Valley City Times-Record

Progressiv­e Ag Marketing Report with Lilja

- By Tom Lilja

I worked for a company that had a policy that the two co-owners were never allowed to get on the same plane. As it was explained to me, an up and coming competitiv­e company in their business had an entire group of executives killed in a single plane crash in southern Minnesota in the late 1970’s. It wiped the entire company out. It was a logical and good company policy. I’ve also heard of similar agreements between couples that have minor children in the household and or couples that run small businesses together. I also think that those agreements are wise. I’ve had a couple different jobs during the course of my life that involved frequent air travel. One of my favorite memories was watching a friend who had never flown before take his first flight when he was in his early 40’s. My child took her first flight with her mother when she was 7. She got the royal treatment from the pilots with a photo of her behind the controls. But a few good policies and a few good memories aside, one flight to Frisco, TX every other year is quite enough for me.

According to Forbes business news, my attitude about flying is justified and I’m probably not alone. Southwest Airlines canceled 2,508 or 62% of their flights on December 23rd and an additional 2,348 or 58% of flights on Thursday December 24th just in time for Christmas. Last week, CEO Bob Jordan apologized to travelers and stated that over 17,000 flights had been canceled since December 22nd. The average during this timeframe for other major carriers was 4%. Southwest stock declined over 6% on these events with one estimate of a $725 to $825 million dollar hit to quarterly earnings. There are plenty of news articles stating that the Department of Transporta­tion will investigat­e this or that Congress will investigat­e that and there will be lawsuits etc., etc. The Southwest Airlines Pilots Associatio­n is on record stating that “We’ve lacked infrastruc­ture for years and years and years.” The CEO states that outdated scheduling systems will be updated so that this “never happens again.” Reading between the lines in all of these articles, the conclusion­s I can come up with are as follows. 1) While you may hate the price tag of computer updates, an ounce of prevention is worth a pound of cure. The computer guys are going to make their money either way with short term fixes or with long term overhauls. 2) Listen to the captain (pilot) of the ship and don’t try to steer the wheel for him. 3) I will continue to let my wife fly with her friends and I’ll fly with my friends so that one of us is grounded at all times for the sake of our child. 4) I’ll be carpooling with friends to Frisco, TX next year.

Corn futures shot higher after the release of the monthly WASDE report as there were a number of changes to the US balance sheet. Energy markets were firm with crude oil showing $6.00 per barrel gains on the week. US production was lowered to 13.73 billion bushels and final yield of 173.3 bushels per acre vs. pre-report estimates of 13.93 billion bushels with yield of 172.5 bu/ acre. Harvested acreage was cut 1.6 million acres making this the lowest US production in 3 years. 2022-23 corn ending stocks are estimated at 1.242 billion bushels which was lower than trade expectatio­ns of 1.314 billion bushels vs. 1.257 bb in the December report. Demand cuts included exports -150 mb, industrial use -10 mb and feed and residual -25 mb. Ethanol usage remained the same taking total usage down -185 mb. World ending stocks are estimated to decrease 2.0 MMT to 296.4 MMT which was slightly lower than expectatio­ns. Argentina corn estimates were cut -3.0 MMT to 52.0 MMT as expected, and Brazil estimates were cut 1.0 MMT to 125 MMT vs. expectatio­ns of remaining close to steady at 126.0 MMT. Quarterly stocks as of December 1st are estimated at 10.8 billion bushels, down 7.0% from the previous year. This was lower than pre-report estimates of 11.173 bb. September to November disappeara­nce was 4.30 bb compared to 4.67 bb during the same period last year.

USDA left US wheat production unchanged at 1.65 billion bushels and a national average yield of 46.5 bushels per acre. US ending stocks for 2022-23 are estimated at 567 million bushels vs. expectatio­ns of 581 mb. 2022-23 World ending stocks came in near expectatio­ns at 268.4 MMT. There were no changes to Australian or Argentine production. US quarterly stocks report showed December 1st wheat stocks in all positions at 1.28 billion bushels, down 7% from a year ago. This was much lower than expectatio­ns of 1.339 billion bushels. The September to November 2022 disappeara­nce was 498 million bushels, 26% above the same period last year. US fall winter wheat plantings were much higher than expected at at 37.0 million acres vs. 34.5 million acres expected, an 11% increase from last year. Hard Red Winter acres were up 10% to 25.3 million acres while Soft Red acres were up 20% to 7.9 million. White wheat acres were 3.73 million, a 3% increase from 2022.

US soybean ending stocks for 2022/23 came in at 210 mb vs. the trade estimate of 233 mb and down from 220 mb in the December report. Production came in at 4.276 bb vs. the trade estimate of 4.357 bb and down from 4.346 in the December report. US yield came in at 49.5 bu/ acre vs. the trade estimate at 50.3 bu/acre and down from the 50.2 bu/ acre in the December report. Harvested acres were revised lowered by 300,000 acres. December 1st stocks are at 3.022 bb vs. estimates of 3.162 bb and down from 3.152 on December 1, 2021. World 2022/23 soybean stocks came in at 103.52 MMT vs. the trade estimate of 101.5 MMT and above the 102.7 MMT in the December report. Brazil’s production came in at 153 MMT vs. the trade estimate of 152.4 MMT and up from the 152.0 MMT in the December report. Argentina’s production came in at 45.5 MMT vs. the trade estimate of 46.5 MMT and down from the 49.5 MMT in the December report.

The Buenos Aires Grain Exchange reports the Argentina soybean crop rated 8% G/E, 54% Fair and 38% P/VP. This leaves 7.4 million acres in poor condition. Dr. Cordonnier left his Brazil soybean forecast unchanged at 151 MMT vs. USDA’s estimate of 152 MMT. He did lower his Argentina estimate to 41.0MMT vs. USDA at 49.5 MMT. Weather remains a concern in Argentina, but light rains moved across Southern Brazil and Argentina this week. Forecast models show rain in the 11 to 15 day and a more normal weather pattern for the month of February. BAGE did indicate Argentina’s weather pattern was improving, however it will likely take until March for moisture levels to return to normal.

Progressiv­e Ag Marketing, Inc. and is, or is in the nature of, a solicitati­on. This material is not a research report prepared by Progressiv­e Ag Marketing’s Research Department.

Tom Lilja is an employee of Progressiv­e who writes this column for the Times-Record.

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