicap, on top of Russia reportedly seizing their grains & controlling ports.

https://www.reuters.com/markets/commodities/ukraine-says-24-million-hectares-winter-crops-wont-be-harvested-because-war-2022-06-15/

Are they too high on corn acres after the wet, cool & late N. Plains planting season, including Ohio, & given high input prices?

May US inflation @ new 40-year high 8.6%. Crypto crashes as Bitcoin @ 18-month low. Recession fears L-T support at 3700.

Sentiment also fouled by more (possible) China zero-COVID lockdowns and/or big US Fed rate increase this week?

US largest orange grower Florida under hurricane & citrus greening disease pressure. Also, drought hit biggest producer Brazil, tightening global supplies!

.....& no seed! Total 13.7 mil acres left to plant as of June 1. No bumper crop? Higher prices? Stocks reman tight!

2022 Western Canadian Crop Acreage Left to Be Planted As of June 1

Source: Provincial Government Data

Even with lower consumption, global grain ending stocks remain tight. Global soybean output expected to rise +11% Y/Y.

What next? Can't write this story if we tried!

https://www.reuters.com/world/russias-un-envoy-storms-out-ukraine-meeting-over-european-statement-2022-06-06/

For '21, 18.84 bil vs expected 18.8. '20 @ 17.13 vs expected 17.1. Plan to deny 69 small refiner waiver petitions very supportive corn for a change!

.....unlike 2008, with new normal at $100/barrel? Saudi could suspend Russia from OPEC+ due to sanctions related to Ukraine war.

Research facility near Ukraine seed bank was damaged. Both are in Kharkiv, which Russia has bombed.

https://www.reuters.com/world/europe/ukraines-giant-seed-bank-risk-being-lost-war-rages-2022-05-31/

Putin supposedly ready to facilitate exports? Chances very low, who can trust him. Month-end selling a buyers delight!

https://www.reuters.com/world/europe/putin-russia-ready-facilitate-unfettered-grains-supply-ukraine-2022-05-30/

Is China waging a quiet war against the West? More N. Plains pain with more moisture this weekend adds risk premium back to futures.

22/23 exports ~6 MMT down vs initial estimate @ 10 MMT & last year's 8.5. No wiggle room for global balance-sheet?

Most are skeptical, but such a deal adds another seller to grain exports?

US Treasury yields fell from recent highs. Inflation still at 40-year high, housing eases some, others to follow?

https://www.cnbc.com/2022/05/24/gold-markets-dollar-federal-reserve-interest-rate-inflation.html

They also lowered 22/23 global wheat -11 MMT to 769 MMT (USDA @ 774.83). Further reductions likely this summer?

.....no reason provided, but trade likely to be limited by low Canadian stocks & high prices? Ban was mostly due to politics, but current nature of global Ag & food tightness is forcing everyone's hand?

.....US refiners will produce ~8.2 mil bpd. Margins record high! China lockdown by end of June- bullish oil demand.

Global heat wave in France, Mexico. New record closing highs in KC; Chicago not far off & MN heading to $25?

The fast-moving derecho traveled over 500 miles across Kansas, Nebraska, Iowa, South Dakota, and Minnesota with winds speeds up to 135 miles per hour with post reports that some regions like in Salem, SD and Areas west of Minneapolis were hit the hardest and are worse than expected!

.....with more moisture on the way! MN at 9% in 2022 vs. 81% in 2021. All equates to below trendline yields!

.....near-term on uncertain demand- slow China purchases (& strict COVID19 measures). But strong summer demand always shows up.

From 770 mil gallons of renewable diesel production in 2021, EPA est 2022 @ 1.59 bil, & trade est 3 bil in 2023, with steep growth there on. US may run out of soybean acreage for this demand spike?

UN FAO food index @ 158.5 in April vs 159.7 in March. The small drop was due to lower veg oil & corn; meat @ record highs!

All wheat off -39% Y/Y, canola -50%, barley -44%, oats -49%! W.Canadian drought also took out specialty crop stocks. E.Canadian corn & soybeans the only outliers!

.....& nowhere near ~90% G-E from last Nov. SA shortfall just continues to propel US exports & futures to new record highs!

.....as drought weighed on production. Does not help the continued global supply tightness!

More pressure on global food security and higher wheat prices to ration demand!

https://www.bloomberg.com/opinion/articles/2022-05-03/india-s-heatwaves-are-testing-the-limits-of-human-survival

- will see much more increased volatility! Buckle up!

.....59% fair, 23% P-VP. But #corn up 19% G-E, 59% fair, 22% P-VP vs LW 18% G-E, 59% fair, 23% P-VP. Production could drop further?

.....smaller-than-expected 2022 canola acreage by Stats Canada. Tightest ever stock-to-use ratio for veg oils this year?

..... oil. Strong Soybean futures will get an "extra" boost when meal turns around?

..... growing demand & this report says tight stocks will continue. Canola futures @ new all-time high!

.....soybeans 5.52 vs 5.32; oats 3.75 vs 3.42; barley 8 vs 8.29. Could surprise with soaring fertilizer prices & looming 2022 drought?

New crop Nov at new contract high, +39% & +111% respectively! New crop trying to buy acres?

Renewable diesel, jet fuel & other fuels derived from canola oil 50+% lower emitting vs petroleum fuels. More market diversification & value added processing = more opportunities & higher prices!

.....in 2022. But higher price objective opened up at $8.65. Russian invasion of Ukraine late-Feb sent energies soaring.

Dec 23 corn futures 22 consecutive higher closing highs since March 18! Net cash price in Ontario $10, U.S. $8.00+ & Western Canada $11.80!

Corn 20% G-E, 58% fair, 22% P-VP vs LW 21% G-E, 55% fair, 24% P-VP. USDA left Arg production unchanged this month.

Year-round sales of E15! Waiver boosts ethanol demand = 13 mil bu more corn, but this is conservative at best.

https://www.cnn.com/2022/04/12/politics/us-gas-prices-waiver-joe-biden/index.html

.....(& 90% of Ag land). 60% of Canada's Ag land is in drought vs 65% prior month.

https://www.agr.gc.ca/atlas/maps_cartes/canadianDroughtMonitor/monthlyAssessments/en/2022/cdm_2203_mn_en.pdf

.....initiatives to address rising fertilizer prices, including investing $250 mil for new production.

https://www.dtnpf.com/agriculture/web/ag/crops/article/2022/04/07/high-fertilizer-prices-members-urge

Corn 21% G-E 55% fair 24% P-VP vs LW 32% G-E 51% fair 17% P-VP; Soy 25% G-E 54% fair 21% P-VP vs LW 33% G-E 52% fair 15% P-VP, production could fall below 42MMT. Tightens global supply further!

For illustration, if similar demand as last year is assumed, with 10.5 mil harvested acreage & 33 bpa yield, ending stocks plummet!

A drop to 39 bpa could lead 22/23 ending stocks to 394 mil bu from 653 if exports go from 800 mil bu to 900. Very bullish for prices in Q2!

Global supply chain disruption could last into 2025?

.....(33,000 MT) set sail to US, which reflects the tight global veg oil market.

.....(33,000 MT) set sail to US, which reflects the tight global veg oil market.

Tight inventory numbers hold potential for stronger prices into spring-summer? Disease is a major headwind for supplies!

.....Russia-Ukraine peace talks optimism. Premature but everyone can hope?

New crop buying acres? USDA report Thursday looms large!

Support from strong cash & pork values during a time of robust demand but tight availability of market-ready hogs.

.....with almost 0 correlation? US$ moves are weighing heavy on the CDN$?

.....the current counter seasonal US old crop soybean export sales.

.....potash production by ~1 MMT in 2022 to 15 MMT, in the face of current global fertilizer shortage.

https://ca.finance.yahoo.com/news/canada-scrambling-supply-massive-global-171732268.html

.....along with higher poultry, ruminant & aquaculture capacity. Strong global demand continues.

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Annual_Beijing_China%20-%20People%27s%20Republic%20of_CH2022-0033.pdf

Russian grain exports reduced to 37.1 MMT vs 37.7 prior. Further adjustments likely...

https://www.reuters.com/article/grains-igc-idAFL2N2VK1JA

Top producer Iowa- a farm had to cull a million birds. Soaring wholesale egg prices!

Pork exports down -16% Y/Y & value -14% to $555.6 mil, but strong exports to leading market Mexico.

https://www.usmef.org/news-statistics/member-news-archive/strong-momentum-continues-for-u-s-beef-exports-pork-exports-trend-lower/

.....was one of the key contributors to the spike even before Russia-Ukraine war. Brace for further spike in March data.

https://finance.yahoo.com/news/consumer-price-index-cpi-inflation-february-2022-203614415.html

.....sunflower seed crush -2.2MMT on Ukraine. This boosts soy oil imports for India & canola for EU.

.....on short-covering as sanctions threatened major producer Russian supply. This is among 145-yr-old exchange's top 3 shutdowns!

Rare heavy rainfall last year delayed planting of ~1/3 of wheat acreage. 1st & 2nd grade crop down by 20+%? Sizable imports needed...

https://www.reuters.com/business/china-ensure-agricultural-product-supplies-including-grains-2022-03-05/

25.5 MMT loss in Brazil, 11-12 MMT in Argentina & 4-5 MMT in Paraguay, & the global balance sheet gets tighter & tighter!

US & EU talks on banning Russian Crude Oil & gas? Many companies (IKEA) close their shops in Russia? Q2 GDP to fall -35%, full year down -7%!

.....this wk to 119.45 (1st sub-120). Total loss of 34+ MMT/1.25 bil bu since start of season, with downward bias? Go US exports!

The longer the Russia-Ukraine war lasts, the higher prices will go!

1+ months of port closures likely, tightening already tight global commodity supply chain.

.....to $130+as the West sanctions Russian exports. Could we get a 2nd shock in 2022 & send the global economy into recession?

Strong demand & tight Brazil + Argentina + Paraguay supplies could support US exports & tighten stocks further?

2022 Feb. USDA Ag Outlook Forum U.S. Crop Estimates

Source: USDA, QTPlus

.....soybean acreage @ 89.2 mil, corn 91.8 mil & wheat 47.8 mil, but March intentions will be more watched, followed by "real" new crop est. in May.

.....for the same time. Less than ideal conditions are starting to weigh!

U.S. Winter Wheat Conditions as of Feb 20th, 2022

Source: USDA

This is forcing biggest importer India to buy US soy oil vs traditional sources Brazil & Argentina, where soybean supply is short due to severe drought.

Corn 19% G-E (down 9), 55% fair (up 8), 26% P-VP (up 1). Some rains in the forecast. If not, production falls further.

China imports ~100 MMT yearly! In 2021 they tried reducing soy meal & corn in feed to reduce import dependence but how well did that work?

.....vs. last year's 10 MMT. The 4th biggest exporter is looking to import for 1st time ever? (But from where?)

.....with downward bias. Futures not yet factoring magnitude of drop with more price upside to follow? Next 30 days critical.

BAGE dropped 21/22 bean output by 2MMT to 42MMT with a downward bias? Rosario Exchange warned of 2018-style productive disaster without rains.

.....(volume just below 2020 record) despite 30% drop in Chinese business, Latin American business record strong

.....from 2014 by +14.6%. What does 2022 hold?

https://www.usda.gov/media/press-releases/2022/02/08/american-agricultural-exports-shattered-records-2021#:~:text=The%20final%202021%20trade%20data,in%202014%2C%20by%2014.6%20percent

.....vs. end-Dec 2021 @ 67% in D0-D4 & 98% Ag land. Some winter precip helping but is it enough?

.....which is likely being 'preserved' by the rise of U.S. imports. Stats Can Dec 31 stocks of canola came in a 7.561 MMT compared to 7.5 MMT expected and 13.259 MMT a year ago. All wheat stocks were 15.564 MMT compared to 17.3 MMT expected and 24.028 MMT a year ago.

Canadian Quarterly Grain Stocks as of Dec. 31, 2021

Source: Stats Canada, QTPlus

.....vs. 13.3 mmt prior year. All wheat 17.3 vs. 25.03 prior year.

Summer peak expected to surpass 2014 record, & above $134/cwt?

.....in the very south of US?

.....Beijing Olympics?) in this inflation year (like 2008, when oil set record near $150) it could soar to new all-time highs?

.....gaining on corn in the US 2022 acreage mix (with fertilizer prices @ record highs). Chinese demand is back, with more to come?

Arctic blast could impact production when strong demand is expected. This will keep fertilizers prices elevated!

A drop of -27 MMT combined (or 0.992 bil bu), with a downward bias! Game Changer & very bullish US old/new crop export program!

.....global veg oil strength (Malaysian Palm Oil +3.3% into new all-time high). March beans gained +22 cents & Nov +13.5 cents!

Global sanctions will weigh on economy & trade. Russia waiting to complete main event- Feb Winter Olympics?

But Canadian Pacific Rail hit by frigid weather & truckers COVID-19 vaccine mandates will further disrupt supply chain.

https://www.reuters.com/world/americas/canadian-farmers-face-cattle-feed-shortage-due-drought-transport-strains-2022-01-25/

https://www.cnbc.com/2022/01/25/long-term-investors-shouldnt-worry-too-much-about-stocks-being-10percent-off-their-highs.html

Largest increase was in ground beef sales on tremendous demand, the highest in past 20 years & +8% higher vs. 20 years ago!

.....when travelling into Canada. We already have supply chain issues & this will make it even worse.

https://vancouversun.com/news/produce-prices-in-b-c-expected-to-rise-as-vaccine-mandate-for-truckers-takes-effect

.....this year, with the crucial spring/summer season yet to come?

ON Tour hosts Moe Agostino & Greg Stewart said it was a perfect storm with higher ear counts, rows around, length & higher kernel mass!

Buyers turned to cheaper alternatives overseas amid soaring prices and a domestic supply crunch.

https://www.reuters.com/markets/asia/chinas-grain-pork-sugar-imports-december-2022-01-18/

.....39% fair, 21% P-VP, on excessive heat & dryness including S Brazil. Rosario Exchange est. drought will cost farmers ~$2.9 bil in lost income.

China blamed adverse impacts of COVID-19 for the shortfall. Will this be the 2022 demand boost for commodities?

https://www.reuters.com/business/china-hopes-us-can-enable-more-trade-amid-phase-1-deal-uncertainties-2022-01-13/

Dec. US temp was the highest on record at 39.3F, +6.7F above average! The disasters killed 688 people.

https://www.cnbc.com/2022/01/11/weather-disasters-cost-145-billion-last-year-in-the-us-says-noaa.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

.....(2021 record was $1711.25)- demand remains strong as industry struggles with labor & continued global supply chain issues.

.....to take it to $3 trillion in market cap!

https://www.cnbc.com/2022/01/03/apple-becomes-first-us-company-to-reach-3-trillion-market-cap.html

Corn current 40% G-E, 39% fair, 21% P-VP vs LW 58% G-E, 34% fair, 8% P-VP. Soybeans 48% G-E, 39% fair, 13% P-VP vs LW 56% G-E, 36% fair, 8% P-VP.

.....this early! (exception- June 2014 futures traded $101/.20). On pace to break to new record above 2014's $133.9?

Share price rose by ~5,800% since Steve Jobs unveiled the first iPhone in 2007! It is a big winner of COVID-19 lockdowns due to soaring consumer spending on gadgets.

.....46% last Jan. USDA give first look at 22/23 US winter wheat acreage in Jan 12 WASDE, which is bound to move the market?

Parana & RGDS make up 32% of soy, even cut by half its a potential loss of 20-23 MMT? Downward revisions just started?

Canada will update stocks of principal field crops in Canada as of December 31, 2021, on February 8, 2022.

.....& some daily record highs challenged by Christmas eve? KC futures on course to test recent highs & break above $9/bu?

.....to control food inflation. This move is made at a time of record highs in producer prices.

https://www.reuters.com/world/india/indias-regulator-restricts-futures-trading-some-agri-commodities-2021-12-20/

They did not appear to reduce mandated volumes for biodiesel.

This will be a dud report, largely demand driven. For final production changes, will have to wait until the final Jan. 12 crop report.

.....prices tripled? '21 wheat prices up +73%, no new crop until May! Or like '08 inflation yr with $100 crude oil?

.....in 2022, prices could stage a comeback. Unlike ethanol though, which is a law, biodiesel is voluntary!

.....and profit taking. Its noise long-term 22 bullish grain & livestock fundamentals remain intact.

Also, dry conditions impacting US HRW wheat & too much rain in Australia delaying harvest & lowering quality (lower protein)?

Now that we tested old long term channel resistance at $74.48 (within 1%), we can resume WTI uptrend to new upside targets at $93.03 - $94.04/barrel?

.....harvest-ready wheat crop. Could further tighten high quality global wheat supplies?

.....10-year lowest cost in 2020 at $46.90. 16-pound Turkey at $23.99, about $1.50/pound, up +24% Y/Y.

https://www.fb.org/newsroom/farm-bureau-survey-shows-thanksgiving-dinner-cost-up-14

ASF concerns in Europe/Asia continue. Despite thoughts that holidays will lead to hogs backing up on farms as processing speeds slow, this is not an ordinary year!

.....(lowest in ~2 decades) & 25.84 in 20/21. Durum up to 5.5 MMT vs 3.55 in 21/22 & 6.57 in 20/21.

https://www.nasdaq.com/articles/canada-wheat-area-set-to-rise-next-year-on-high-prices

.....could see 5+ mil acres move away from corn & soybeans? We will take the under on the 178.719 mil corn+soy acres.

With increased Russia/Ukraine tensions, wheat prices could build in further geo-political risk premium?

Global demand continues to be strong- all trying to buy early? Paris wheat 14yr high (near record for Euronext), CBOT wheat 9yr high.

.....stocks are lowered again- AAFC is currently at 0.5 MMT- lowest in over 2 decades.

.....of 51.2 bpa. Stiff upside resistance exists, but this was a "reversal-type" start?

SRW wheat back to net long. Net buying across grains!

Pork remains on record pace (225,822 MT +4% Y/Y, value +20% to $633.9 mil; record exports to Mexico, Chinese variety meat demand).
https://usmef.org/news-statistics/member-news-archive/august-beef-exports-top-1-billion-pork-exports-remain-on-record-pace/…

Partnership will enable CME to bring new products and services to market faster.
https://www.bnnbloomberg.ca/google-strikes-deal-with-cme-as-exchange-moves-to-cloud-1.1676936

USDA reported US Sept meal stocks fell to 306,923 MT- tightest monthly since Jan 2020. Soy oil was leading the complex due to veg oil strength & biodiesel euphoria, now soy meal shows up?

With demand still brisk & a pending Dec. 3 Stats Canada production report, it may take double digit futures to ration demand?

.....If situation improves this tightening may be pulled back? They said Princeville plant is not closing.
https://www.swineweb.com/olymel-wants-to-limit-the-impact-of-its-restructuring-on-quebec-pork-producers/

....., making a go for record high near $1045.3, as nearby futures expire trading to $1037/MT! Corn & soybeans are watching?

Inflation is likely to stay with us well into 2022, fueled by soaring energy prices which are in part fueling higher commodity prices.

Unprecedented spike in the Prairie crop's prices coincide with soaring values of fellow crops canola, spring wheat & barley as well- drought has sucked out inventories, leaving the 2022 outlook very bleak indeed?

The largest private sector strike since 2019! This will add to shortages caused by COVID-19 in tractors, combines & parts.

Instead of costing normal $1.22/bu to ship wheat/soybeans from Gulf to Japan, it now costs $2.23 (+$1 to end user).

Instead of costing normal $1.22/bu to ship wheat/soybeans from Gulf to Japan, it now costs $2.23 (+$1 to end user).

.....a loss of 0.93 mil acres on corn vs. 21 to 92.4 million acres.

Late week grain market recovery saw gains across the board (corn, soys, wheat, canola, cotton) as demand took over.

 Ministry of Ag notified World Organization for Animal Health, which released an official bulletin.
https://www.pigprogress.net/Health/Articles/2021/10/CSF-Brazil-Outbreak-outside-free-zone-in-Ceara-805383E/

Up +64% since the August low as demand takes over again. Expect strength to continue into 2022?

Beef cutouts yet to make a full recovery

Prices up 60+% for 2021 as demand rebounds while supply remains tight, with more legs to go.

https://www.cnbc.com/2021/10/08/us-crude-oil-price-tops-80-a-barrel-the-highest-since-2014.html

.....slow production & strong demand support. China major buyer.

Canada’s smallest harvest this in 13 years due to severe drought!
Canola record still @ $1,045.30/MT set by May 2021 futures near its expiry, on May 7, 2021.

It has been shown to prevent & effectively protect both European & Asia bred swine against the virus. USDA’s ARS reports that it is effective in all swine by 4th week after vaccination.

https://www.newsdakota.com/2021/10/01/usda-announces-asf-vaccine-candidate/

Learn more @ https://www.weatherinnovations.com/ - Platinum sponsor 2021 Great ON Yield Tour

Nearby oat futures traded to an new all-time record high breaking the old high set in 2013 at $6.00/bu.

Bacon has skyrocketed! US bacon now $7.1/pound vs $5.56 a year ago, +27.7%! A good time to stock up on bacon? Its always a good time!

U.S. corn Sept. 2021 stocks down -36% Y/Y; 20/21 soybeans down -51%, and all U.S. wheat down -34%.

Adverse weather & shipping snags threaten supplies!

https://www.bloomberg.com/news/articles/2021-09-28/cotton-prices-near-decade-high-signal-jeans-could-get-pricey

Lower than expected inventory! Futures supported near-term! Smaller pig crop during fall? Tight supplies likely continue into 2022...

USDA Sept. 1 2021, Hogs & Pigs Report (% vs. Year Ago)

Source: USDA, Reuters

Sept. 1 2021 USDA Cattle on Feed Report Estimates

Source: USDA, www.qtmarketcenter.com

USDA SEPT. 2021 COLD STORAGE REPORT

Source: USDA

For this year, Stats Canada estimates the smallest Canadian oat crop production since 2010 & tightest supplies since 1991/92. Canadian stocks are expected to be record low in 2021/22? US 2021/22 oats stocks are the lowest since 2013/14.

This is the 2nd detection in Americas this year, following from the 1st in the Dominican Republic. Both countries share the same island in the Caribbean.

https://www.pigprogress.net/Health/Articles/2021/9/ASF-Haiti-Virus-moves-to-second-country-in-Americas-795740E/

Markets are nervous over the potential failure of China's Evergrande Group, a property developer with over $300 billion in debt, who has defaulted on a debt payment creating fears of contagion in the broader property sector unless the Chinese government steps in. Global financial and commodity markets sold off as traders exit riskier investments to get to the sidelines. Reading into its most recent financial results, Evergrande’s total debt burden is the biggest for any publicly traded real-estate management or development company in the world.

21/22 USDA SEPTEMBER WASDE REPORT ESTIMATES SEPT. 10, 2021 

Source: USDA, QTPlus, Reuters

It’s a new ALL-TIME RECORD HIGH for the 2021 Ontario corn yield at 191.50 bu/acre, but soybeans comes up short at 51.7 bpa. This compares the the 2018 previous high by Agricorp at 183 & 53 respectively. The 10-year average sits at 174 & 46. #TwitterlessGregStewart says “There’s no stopping a record corn crop.” #ONYield21 @Ontag @FarmsNews Thank you all hosts, sponsors, scouts and farmers!

Spring wheat 15.9 MMT; Durum 4.1 MMT vs 5.84 last. oats 3 MMT vs 3.794 last. barley 7.4 MMT vs 10.891 last.
The data will be released at 7:30 am CT/8:30 am EDT Monday, Aug 30th.

2021 USDA AUGUST WASDE 20/21 & 21/22 U.S. CROP ESTIMATES (Bil Bu)

Source: USDA, QTPlus, Reuters

.....yields for corn are expected at 176.5 bpa, while soy yields are expected at 51.5 bpa. Yesterday, Linn & Associates estimated 2021 U.S. corn production at 14.794 billion bushels, on a yield of 176.16 bpa, & soybean production at 4.284 billion bushels, on a yield of 49.5 bpa.

..... US & Mexico tightened border checks to avoid infections. U.S. testing of 389 samples from Dominican hogs raised on farms and in backyards indicate the contagious disease is in "a small population of backyard pigs from Sánchez Ramírez and Montecristi provinces".

.....already-stressed crops in dry areas of NW Corn Belt! Some weekend rain expected but with limited coverage?

As oats are harvested earlier than most (mid-August), it will give markets a good idea on yield loss from hot & dry weather?

Rain extremes since Friday reached 40 - 45+ inches! Significant crop losses possible as fertile plain may not drain very quickly.

White House has mostly stayed out of discussions but now wants to take control of matter? Mandate is more than a year behind!
https://www.reuters.com/world/us/exclusive-white-house-delays-biofuel-mandates-due-political-concerns-sources-2021-07-20/