We kicked off the day with Fed Barkin's Speech at 7:00 A.M., Building Permits Prel, PPI MoM & YoY, Core PPI MoM & YoY, Housing Starts, Housing Starts MoM, PPI Ex Food , Energy and Trade MoM & YoY at 7:30 A.M., Fed Barr Speech at 8:10 A.m., Michigan Consumer Sentiment Prel, Michigan 5-Year Inflation Expectations Prel, Michigan Consumer Expectations Prel, Michigan current Conditions Prel, and Michigan Inflation Expectations Prel at 9:00 A.M., Fed Daly Speech at 11:00 A.M., and Baker Hughes Oil & Total Rig Count at 12:00 P.M.

Image Source: Unsplash

It’s still early in the season, but dry soils and seasonally warm temperatures have triggered light fieldwork and fertilizer application in February. The latest Illinois Production Cost Report shows that anhydrous ammonia prices have further declined from fall price levels. The latest report showed an average price of $785/ton, down $40-50/ton from fall prices and $470/ton (37%) from a year ago. Liquid nitrogen is down 34%, urea is 20% cheaper, DAP & MAP ate 6-10% lower, potash is down 22% from last year, while farm fuel is $.52/Gal or 14% cheaper. Given the decline in commodity prices, fertilizer values are expected to decline in spring.

The South American weather forecast has trended drier in Brazil in the 11-15 day period, which is not an issue today but needs close watching moving forward. The performance of Brazil’s monsoon in March is critical. Once soaking rain exits the country it rarely returns until late September and October. It’s premature to project an early withdrawal of the monsoon today, but rain in Brazil is paramount in March/April. The EU and GFS models broadly agree that Brazilian rainfall Feb 25-29 will start to subside. The near-term outlook is favorable/non-threatening for South American crops. Dry but mild weather continues in Argentina for the next 10 days. This will aid crop growth following soaking rainfall of 2-6.00” there last week. Helpful showers impact the driest areas of Parana and Mato Grosso do Sul in Brazil into the weekend. Soaking rain moves northward into Mato Grosso in a 6-10 day period, but subsides in the 11-15 day forecast. Watch the late extended Brazilian weather forecasts closely. Today’s EU model showed dryness developing across the Amazon and shifting southward by mid-March. The crop at risk is Brazilian winter corn.

CBOT grain values are mixed this morning with wheat futures lower, while corn and soybeans slightly higher, With a 3-day weekend (Presidents Day Holiday), occurring on Monday and the USDA Outlook Forum concluding later today may key commodity outlooks. A mixed trading session is expected with breaks likely to uncover profit taking from bears. Yesterdays open interest showed soybeans gained 12,939 contracts, soybean meal 411 contracts, with soybean oil shedding 122 contracts, and corn was cutdown 9,361 contracts, and Chicago wheat down 2,270 contracts.

More By This Author:

Cash MKT & Forecasted USDA Data Lean Heavily Bearish. The Corn & Ethanol Report
CPI Takes Bulls By The Horn. The Corn & Ethanol Report
Super Bowl Monday Chop. The Corn & Ethanol Report