Rejeana Gvillo

Canada is poised for a massive harvest this year, especially compared with the drought-reduced crop of 2021.  Throughout the growing season, FBN® Research has been assessing whether Canada’s rail system and broader infrastructure will be prepared to handle a record crop. Based on previous capacity volumes for key grain crops including wheat, barley, canola, corn, oats, peas, flaxseed, soybeans and more, we are confident the country can handle a bin-busting record harvest. What if yields are max potential vs. history? To begin our analysis, we looked at planted area for 2022 compared to 2016 and 2020. In 2022, planted area for the aforementioned crops is higher.  Next, to gauge what total harvested area could be, we applied the average harvest percent in 2016 through 2020 by crop to 2022’s planted area. By taking the maximum yield recorded across history for those crops and applying that to the 2022 forecast harvested area, we projected a production total.   Based on those assumptions, we estimated a major grain production total of about 4 billion bushels; this is marginally larger than both the 2016 and 2020 totals. Assuming all of these crops hit the previous record yield, the total production outlook would not be at a volume that causes concerns about testing Canadian storage infrastructure.  Can growers handle record-breaking harvest delivery and storage? If farmers are facing a four billion bushel crop, can the crop be managed by storage and delivery?  Let’s first look at storage. The maximum stocks volume reported for commercial and farm was in December 2019 at around 72 MMT.  Let’s assume we export an average of 5 MMT each month between August and December for a total of 25 MMT. Now, let’s assume we use around 25 MMT of grain over the course of those months as well (domestic use has exceeded 24 MMT between August and December in 2016, 2019, 2020, and 2021). This means 72 MMT of capacity + 25 MMT of exports + 25 MMT of use could be handled around harvest time.  That translates to the need to handle 122 MMT of grain at harvest + roll over stocks.    But, even at 122 MMT (using 36.7437 pounds/bushel as a generic conversion) gives us a capacity minimum of about 4.5+ billion bushels — which is well off the 2022 projected total and gives us room for rollover stocks (which are light this year).  At this point, even with a 4 billion bushel or so crop, we believe Canada’s infrastructure can handle the anticipated record harvest.  What does this mean for Canadian farmers?  While Canada is expected to harvest a hefty crop, we are not overly concerned about that crop testing existing infrastructure. With light rollover stocks, storage use right now is probably at one of its lowest totals in years. We also anticipate a surge in exports as harvest season gains momentum. Copyright © 2015 - 2022 Farmer's Business Network Canada, Inc. All rights reserved. The sprout logo, "Farmers Business Network," and "FBN," are trademarks or registered trademarks of Farmer's Business Network, Inc. or its affiliates. The material provided is for educational purposes only and may contain forward-looking statements based on the beliefs of the authors as well as assumptions, expectations and projections made by and information currently available to them. Actual results may vary. Neither Farmer's Business Network Canada, Inc. nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed.

[FBN Members: Click here to access the October 2022 U.S. Corn & Soybean Yield Forecasts Report ] [Not an FBN member yet? Click the link above and create a free FBN account to unlock the report.] On September 12, 2022, the USDA released their most recent Crop Production report. Based on initial survey-based U.S. corn and soybean yields, their results forecast U.S. corn yield to be 172.5 bushels and 50.5 bushels for soybeans. This is down compared to 2021 yields of 177.0 bushels of corn 51.4 bushels of soybeans.  FBN®’s model-based yield forecast for U.S. corn and soybeans published in September was at a more conservative 169.5 bushels for corn and 50.6 for soybeans.  With widespread losses in Texas, Kansas and Nebraska, only Illinois is showing substantially better than expected yields so far. Corn yield observations from FBN members show few signs that USDA corn yields will need to be adjusted higher in coming reports Ahead of the USDA’s next report, which will be released on October 12, 2022, FBN is once again looking at its own models to forecast corn and soybean yield.  Will yield increase or decrease compared to last month’s estimations? Click here to unlock the FBN Research team’s predictions in our latest report, free for FBN members . [Not an FBN member yet? Click the link and create a new member account to access the report.] FBN® yield forecasting As the 2022 crop season comes to an end, FBN’s model-based yield estimate will shift to actual field observations as more data comes in from members.  In our latest report, FBN will continue to predict both U.S. corn and soybean yield ahead of USDA’s report. We will also look at how FBN’s forecasts have historically presented low yield errors compared to other published predictions.  Unlock the report Find out more by signing up to become an FBN member and downloading the October 2022 U.S. Corn & Soybean Yield Forecasts Report. By becoming an FBN member , you'll join a global network of farmers — 43,000+ strong and growing — who are already taking advantage of the opportunity to reduce their production costs and maximize the value of their crops.  You’ll also have access to unique insight from experts in the latest FBN Research publication for free in the Reports section of the FBN app. FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory - NFA ID: 0508695 Disclaimer : Commodity trading, including futures, hedging and speculating, involves substantial risk of loss and may not be suitable for all investors.  All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. The information and data provided comes from sources believed to be reliable but FBN BR LLC does not guarantee its accuracy or completeness. Past performance is not necessarily indicative of future results.  FBN makes no representations, warranties, or guarantees as to this content. Copyright © 2014-2022 Farmer's Business Network, Inc. All rights Reserved. "Farmers Business Network," "FBN," and "Farmers First" are registered trademarks of Farmer's Business Network, Inc. All other trademarks are the property of their respective owners.

Winter wheat harvest is wrapping up but planting season will be here soon. As we head into the planting season and think about where we may be this time next year, the price environment could be different. But, today we do have prices that are historically high. Wheat futures still are elevated despite the pull back we have had the past several weeks. Markets remain sensitive to news developments out of the Black Sea, keeping volatility present. Now, Chicago and Kansas City markets are trading around pre-invasion levels (along with Minneapolis), suggesting that the market views the risk of losing wheat supplies from the war is alleviated and/or that other countries have sufficient supplies to offset losses in Ukraine.   Nearby wheat futures Our bias is that winter wheat futures are undervalued at the moment given the uncertainty about export potential from the Black Sea and the shrinking global stocks outlook. But that does not imply producers will have smooth sailing in the US, especially when considering where prices could be at this time next year. Indeed, many things can and will change between now and harvest season in 2023 that could weigh on futures. Price models point to a modest boot in U.S. winter wheat area Today’s values of new-crop futures suggest farmers could be drilling more wheat this year as compared to last year. Price modeling points to a tally at about 35 million acres that could be planted this fall, which would be a total not seen since the 2016 crop year. FBN® is planning to conduct a winter wheat poll later this year which will offer more insight to what actually is put in the ground. Assuming that we return to trend-like yields, acreage at 35 million puts a hefty harvest projection in next year’s balance sheet - but the crop is not likely to be large enough to add substantially to the US stocks outlook. Regardless, if the US farmer is responding this way, other countries in the Northern Hemisphere may be leaning in the same direction.   Current declining stocks-to-use pattern will be hard to overcome On a global scale, the story is different, however. World wheat stocks are tightening, and have been for a few years. The global stocks-to-use ratio for wheat has been declining, meaning that use is out-pacing production. For 2022, USDA’s latest forecast shows global use (plus trade residual) at 789 MMT, or 9 MMT more than production.   We ran some analysis on the odds of the world being able to produce at least 797 MMT of wheat, assuming that global use would be near that level. We chose 797 MMT of global use using trends in growth and pushing that to 2023. In essence, to keep global stocks from declining in this situation, we would need to produce that volume of wheat globally, which is something that has never happened. Global wheat production is forecast at a record this year at 780 MMT. To take it to the next step, we looked at each country’s production since 2018 and randomly selected a production total for that country, then combined each selection to calculate a global tally. We then increased that volume by the average increase in production since 2012, or 1.2%.  Total global production from the random calculations was nearly always below expected use. Here is a snapshot of nine random grabs, showing that only one scenario was there a surplus - and a surplus of 2 MMT is light indeed. After simulating the situation 1,000 times, in 136 instances we had a situation where global production exceeded consumption, or, 10.4% of the time.   Wheat production totals for 2023 plus average increase What it means for the farmer Our analysis suggests that at best, the current price environment is here to stay for a while, but that does not mean that markets will hold at these levels for months on end. There are many risks present and those risks are spread out for wheat.  Southern Hemisphere harvest will be here at the end of the calendar year followed by acreage estimates hitting the market for Northern Hemisphere producers. And, according to USDA, Russia has a monster crop this season. Based on all this, wheat markets are likely to remain volatile in the coming months. What does this mean for wheat insurance? With all that is going on in the world today it’s hard not to suggest that commodity prices could continue to see volatility. Some farmers might opt for future and options strategies if they are comfortable with the risk.  Wheat insurance is a risk management strategy that can add an extra layer of protection when markets are shaky. Historically, enrolling acres in revenue protection (RP) insurance has been a dominant choice for wheat growers looking to avoid the pitfalls of a down market. RP will protect against one's yield as well as downside drop in the market. This allows the producer to establish a floor of guaranteed revenue giving them the ability to forward market and have peace of mind throughout the growing season. According to recent RMA acreage enrollment data, the majority of winter wheat acres are enrolled in revenue protection (close to 90% in recent years). Price discovery is currently underway with July KC wheat futures averaging at 8.32 per bushel since August 15th and will continue averaging through September the 14th.  Learn more If you would like to speak to an FBN agent about wheat insurance or our risk management plans, please call (877) 204-4645 or learn more here . Disclaimers : The views and opinions are solely those of the author as of the date of publication, are subject to change at any time due to market or economic conditions, will not be updated or supplemented after the date hereof and may not necessarily come to pass. The views and opinions expressed herein do not reflect those of all personnel at FBN BR LLC (FBN) or the views of the Farmer's Business Network Inc. as a whole. Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. Commodity trading, including futures, hedging and speculating, involves substantial risk of loss and may not be suitable for all investors.  We are an Equal Opportunity Provider. FBN Insurance services are offered by FBN Insurance LLC (dba FBN Insurance Solutions Services LLC in Texas, and FBN Insurance Solutions LLC in California and Michigan). FBN membership is not required to purchase through FBN Insurance LLC, but certain features may only be available to FBN members. FBN Crop Insurance is currently offered in all U.S. states.

Twenty cars carrying around 80 crop scouts left Manhattan, KS early Tuesday morning (May 17)  to fan out across the state and sample wheat yields. This year, wheat yields in Kansas are a big unknown as divergent weather has created yield question marks. In the Northeast part of the state, growing conditions have been mostly favorable hovering around normal for this time of year. But, as you move west and the south, drought and heat have taken their toll, cutting into yield prospects.  Last week USDA released their May forecast for winter wheat yields and pegged the Kansas state yield at 39 bushels per acre, off sharply from last year’s reading of 52 bushels. The estimated yield from the tour came in at 39.7 bushels per acre versus the average from last year at 47.4 bushels.  Production is seen at 261 million bushels, implying USDA’s harvested area total is viewed as too optimistic by the tour. On this year’s tour, Rejeana Gvillo, FBN ’s Senior Economist, was on the road participating in the tour and giving first hand perspectives from her route. Here are some of her comments and observations. The western half of the state is in need of moisture. Having been on the tour previously, this was the first time I did not get damp when walking into a field before lunch.  It was so dry and hot, dew was nonexistent until we were in the Wichita area. There were many (what I would call) aborted (solid white) wheat heads from a combination of freeze damage and/or lack of moisture. There are limited pest/disease issues because it is so dry. Expectations for an above-average protein crop are present. The bulk of the crop was flowering or in the milk stage thus rain in the coming week or two could help and definitely maintain the crop - but would not substantially alter my views on the overall health of the KS wheat crop. Harvest is 2-6 weeks off, depending on the area. In several western/southern fields, stalks are so short that a combine header won’t be able to cut the wheat. My opinion is that USDA’s harvested area expectation is too large. Therefore I expect harvested area to come in lower in the June Acreage report. Winter wheat crop tour - FBN Economist stops Key findings and insights Day 1 Day 1 should have been a pretty decent crop based on USDA’s crop conditions showing the crop rating that was mostly fair. Of the 13 stops, only one stop showed a field level yield that was above last year’s county yield. Freeze damage was observed on stop 5, and yield in that field was off 20 bushels from the county average in 2021. As the route headed West across the northern reaches of the state yields definitely got lower, reflecting the challenging growing season. Read more about the key findings from Day 1. Day 2 Day 2’s scouting tour headed into the worst areas for yield and the findings confirmed how bad it is. Yields fell dramatically as the tour hit the SW corner of KS. But as the tour reached the south central region of the state, yield conditions began to improve.     Read more about the key findings from Day 2. Day 3 Day 3 offered no surprises.  As the tour headed north of Wichita towards Manhattan, but with only a few miles between the cities, Rejeana made just two stops to wrap up the final day of the tour.  Wheat tour coming up short Click here to enlarge the image. Stop 26 - Mulvane KS Stop 27 - Mulvane KS FBN Market Advisory services, including FBN Market Intelligence, are offered by FBN BR LLC - NFA ID: 0508695. The risk of trading futures and options can be substantial and may not be suitable for all investors. We do not guarantee customers will receive specific benefits or value from participating; results will vary and may result in loss. All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This newsletter contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC. Past performance is not necessarily indicative of future results. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.  Copyright ©2022 FBN BR LLC. All rights reserved. The sprout logo, "FBN" and "Farmers Business Network" are registered trademarks or service marks of Farmer's Business Network, Inc.  

Rejeana Gvillo, Senior Economist at  FBN , is on the road in Kansas with the Wheat Council Tour. Follow her posts to get firsthand perspectives from her route. Here are the key findings and insights from Day 2’s route. Read about Day 1's Tour Results here. Key findings and insights Day 2’s scouting tour by FBN Economist Rejeana Gvillo headed into the worst areas for yield and the findings confirmed how bad it is. Yields fell dramatically as the tour hit the SW corner of KS. But as the tour reached the south central region of the state, yield conditions began to improve.  Winter wheat crop tour - FBN Economist stops Stop 14 - Tribune KS Stop 15 - Richland KS Stop 16 - Johnson City KS Stop 17 - Stano KS Stop 18 - Sublette KS Stop 19 - Kismet KS Stop 20 - Meade Center KS Stop 21 - Sitka KS Stop 22 - Coldwater KS Stop 23 - Sharon KS Stop 24 - Crystal Springs KS Stop 25 - Suppesville KS Wheat tour coming up short Click here to enlarge the image. What it means for the farmer Kansas farmers are seeing wildly variable growing conditions this season, and day 2 of the tour saw the impact on yields. Widespread losses are expected in the SW stretches of the state, while central and Eastern regions are normal, to perhaps even a bit above normal. With one day left on the tour, it seems likely that USDA’s 39 bushel mark for KS in their May estimate is about where the KS Wheat Tour will land. The overall tour average for day 1 was 39.5 and day 2 was 37. FBN Market Advisory services, including FBN Market Intelligence, are offered by FBN BR LLC - NFA ID: 0508695. The risk of trading futures and options can be substantial and may not be suitable for all investors. We do not guarantee customers will receive specific benefits or value from participating; results will vary and may result in loss. All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This newsletter contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC. Past performance is not necessarily indicative of future results. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.  Copyright ©2022 FBN BR LLC. All rights reserved. The sprout logo, "FBN" and "Farmers Business Network" are registered trademarks or service marks of Farmer's Business Network, Inc.  

Rejeana Gvillo, Senior Economist at FBN , is on the road in Kansas with the Wheat Council Tour. Follow her posts to get firsthand perspectives from her route. Twenty cars carrying 80 crop scouts left Manhattan, KS early Tuesday morning ready to fan out across the state and sample wheat yields. This year, wheat yields in Kansas are a big unknown as divergent weather has created big yield question marks. In the Northeast part of the state growing conditions have been mostly favorable hovering around normal for this time of year. As you move more to the Southwest corner of the state, drought and heat have taken their toll and likely cut deeply into yields.  Last week, USDA released their May forecast for winter wheat yields, and pegged the Kansas state yield at 39 bushels per acre, off sharply from last year’s reading of 52 bushels. With the world grappling with the loss of Ukraine and Russian wheat from fully reaching international buyers, any more drawdown in the largest US wheat state could be a further catalyst for record-high wheat prices. Wednesday, May 18 FBN will be conducting our own Virtual Wheat Yield poll with text polling happening in CO, KS, NE, OK, and TX! Look for the results to be released soon in conjunction with the final numbers from the Wheat tour. Key findings and insights Day 1 should have been a pretty decent crop based on USDA’s crop conditions showing the crop rating that was mostly fair. Of the 13 stops, only one stop showed a field level yield that was above last year’s county yield. Freeze damage was observed on stop 5, and yield in that field was off 20 bushels from the county average in 2021. As the route headed West across the northern reaches of the state yields definitely got lower, reflecting the challenging growing season. Winter wheat crop tour - FBN Economist stops Stop 1 - Chapman KS Stop 2 - Salina KS Stop 3 - Minneapolis KS Stop 4 - Delphos Stop 5 - Concordia KS Stop 6 - Soloman Rapids KS Stop 7 - Downs KS Stop 8 - Woodston KS Stop 9 - Webster Park KS Stop 10 - Hill City KS Stop 11 - Morland KS Stop 12 - Studley KS Stop 13 - Menlo KS What it means for the farmer While this is only one route from day 1, there was little here to suggest yields are better than what USDA pegged last week from their objective survey. FBN Market Advisory services, including FBN Market Intelligence, are offered by FBN BR LLC - NFA ID: 0508695. The risk of trading futures and options can be substantial and may not be suitable for all investors. We do not guarantee customers will receive specific benefits or value from participating; results will vary and may result in loss. All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This newsletter contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC. Past performance is not necessarily indicative of future results. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.  Copyright ©2022 FBN BR LLC. All rights reserved. The sprout logo, "FBN" and "Farmers Business Network" are registered trademarks or service marks of Farmer's Business Network, Inc.  

With planting progress for the US lagging the average for a handful of crops, lots of questions about prevent plant and the risk around those totals are surfacing. Already the world is facing supply uncertainty, and the threat of losing additional ground for corn production specifically heightens concerns. To answer whether we should be concerned about prevent plant now, we looked at historical levels of planting progress and the relationship to prevent plant totals, then zoomed in on North Dakota (ND) as risks there are mounting.   Digging into the data We gathered data from two key sources to answer the question: is it too early to be concerned about prevent plant?   Weekly Crop Progress reports - these are issued by USDA on Mondays (as of the prior Sunday) during the key weeks of the growing season for the US - usually April-October or so, depending on the year. FSA crop acreage data - these data sets are released monthly, usually from August - January.  The data included progressive totals of prevent plant, failed, planted, and volunteer acres with the final report usually released in January. Crop progress to date vs history - Focus on US corn As of April 24, the US corn crop was 7% planted versus the average of 15%.  Going back to 1980 and looking at the same week across time, here are some stats. Bolded years are record-yielding years, green years represent record-production years. So, at the national level, the current planting pace to date is not worrisome. We have had several years of progress that have run behind this year’s to date pace that ended up being records (2009, 2013, 2014).  Historical vs April 24 US corn planting progress stats Back to 1980 Minimum progress 2% (1984, 1983) Maximum progress 50% (2010) Median progress 9% (including 2011, 2015) Average progress 11%  (2007) Years below 7% 14 (including 2008, 2009 , 2013, 2014 , 2018, 2019) Years above 7% 24 Years at 7% 5 (1981, 1995, 1997, 2020, 2022) Source: USDA Does North Dakota pose risks? At a national level this year’s corn planting pace to date does not seem too threatening. But we decided to specifically zoom in on North Dakota. We did that for a couple of reasons. First, ND has led the US in prevent plant acres of major crops in five of the last 15 years making it highly prone to planting challenges.  And this year’s planting season has not started out well as record cold temperatures for this time of year, combined with several big snow events, have kept farmers on the sidelines. While this time of year is generally not the height of planting in ND, the weather in April along with the forecast through the first week in May suggest ND could face an uphill challenge getting the corn crop in the ground over the next 30 days. Precip concerns Over the 2nd half of April, corn growing regions in North Dakota got nearly 4 inches of moisture from several feet of snow fall. That is the highest two-week total for this time of year with the next highest being 1986 at 3 inches and 0.8 inches on average. Unfortunately for producers, there is ample moisture in the near-term forecast as well which stretches into the first week of May as of this writing.  Temp concerns On top of all the moisture, temperatures have been record low for this time of year. The average daytime high for the 2nd half of April is projected to be a brisk 41 degrees, a full 17 degrees below average at this time of the season. The most recent year that was close was 2013, when the last half of April temperatures were 44 degrees. That was a year when North Dakota had significant corn prevent plant, with 13% of the state’s corn acreage not planted. Here again, weather models are forecasting continued cold to persist into the first week of May.  We still have time Still focusing on ND, we looked at the day of the year (DOY) that ND historically has 10% of the crop planted, 20% planted, 30% etc. We then tested those interpolated values with prevent plant totals for each year.  The DOY we need to keep an eye on is around 145 or May 25. If the state has 60% or less of intended corn in the ground by then, the risk of having prevent plant acres increases significantly.  Essentially, in the coming 28 days, ND corn planting progress needs to be at that threshold or more to alleviate concerns about not getting the whole corn crop in the ground. What it means for the farmer The world is already on edge about price risk in the grain and oilseed complex. US farmers surprised the market in March with lower than expected corn intentions for the coming growing season. Any hint of further cuts in acreage due to Mother Nature’s fickle ways could add more fuel to the price outlook. While still time to see a change in weather to have beneficial impacts in planting pace, it will require a significant warm and dry trend in the Upper Midwest to give farmers a shot ahead of the late May deadline.  FBN Market Advisory services, including FBN Market Intelligence, are offered by FBN BR LLC - NFA ID: 0508695. The risk of trading futures and options can be substantial and may not be suitable for all investors. We do not guarantee customers will receive specific benefits or value from participating; results will vary and may result in loss. All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This newsletter contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC. Past performance is not necessarily indicative of future results. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.   Copyright ©2022 FBN BR LLC. All rights reserved. The sprout logo, "FBN" and "Farmers Business Network" are registered trademarks or service marks of Farmer's Business Network, Inc.  

Fertilizer prices have increased due to a multitude of factors and now even more uncertainty is present in the market with sanctions hitting Russia left and right.  This week, we dug into the US fertilizer situation for nitrogen (N), phosphate (P), and potash (K).  The US Geological Survey (USGS) provides a summary on mineral commodities, which has excellent details and can be found here . Potash, nitrogen, and phosphate: Potash most at risk for us Potash The US relies heavily on potash imports but much less so for nitrogen (ammonia) and phosphate. The world’s largest producer of potash happens to be our neighbor to the north. In 2021, the US imported 93% of its potash needs with imports around 7 MMT and Canada accounting for 5.25 MMT of that total. Russia and Belarus made up another 1.3 MMT and even though the US has sanctions on Belarus (that began in August), imports still trickled in. However, this was a big jump in imports, year over year. Perhaps buyers hedged bets and brought in extra tonnage to get through the start of 2022. Plus, another US mine should be in production in 2022 with capacity at 650,000 tonnes per year. But in the midst of the war, Russia and Belarus found themselves alienated from world markets and that likely will have widespread impacts on fertilizer trade. While Russian fertilizer is not directly being sanctioned, Russia has announced intentions to ban fertilizer exports with restrictions already in place for nitrogen-containing fertilizers. Assuming the US would not import any potash from Russia and Belarus, then an extra 1 MMT to 2 MMT of potash would need to be sourced to keep application rates the same. For nitrogen and phosphorus, the US produces significant volumes of both, relying less so on imports and nearly none being sourced from Russia or Belarus.    Nitrogen (Ammonia) In 2021, the US imported 2.2 MMT of nitrogen or 12% of actual consumption needs. The top suppliers of US nitrogen imports were Trinidad and Tobago at 63% and Canada at 34%. But,  35 plants across the US produced 14 MMT of nitrogen, which represented about 84% of capacity. And of that 14 MMT, 88% of that was used for fertilizer. No capacity increases have been announced for the US in 2022, but we could see more utilization of current capacity. China is the world’s largest producer of nitrogen followed by Russia and the US.  Hence, Russia’s banning of nitrogen-based fertilizer products has hit the world rather hard. India is another top producer of nitrogen. Phosphate rock LIke nitrogen, the US produces much more phosphate rock than it imports. Of the 22 MMT the US produced in 2021, more than 95% went to ammonium phosphate fertilizers and animal feed supplements. The US imported about 13% of its consumption needs in 2021 with 87% of that coming from Peru. DAP production decreased in 2021 thanks to Hurricane Ida, which damaged facilities in Louisiana. China, Morocco, and the US are the top producers of phosphate rock. USDA has data on historical fertilizer application rates. Unfortunately, the latest data are through 2018 and no data are available for the 2007/08 year, when fertilizer prices sharply increased. But, applying 2018’s application rates to acreage totals from 2018 forward, we get the following outcomes, which underscores the need to import around 7 MMT of potash for 2022. High prices impacted US producers’ behavior Per FBN ’s January poll on fertilizer decisions, about two-thirds of US farmers planned to buy less or explore other options, such as manure, and the effect was more apparent in states that are less corn-centric. This was further underscored by USDA’s confirmation that corn acres are planned to be lower this year versus last. A further take away is that if the US producer altered plans, other countries could be as well. Brazil caught in the headwinds While the US is in a rather secure position for most fertilizer supplies, Brazil is not. Brazil relies heavily on imports of all three fertilizer products with Russia a significant contributor. This has notable implications for 2022’s plantings in Brazil, which will start late this calendar year. Brazil has voiced its goal to increase fertilizer production, but it is unlikely that the country will be able to come anywhere close to meeting domestic needs within a year, much less a few months. Import reliance for key fertilizers & key origins Nitrogen Phosphate Potash Brazil 95%  Russia 21% China 20% 75%  Morocco 38% Russia 15% 91%  Canada 32% Russia 26% U.S. 12%  Trinidad 65% Canada 30% 9%  Peru 85% Morocco 15% 93%  Canada 83% Russia 6% Source: US: USGS Mineral Commodity Summary, Brazil: Farmdoc What it means for the farmer Even though the US produces a lot of its fertilizer, the rising costs of energy along with global supply issues is keeping fertilizer prices at high levels. This has contributed to the pullback in corn acreage in the US and has farmers changing their fertilizer plans for the planting season. High prices could have further implications for fertilizer use in other countries, especially countries that rely heavily on Russia and China for their needs. FBN Market Advisory services, including FBN Market Intelligence, are offered by FBN BR LLC - NFA ID: 0508695. The risk of trading futures and options can be substantial and may not be suitable for all investors. We do not guarantee customers will receive specific benefits or value from participating; results will vary and may result in loss. All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This newsletter contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC. Past performance is not necessarily indicative of future results. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.  Copyright ©2022 FBN BR LLC. All rights reserved. The sprout logo, "FBN" and "Farmers Business Network" are registered trademarks or service marks of Farmer's Business Network, Inc.  

Soybean futures have been rallying for weeks as weather concerns in Brazil have yet to ease. In fact, concerns have heightened with harvest progress suggesting that even central states could be facing yield cuts. Rewind a couple of months ago and Brazil was set to have a record bean harvest by far with Mato Grosso the leader. Now, too much moisture for that state and a lack of moisture for southern states has us leaning towards a production total closer to 118 MMT.   To put that into perspective, in 2018/19 (planted in late 2018, harvested in early 2019), Brazil harvested 119.7 MMT of soybeans. So we have to rewind a few years to get a crop that is sub-120 MMT. A couple of months ago, Conab was expecting a record crop at just under 143 MMT. The agency most recently downgraded its production forecast to 125.5 MMT. But our bias is that final production may be even lighter.   What is driving our outlook lower? A couple of things are pushing us to cut production even more. First, harvest progress in Mato Grosso is suggesting that its crop is not as healthy as Conab is projecting. Contacts in Brazil are stating that high humidity and too much moisture caused plant damage, particularly on the lower pods. Moving further south into Parana, and plant growth is limited, many fields are yellow and stunted, and some fields are simply dried out - as shown in the following pictures. Source: FBN - Parana, Brazil, February 2022 Source: FBN - Parana, Brazil, February 2022 We will dig more into balance sheet implications in forthcoming analysis, but a crop in the 120 MMT range suggests Brazil’s exports could be closer to 75-80 MMT versus USDA’s current forecast at 90.5 MMT. And that has positive implications for US export prospects into 2022/23.  In fact, China reportedly has canceled several cargoes of Brazil beans - these cancellations reportedly are tied to weakening crush margins in China but also higher prices in Brazil.      What it means for the farmer Old-crop futures are likely to gain in the coming months, which is a key reason as to why we lifted the short side of the call option earlier this week. US acreage prospects for 2022 may keep the upside for new-crop values limited for now, but at this juncture, the odds of China having to source more beans from locations outside Brazil are high. Copyright ©2022 FBN BR LLC. All rights reserved. The sprout logo, "FBN" and "Farmers Business Network" are registered trademarks or service marks of Farmer's Business Network, Inc.

Canola crush hit a new record for September, coming in at 785,725 tonnes. That was down from August but above our expectations for the month by a few thousand tonnes. Crush remains strong, with demand for meal and oil robust. With August and September crush combined, we are running slightly ahead of last year’s volume for the same time period. Seasonally, we see a boost in crush volume in October, thanks in part to fresh supplies. The same is expected this crop year.   The daily crush rate slipped versus August but remained near recent levels. The daily rate for September was the third highest on record but was lower than September 2019 and 2018. We feel this is partially tied to tighter supplies ahead of new-crop harvest but also some potential shutdowns given the large crush we saw in August. Overall, the volume crushed per day is not alarming, and we do feel that three consecutive months of slightly lower daily volumes suggests that the crush industry is heading towards lower levels. Margins have been trending higher for several months since hitting a calendar-year low this late winter/early spring. Margins have been pushing higher, thanks partially to higher values for soybean meal and oil, which influences the canola market. On top of that, export demand is strong for canola meal as well. But the higher margins do not necessarily mean we will see higher crush volumes. There is no statistically significant relationship between higher margin levels and higher crush volumes using the data available (i.e., crush levels on a monthly basis). But we can say the industry appears to be in a period of higher-than-average margins, which is a positive. What are the balance sheet implications? As stated previously, September crush came in slightly higher than our expectations. That means that without changing the volume expected for the total year, the forecasts for other months had to be reduced to absorb the larger-than-expected September volume. At this juncture, we see crop year crush around 10 million tonnes. Last year, we had a final crush level of 10.1 million tonnes. The problem for this year is that we anticipate that a lack of supplies could limit crush volumes.   FBN 's take on what this means for the farmer Another strong month of crush is a positive for the canola balance sheet. We are moving stocks tighter, which is a plus from a pricing perspective. The risk to the canola outlook is a much larger soybean crop than expected out of Brazil/Argentina. We have eased off recent highs, but the situation for canola alone points to this market remaining supported. However, new highs may be hard to come by as planting progresses in South America with expectations that acres will be higher. Want access to more insights like this? This article is excerpted from our Market Intelligence newsletter, delivered weekly to  FBN® Market Advisory members in Canada. With FBN Market Advisory, you'll receive truly personalized tools and reports to support your grain marketing efforts. Get access to market news, straightforward marketing recommendations, basis trend insights and weather reports—all relevant to your operation and geographic location. FBN Crop Marketing Canada, Inc. does not guarantee any specific benefits or value from participating in FBN Crop Marketing; results will vary. Past performance is not necessarily indicative of future results. FBN Crop Marketing Canada offerings involve risks, including the risk that market conditions deteriorate, resulting in contract participants receiving lower prices for their grain than had they not participated in the FBN offering.  Copyright © 2015 - 2020 FBN Crop Marketing Canada, Inc. All rights reserved. The sprout logo, "Farmers Business Network," "FBN," and "Farmers First '' are registered service marks of Farmer's Business Network, Inc. and are used with permission. All other trademarks are the property of their respective owners. FBN Crop Marketing Services are offered by FBN Crop Marketing Canada, Inc. and are available only in provinces where Farmer's Business Network Canada, Inc. is licensed. FBN Crop Marketing Canada, Inc. Box 5607, High River, AB T1V 1M4, Canada