Weekly Market Update With Tom Lilja of Progressive Ag
As a college football season ticket holder, I don’t like the games where both teams end up punting a lot. It’s entertainment after all. I miss the days of $7.50 tickets and an occasional $7.50 bottle of whiskey crashing under the bleachers or crashing through the press box window. Wearing deer hunting gear and watching fair weather California boys drop the football like a brick in 10 degree playoff weather was also entertaining. Those were the good old days. Since both the tickets and the bottle cost more than $40.00 each now, things aren’t as carefree as they used to be. The fun haters put us indoors and make us pay for parking nowadays. It was only on rare occasion back in the day where the punter was named player of the game.
In terms of football, the United States Department of Agriculture is the punter and they earned the player of month honors for March with their latest performance. I don’t recall a report where US corn, wheat and soybean numbers were all unchanged from the previous month. Carryout remains at 1.502 billion bushels of corn, 836 million bushels of wheat and 120 million bushels of soybeans. USDA did not adjust for US exports despite re
cord numbers of corn and soybean purchases. They are assuming Brazil and Argentina will take away most of our exports through October. The Brazilian Real has been struggling recently and the US Dollar has been recovering, so they could be right. They are also banking on the same with wheat despite the fact that Russia will be implementing export taxes on their internal supplies of wheat starting March 15th, 2021. They did not lower Russian wheat export numbers. This report was a fake punt and they think they are going to convert at the start of the play, but if there is one hiccup with North American or Russian weather this season, 120 million bushels of carryout in soybeans will not be enough and will cost them the game.
USDA was able to keep their punting average up by making some small adjustments to world numbers. They increased corn and soybeans slightly to 287.67 MMT and 83.74 MMT, respectively when trade was expecting decreases to South American production. World wheat numbers were reduced to 304.22 MMT. The punt is now in the air to the March 31st acreage and stocks report. We will have to wait a few weeks to see where the ball lands.
Texas and Kansas winter wheat ratings in the good to excellent range declined 1% from the previous week, while Oklahoma improved 7%. The verdict is still out on damage to the KC winter wheat crop as Texas conditions in the poor to very poor range increased 6%. 1-5 day forecasts call for good rainfall through most of Oklahoma, Kansas and northern Texas. These forecasts pressured wheat futures. 8 to 14 day outlooks are cooler and drier than normal for the southern plains.
Ethanol production showed a recovery from the lows set around a month ago when the country went through a deep freeze. Weekly ethanol data showed production rose 89,000 barrels per day to 938,000 bpd, the highest since midJanuary. Inventories fell 355,000 barrels to 22.07 million barrels. This is a 3 month low for ethanol stocks. According to Reuters, “U.S. crude oil stockpiles jumped by nearly 14 million barrels last week while fuel inventories plunged, as production and refining output slowly came back online in the wake of the Texas winter storms, the Energy Information Administration stated. Crude inventories rose by 13.8 million barrels in the week ending March 5 to 498.4 million barrels, compared with analysts’ expectations in a Reuters poll for an 816,000-barrel rise. Crude stocks dropped sharply in February after several days of freezing temperatures forced production to shut.”
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