Update for March 3rd 2023
Export Situation for Ukraine & Keep your Winter Coats and Shovels Handy
Last week’s USDA Ag Forum set market prices in motion to lows not seen for months. Since then, prices have started to rebound on some bullish news. Rumors are that China has re-entered the U.S. market following the price pull-back purchasing 1.0 to 2.0 MMT but so far there has not been an official confirmation of this sale. In addition, recent data indicates that the Chinese economy may be recovering faster than many had projected. If true, this could give prices the tailwind needed to bring Fund interest back into the market and create a more optimistic outlook for commodities.
Such news would help silence the market bears that feel the USDA estimates for exports, ethanol and feed demand are too high and will need to be adjusted in future reports. Ethanol production fell off slightly from the previous week but was able to remain above 1.0 million barrels, the problem is that it is still considerably less than what the USDA has projected for corn used for ethanol. The good news is that the EPA has proposed a new rule that would allow for the use of higher blends of gasoline in select states across the Midwest beginning in 2024. Governors from the major corn production states of Iowa, Nebraska, and Illinois have requested the EPA lift the restrictions on the use of E15 and allow the sale of the product through the summer months as well. There had been some concern that E15 contributed to smog during hot weather, but research has proved that E15 and E10 have similar emissions. Of course, there are both critics and proponents of the idea so a public hearing for the proposed rule change will be held in either this month or in April.
Weather continues to create issues for Argentina and Brazil. In Brazil the slow harvest caused by wet conditions has slowed planting progress of the Safrina crop which is pushing the timing of critical development and pollination into the period when more serious weather extremes are common. Some sources have begun to raise current Brazilian yield estimates. The same is not true for Argentina, most sources see even further yield losses in Argentina yields as the hot and dry conditions continue to deteriorate the drought-stricken crop. During the month of February export dollars fell by 74% compared to the same month last year and sales were down 30.5% from just the previous month. (Reuters) Both SAM countries are facing new political and logistical complications which may help the U.S. attract buying interest from the funds as well as importing nation’s that don’t want to deal with the complications Brazil and Argentina have, that could potentially delay exports.
Wednesday Russia announced that the only way they will agree to extending the Black Sea safe passage deal is if their exports are cleared. The current Black Sea Grain Initiative was arranged last year by the United Nations and Turkey and expires on March 18th this deal cannot be renewed without all parties in agreement. Moscow says that Western nations have not specifically targeted their exports, but the restrictions placed on payments and insurance industries has hampered their ability to export its grains and fertilizers. (Reuters)
Finding insurers for ships leaving Ukrainian ports has been an ongoing problem. 40 to 60 commercial ships are still stuck in Ukraine a full year after the start of the war. When the war began there were over 90 merchant ships many loaded with food and around 2,000 crew members that were unable to leave due to the fighting. Once a shipping vessel has been stranded for a year, owners of the vessel can claim a total loss on their insurer. This has led to insurance companies facing claims of half a billion dollars.
Ukraine has now decided to start a $500 million dollar insurance fund for cargo ships that incur damage. These funds will help cover costs of damages to civilian vessels that enter Ukrainian ports. Deputy Prime Minister Oleksandr Kubrakov said last week that Ukraine’s parliament had approved the $500 million dollar insurance fund, “We’re working on resuming delivery and expanding the range of products. I invite countries of the civilized world and interested businesses to cooperate.”
U.S. weather outlooks through April are now out. Below you will see a series of maps that speak for themselves.
Temperature analogs that we have watched for several months now show us that in March we will be in MJO Phases 1 and 2.
The following maps display what is expected to occur in the northern latitudes March 6th. The red shows high pressure and arches from Alaska to Greenland.
This high pressure will push the cold air in Canada to the south into the U.S. We will see the temperature trend change March 8-15th when temps will fall well below normal across the nation.
The next series of maps are shown in increments and illustrate how the cold is forecast to spread and intensify over the period. The dates for each are located in the upper right corner.
Map 1-March 2-7
Map 2-March 7-12
Map 3-March 12-17
For the 15-day period ending March 17th the northern ½ of the country has enhanced chances of above average snow.
If that’s not bad enough the EURO Weeklies map shows the snowfall outlook for the next 46 days ending April 17th.
The second EURO Weeklies map shows the expected temperatures during the same period ending April 17th.
Winter 2023 is going out with a ROAR!