Ukraine Production Maps, Canadian Railway Strike and Rising Covid Cases in China
Update for March 18th, 2022
Three-thousand Canadian Pacific Railway teamster members including engineers, conductors and yard workers voted this week to strike. Initially the report said the labor stoppage would begin just after midnight, March 16th but the Union has yet to give the 72-hour notice required. The last major Canadian railway strike occurred in 2019 and lasted for 8 days but it took several weeks for shippers to recover. CP’s rail line network runs across much of southern Canada and extends as far south as Kansas City in the U.S. This rail company carries U.S. grain to export terminals in the Northwest and transports potash fertilizer into the U.S. The prospect of a Canadian railway strike comes at a very critical time and is raising concerns that the already tight supplies of fertilizer and other inputs may be further complicated and delayed which could shift potential corn acres to soybeans in the coming weeks. The USDA Planting Intentions report will be announced at the end of the month, traders are expecting to see corn acreage fall into a range between 92 to 94 million acres for 2022 but a lot of variables are still to be played out over several weeks and months. (Reuters)
The commodity brokerage and analytic firm Allendale Inc conducts an annual survey of U.S. farmers regarding their planting intentions for the upcoming spring season. Producers from 27 states were surveyed between February 28th to March 11th and the results were released this past Wednesday. Data collected shows U.S. producers plan to raise 92.421 million corn acres and 89.281 million acres of soybeans during the 2022 growing season but rising input costs and availability of products like fertilizer could cap corn acres. (Reuters)
Russian attacks in Ukraine continue to rage-on. There have been cease-fire talks that have raised hopes that the war will end but Russia always resumes the fighting soon after. Ukrainian officials have said they expect farmers in Ukraine will plant crops as usual but fuel supplies may hinder progress. Analysts here in the U.S. are following developments in Ukraine and question what reasonable percentage of corn acres could be planted considering all of the obstacles. I’ve heard reductions of 30 to 50% are likely and with the on-going war and spring quickly approaching, it’s logical to think these estimates could be accurate.
Reports this week say Russia has 14 Navy ships headed toward the Ukraine port of Odessa (Odeska on the map). Cargill owns the majority of one of Odessa’s deep-sea ports and has a large processing plant there. ADM also has a grain terminal at the port as well as 5 additional terminals and a river silo nearby. All of this information can be confusing when unfamiliar to an area to understand the significant contribution each region makes to the overall production and the consequences involved. Several maps are shown below to help gain a better understanding of what is occurring where and what that means for production and export capabilities. BBC News maps of the Russian progression into the country of Ukraine and USDA maps of corn, soybean and wheat grown by region and percentage of overall crop production are also included. (BBC News; USDA Foreign Agricultural Service)
China has been locking down citizens once again as Covid cases rise. Millions of people have been locked down already and if the virus continues to spread it’s impossible to estimate how many more people and communities may be affected. The Chinese government has closed off communities where the spread is occurring, closing restaurants and factories in an effort to keep the citizens locked down and prevent further spreading of the virus. This has the commodity markets concerned once again. How long will these lockdowns last, how widespread will it become, how will demand of pork, vegetable oil and other U.S. trade products be affected this time?
Forecasts show the U.S. Plains and western Corn Belt could received an inch of precipitation over the next 7 days. The 6-to-10-day outlooks also offer odds of above normal precipitation in these drought-stricken areas that have been parched for months. Some in the eastern Corn Belt will also be wet but Illinois and Indiana are forecast to receive heavy rainfall making these areas too wet if anything.