Corn and Soy Exports Lag and A Cold Outlook
Corn exports remain below levels from 2021. Last week the USDA reported corn inspections of 856,606 mt, 10% less than this same week last year. Total corn shipments for the current marketing year are down 28% vs the same period in 2021. Soybean shipments were up last week vs the same week a year ago by 1.75 mmt but total shipments for the marketing year are 7% lower than last year.
U.S. exporters announced a flash sale of 7 million bushels of corn to Japan this week. 95% of the sale is for new crop 23/24 delivery. Similar sale amounts to Mexico were made last week but overall corn sales and shipments continue to disappoint and will likely lead the USDA to make further downward revisions to their forecast in the January report.
China is the largest soybean importing nation on the globe and last year total corn bushels imported landed the nation in 2nd place. The fact that China is abandoning their Covid Zero policy and has adopted the “live with Covid” plan has given hope to our markets that this could mean significant improvements in demand for U.S. imports. The Chinese government is eliminating most of the previous policies associated with Covid Zero, including the testing requirements for travelers on January 8th. Now that China is no longer attempting to contain the virus and is reopening their borders, sales of plane tickets have soared prompting new testing requirements for travelers leaving China bound to many nations including the U.S. which are scheduled to go into effect January 5th.
Barge traffic on the Mississippi River last week found water levels peak at 10 feet in Memphis, TN easing travel issues. Unfortunately, the river has returned back to Low Stage levels once again and currently only registers at 2.4 feet. The graph below shows the actual observed water level readings found in Memphis, TN in blue and the predicted water levels are shown in purple. As you can see in the graph the water level is expected to decline further through the first week of January.
As we approach to start of a new year the war in Ukraine rages on. Both the Russian and Ukrainian governments have stated they are open to discussing an end to the conflict but neither side appears willing to actually negotiate. The escalation in missile attacks into Ukraine is threatening the ability for shipping companies leaving from Black Sea ports to renew insurance coverages beginning January 1st. With the decrease in insurance options shipping rates out of the Black Sea region are expected to rise. Some shipping companies may opt to forgo insurance in order to keep products moving out of the region
This winter season has started out snowier and colder than recent years and that trend is expected to persist. The last half of December turned cold and according to Bret Walts, lead meteorologist at BAMXW it is likely to continue into January. He explains, “High pressure above the high-latitude areas will likely allow colder-than-normal temperatures to persist across the northern and eastern U.S. for January. This looks to be a pattern that is a bit less favorable for snow in the Plains but will remain active in the winter storm department across the East.”
The following maps illustrate temperature ranges that are predicted across the United States in January and February.
The La Niña weather pattern that has been in place for the past few growing seasons is expected to dwindle by the end of January which could allow for the development of a neutral pattern. This change would bring wetter conditions to the Great Plains and western Corn Belt in February and March. This neutral pattern would offer mild relief to drought -stricken regions but will not fix the problem because BAMWX forecasts that following the beneficial precipitation this winter and early spring it is likely to be followed by dryness during the growing season.
Another significant weather event is expected to enter the region late Monday and could last into Wednesday of next week. Both the EURO and GFS weather models agree on the development of the storm system, but it is still too early to fully determine the exact path it will take. The EURO expects the low to develop near the Texas panhandle and then track NE into Kansas and eastern Iowa. The GFS model has the low developing in Colorado and tracks it movement into NE Nebraska and then into Minnesota.
I know which model I prefer but with the event still 5 days away the actual track and intensity of the system will be better known over the weekend.
Here's what the EURO currently indicates for total precipitation.
The GFS has this for the same period.
The entire staff at Ag Performance wishes each of you a healthy and happy
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