Fuel Report: Prices Slip Slightly Lower

The U.S. average diesel fuel price decreased 1 cent to $3.72 per gallon on November 22, $1.26 higher than a year ago. The East Coast and Gulf Coast prices each decreased nearly 2 cents to $3.69 per gallon and $3.46 per gallon, respectively, the Midwest price decreased more than 1 cent to $3.62 per gallon, and the West Coast price decreased less than 1 cent, remaining virtually unchanged at $4.42 per gallon. The Rocky Mountain price increased less than 1 cent, remaining virtually unchanged at $3.84 per gallon.

The U.S. average regular gasoline retail price decreased less than 1 cent, remaining virtually unchanged at $3.40 per gallon on November 22, $1.29 higher than a year ago. The Gulf Coast price decreased more than 4 cents to $3.03 per gallon, the Midwest price decreased 2 cents to $3.20 per gallon, and the Rocky Mountain price decreased nearly 2 cents to $3.52 per gallon. The West Coast price increased more than 2 cents to $4.19 per gallon, and the East Coast price increased more than 1 cent to $3.35 per gallon.

U.S. propane/propylene stocks decreased by 1.0 million barrels last week to 73.6 million barrels as of November 19, 2021, 11.4 million barrels (13.4%) less than the five-year (2016-2020) average inventory levels for this same time of year. Gulf Coast inventories decreased by 0.7 million barrels, Rocky Mountain/West Coast inventories decreased by 0.3 million barrels, and Midwest inventories decreased slightly, remaining virtually unchanged. East Coast inventories increased by 0.1 million barrels.

Residential propane prices averaged more than $2.72 per gallon, almost 1 cent per gallon below last week’s price but nearly 87 cents per gallon above last year’s price. Wholesale propane prices averaged almost $1.28 per gallon, more than 17 cents per gallon below last week’s price but nearly 63 cents per gallon above last year’s price.

As of November 22, 2021, residential heating oil prices averaged nearly $3.39 per gallon, 2 cents per gallon below last week’s price but almost $1.19 per gallon higher than last year’s price at this time. Wholesale heating oil prices averaged more than $2.43 per gallon, nearly 10 cents per gallon below last week’s price but more than $1.04 per gallon above last year’s price.

Moving Grain: Steps Announced to Deal with Supply Chain Issues

White House Announces Immediate and Near-Term Steps to Address Supply chain Issues

On November 9, the White House announced immediate and near-term steps to ease supply chain issues.

One immediate step includes funding a Georgia Port Authority pop-up container yard project to alleviate congestion at the Port of Savannah. This project will allow the Georgia Port Authority to reallocate more than $8 million to convert existing inland facilities into five pop-up container yards in Georgia and North Carolina.

Under the plan, the Port of Savannah will transfer containers via rail and truck further inland so that they can be closer to their destination.

Near-term steps include launching programs to modernize ports and marine highways with more than $240 million in grant funding in the next 45 days; identifying projects for U.S. Army Corps of Engineers construction at coastal ports and inland waterways in the next 60 days (including a roadmap for more than $4 billion in funding to repair outdated infrastructure and deepen harbors for larger cargo ships); prioritizing key ports for modernization and expansion in the next 90 days; and announcing more than $475 million in additional funding for port and marine highway infrastructure in the next 90 days.

New Supply Chain Initiatives Announced by FMC

On November 17, the Federal Maritime Commission (FMC) announced the convening of six Supply Chain Innovation Teams to detect and implement improvements to the process and timing of return and delivery of containers to marine terminals.

Grain News on AgFax

  • USDA Numbers Neutral for Corn, Wheat, Bullish for Soybeans – DTN
  • Wheat Market: USDA’s Latest Look at Exportable Supplies
  • Corn, Soybeans: WASDE 2021 Price Projections – A Historical Perspective
  • Grain Export Flow Expected to Shift from Ida Damage – DTN
  • Corn Market: Strong Prices Come at a Cost – DTN

The goals of the Teams are two-fold: for truckers to return an empty container to a terminal and pick-up a loaded container (known as “double move”) and to bring certainty and predictability to the “earliest return date” process, a major source of complaint and uncertainty with exporters.

The Teams will consist of executives from each ocean carrier operating in an alliance and from the marine terminal operators that serve them. The Teams will focus on improving conditions at the Ports of Los Angeles, Long Beach, New York, and New Jersey.

STB Announces Hearing on Competitive Switching

On November 12, the Surface Transportation Board (STB) announced it would hold a two-day public hearing on competitive switching on March 15-16, 2022, in Washington, D.C. Competitive switching refers to a shipper’s ability to access an alternate railroad through its incumbent railroad.

For example, in Canada, shippers within 30 kilometers (18 miles) of an interchange with another carrier can switch carriers, and the incumbent railroad is compensated at a pre-determined rate. In the United States, competitive switching is currently available, but the conditions under which STB grants access are less clear.

The STB can mandate a competitive switch, but a shipper must demonstrate uncompetitive conduct by the railroad. Few requests have been filed in the United States, and none have been granted.

Snapshots by Sector

Export Sales

For the week ending November 11, unshipped balances of wheat, corn, and soybeans for marketing year 2021/22 totaled 47.7 million metric tons (mmt), down 22 percent from same time last year and down 2 percent from the previous week.

Net corn export sales were 0.905 mmt, down 15 percent from the previous week. Net soybean export sales were 1.383 mmt, up 13 percent from the previous week. Net weekly wheat export sales were 0.399 mmt, up 40 percent from the previous week.

Rail

U.S. Class I railroads originated 25,336 grain carloads during the week ending November 13. This was unchanged from the previous week, 13 percent less than last year, and 4 percent more than the 3-year average.

Average December shuttle secondary railcar bids/offers (per car) were $510 above tariff for the week ending November 18. This was $134 more than last week and $504 more than this week last year. There were no non-shuttle bids/offers this week.

Barge

For the week ending November 20, barged grain movements totaled 814,495 tons. This was 8 percent less than the previous week and 16 percent lower than the same period last year.

For the week ending November 20, 497 grain barges moved down river—60 barges less than the previous week. There were 891 grain barges unloaded in the New Orleans region, 2 percent less than last week.

Ocean

For the week ending November 18, 37 oceangoing grain vessels were loaded in the Gulf—unchanged from the same period last year. Within the next 10 days (starting November 19), 47 vessels were expected to be loaded—22 percent fewer than the same period last year.

As of November 18, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $70.00. This was 10 percent lower than the previous week. The rate from the Pacific Northwest to Japan was $37.50 per mt, 11 percent lower than the previous week.

Fuel

For the week ending November 22, the U.S. average diesel fuel price decreased by 1.0 cents from the previous week to $3.724 per gallon, $1.26 above the same week last year. This is the first time in 9 weeks that the national average diesel price has declined.

Moving Grains: Potential Relief of Supply-Chain Bottlenecks

President Announces Changes, Potential Relief of Supply-Chain Bottlenecks

On Wednesday, October 13, the President announced the Port of Los Angeles would begin operating around the clock, joining Long Beach, which already operates 24/7. The expanded hours are to help relieve growing backlogs in the busiest U.S. container port complex.

Convening leaders of business, unions, and ports, the Administration’s negotiation efforts have so far secured commitments from shippers and retailers to ensure extended port hours will be well utilized. According to a White House statement, Walmart will increase its container turnover 50 percent over several weeks by increasing its nighttime operations.

United Parcel Service plans to increase its 24/7 operations, which will allow it to move 20 percent more containers off the ports. FedEx will work with its trucking and rail providers to double the number of containers it moves at night. Samsung said its warehousing operations will be open 24/7 for the next 90 days in a bid to move 60 percent more containers out of the ports.

Containerized agricultural exporters rely heavily on the Los Angeles and Long Beach port complex to move products overseas. The ports’ efforts will help regain terminal space by clearing import containers and allow more fluid operations for all users.

Grain Inspections Highest Since Mid May

For the week ending October 7, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions totaled 2.86 million metric tons (mmt). Total grain inspections were up 19 percent from the previous week, down 27 percent from last year, and up 11 percent from the 3-year average.

Grain News on AgFax

  • USDA Numbers Neutral for Corn, Wheat, Bullish for Soybeans – DTN
  • Wheat Market: USDA’s Latest Look at Exportable Supplies
  • Corn, Soybeans: WASDE 2021 Price Projections – A Historical Perspective
  • Grain Export Flow Expected to Shift from Ida Damage – DTN
  • Corn Market: Strong Prices Come at a Cost – DTN

Grain inspections were the highest since mid May, with soybean inspections jumping 87 percent from the previous week. From week to week, soybean shipments to China (1.17 mmt) rose over 200 percent, while wheat inspections fell 29 percent and corn inspections fell 14 percent.

Also, from the previous week, total inspections increased 45 percent in the Pacific Northwest (PNW) and increased 1 percent in the Mississippi Gulf. The high increase in PNW inspections was reflected in a significant jump in PNW rail deliveries of grain to port.

The high week-to-week increases were a marked departure from the general trend: over the last 4 weeks, total inspections were 38 percent below last year and 21 percent below the 3-year average.

Minnesota Provides HOS Relief To Transport Livestock Feed

Signed on October 4, the Governor of Minnesota’s 30-day executive order (EO) 21-32—effective immediately—declares an emergency in Minnesota and waives hours-of-service (HOS) trucking regulations. The HOS waivers are intended to support Minnesota livestock producers in safely and efficiently transporting livestock, water supplies, and livestock-feed-related commodities.

Extreme drought in Minnesota has made hay and other forage scarce. With EO 21-32, the Governor extends the HOS waivers originally issued in other EOs in July and August.

Snapshots by Sector

Export Sales

For the week ending September 30, unshipped balances of wheat, corn, and soybeans for marketing year 2021/22 totaled 51.1 million metric tons (mmt), down 17 percent from same time last year. Net corn export sales were 1.265 mmt, significantly higher than last week.

Net soybean export sales were 1.042 mmt, down 5 percent from last week. Net weekly wheat export sales were 0.333 mmt, up 15 percent from last week.

Rail

U.S. Class I railroads originated 26,007 grain carloads during the week ending October 2. This was a 19-percent increase from the previous week, 2 percent less than last year, and 15 percent more than the 3-year average.

Average October shuttle secondary railcar bids/offers (per car) were $59 above tariff for the week ending October 7. This was $211 less than last week and $709 lower than this week last year. There were no non-shuttle bids/offers this week.

Barge

For the week ending October 9, barged grain movements totaled 590,886 tons. This was 20 percent higher than the previous week and 27 percent lower than the same period last year.

For the week ending October 9, 360 grain barges moved down river—65 barges more than the previous week. There were 747 grain barges unloaded in the New Orleans region, 17 percent more than last week.

Ocean

For the week ending October 7, 32 oceangoing grain vessels were loaded in the Gulf—27 percent fewer than the same period last year. Within the next 10 days (starting October 8), 53 vessels were expected to be loaded—7 percent fewer than the same period last year.

As of October 7, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $84.25. This was unchanged from the previous week. The rate from PNW to Japan was $46.50 per mt, unchanged from the previous week.

Fuel

For the week ending October 11, the U.S. average diesel fuel price increased by 10.9 cents from the previous week to $3.586 per gallon, $1.19 above the same week last year. At $4.42 per gallon, California diesel prices are the highest since September 2012.

Rice Market Update: Conditions Full of Unclear Factors

Harvest is rounding out well, as all eyes are now turning to the demand situation for a high-yielding crop. While Haiti is the usual suspect to fill out milled rice demand, the loss experienced by the US industry this year is becoming tangible. Louisiana, for example, has had a significant erosion of the historically consistent Haitian business.

Even if the rice does make it to the port, it becomes a target for local gangs and/or militias and doesn’t make it to its destination. This uncertainty pervades the market, and despite NGO’s doing their best, with no coherent logistical system inside the country, exporting rice is increasingly difficult. This is a dynamic situation with significant efforts being made to continue to source US rice into this country.

The USDA released its World Agricultural Supply and Demand Estimates report this week, and they are projecting reduced supplies, decreased domestic use, unchanged exports, and reduced ending stocks.

The expectations for great yields in the long grain market were confirmed this week as well, as NASS increased the average yield by two pounds per acre, up to 7,625. As discussed previously, the lower milling yields are acting as a counterbalance to pricing pressure that may result from the bump in yields.

There is also an expectation that imports will decrease by 2 million cwt, down to 36 million cwt, on account of higher freight costs and port delays—simply a function of the clogged supply chain.

With the White House, leading retailers, and port authorities finally huddling to come up with solutions, there is hope for some form of progress in the coming days, albeit Q1 of 2022 is still the earliest anyone is expecting to see any form of relief.

Rice News on AgFax

  • Arkansas: Northeast Rice Research and Extension Center Virtual Field Tour, Oct. 18
  • Global Markets: Rice – U.S. Regains Market Share in Central America
  • WADE Rice: Reduced Domestic Supplies, Use
  • Rice Market Update: Hurricanes Reinforce the Importance of Export Ports
  • Rice Market: Prices Decline on Dollar Strength

So many influencing factors are contributing to market conditions few have witnessed, if ever. Production, weather issues, freight, logistics, labor shortage, impacts of COVID-19, damage from hurricanes and other factors are all colliding.

If you have not, farmers are encouraged to contact their fertilizer suppliers to secure product for the 2022 crop. Comments in the Delta are that if there is a lack of available urea, farmers will have a tendency to shift acres more into soybeans from rice.

The global outlook calls for increased rice consumption along with increased supplies and trade. The ultimate effect is higher ending stocks, with supplies up by 2 MMT to 695.9 million. This is on account of India’s third record crop that they can’t seem to liquidate fast enough.

We have mentioned that their export numbers have eclipsed Thai and Viet numbers, and the expectation is that will continue to be the case until some form of agricultural controls imposed by the government will slow the production of rice, or encourage some other crop to be planted. Global ending stocks bumped 1.8 MMT to 183.6 MMT, largely a result of China (61% of world stocks) and India (19% of world stocks).

In Asia, markets have held steady and look firm moving into the week ahead. Prices are largely unchanged in Thailand, Vietnam, and India with reports remaining at $385/pmt, $435/pmt, and $355/pmt respectively. The situation in Vietnam is going to be driven by the reopening of ports more than the supply of rice at this point; and they will be able to ship rice at these prices as quickly as the system will allow.

Thai exports are struggling to pull west African business away from the cheaper Indian rice, where overall exports have just crossed 3 MMT for the year, directly on pace with last year.

The futures market got a boost this week with a tighter balance sheet signaling future reports will follow suit. This coupled with low milling yields could result in a bullish sentiment for the futures market.

Drought Monitor Weekly: Mixed Reductions, Expansions

Despite the amplified ridge in the East, early in the week an upper level low pressure system drifted slowly northward from the Southeast to the Great Lakes bringing unsettled weather and keeping many areas across the Southeast and Ohio Valley wet.

A coastal low pressure system along the coastal Carolinas brought some additional precipitation to coastal and inland areas of the Carolinas, leading to mixed reductions and expansion in coverage of abnormal dryness across the Carolinas and Virginia.

In the Northeast, little to no precipitation fell and above-normal temperatures, coupled with long-term deficits, led to degradation and expansion of abnormally dry and severe drought areas across Upstate New York and New England.

The Northern Plains and Upper Midwest experienced some of the largest positive temperature anomalies (8-10°F above normal) this week. However, a strong surface low pressure system brought heavy rainfall across the Dakotas and northern Minnesota, leading to broad 1-category improvements.

In the wake of this storm system, a surface low pressure system developed in the lee of the Rockies over the Southern Plains dropping several inches of rainfall, further improving drought conditions (1-category improvements) in areas affected by the recent rapid onset and intensification of drought during September.

As this low pressure system moved across the Midwest later in the week, it led to further improvements across portions of the western Corn Belt, due to heavy rainfall. Areas that missed out on the rainfall over the Great Plains experienced worsening conditions due to above-normal temperatures and high winds increasing evaporation and leading to increased soil moisture loss.

An active storm track in the West, associated with a long wave trough, resulted in improving conditions along fringe drought areas in the Pacific Northwest and the Four Corners, where antecedent wetness leading up to this week resulted in more immediate improvements. Given the intensity and duration of drought across the remainder of the West, more precipitation will be needed to warrant more meaningful improvements.

Southeast

Short-term, 30-90 day dryness is prominent across portions of the Carolinas and Virginia. Some heavy rainfall associated with a coastal low pressure system was enough to eliminate some antecedent D0 (abnormally dry) areas across the eastern Carolinas. Conversely, adjacent areas missing out on the heaviest rainfall saw expansion of D0 coverage – the Delmarva Peninsula, southern North Carolina, and eastern South Carolina.

Much of the remainder of the Southeast is mostly wetter than normal all at time scales going back to 90 days. However, some dry pockets are starting to pop up across southeastern Georgia and portions of the Florida Peninsula that will need to be monitored going forward. Despite the areas of abnormal dryness, the Southeast remained drought-free this week.

South

Ahead of a long-wave trough across the western U.S., an area of low pressure developed over the Southern Plains, bringing with it much needed precipitation to areas affected by the rapid onset of drought conditions in recent weeks. This has helped to improve conditions, mainly across parts of Oklahoma, where many locations received 2-3 inches of rainfall (greater than 1 inch positive weekly anomalies).

Unfortunately, many locations outside of Oklahoma in the Southern Region continued to see further degradation and expansion of drought conditions in, and adjacent to, areas where the rains did not fall or was insufficient. Worsening conditions were observed across Texas and the Ark-La-Tex region were exacerbated by above-normal temperatures and high winds leading to increased evaporation and evapotranspiration rates.

Midwest

With the exception of the expansion of D0 (abnormally dry) conditions in western Iowa due to low soil moisture, above-normal temperatures, and the area missing out on precipitation this week, the remainder of the Midwest was the beneficiary of two storm systems that moved across the region.

The first storm system brought heavy rainfall across the Upper Midwest, warranting 1-category improvements to the drought depiction in areas that received more than 1.5 inches of rainfall. This was also the case farther south across parts of eastern Iowa, extending eastward into southern Wisconsin and northern Illinois and southwestward into northern Missouri, where a second low pressure system dropped similar rainfall amounts.

Central Wisconsin is an area to watch given the short-term dryness and above-normal temperatures. SPIs there have trended drier over the past 30-90 days (positive SPIs at 90 days, but D1-D3 equivalent at 30 days) and precipitation deficits are starting to mount.

High Plains

Similar to the Southern Plains, much of the High Plains region is susceptible to extended periods of above-normal temperatures and high winds. In areas where little to no rain fell, these conditions helped to further degrade ongoing drought east of the Front Range across portions of Colorado, Wyoming, Kansas, and Nebraska, where many areas have seen drastic deterioration in topsoil moisture in recent weeks (widespread D1-D4 equivalent NASA SPoRT soil moisture percentiles down to 10 cm).

Farther north over the Dakotas, a strong low pressure system brought widespread heavy rainfall over the weekend, where several areas received more than 2 inches of rain, with some localized areas of more than 4 inches. This warranted 1-category improvements across large portions of the Dakotas.

However, improvements were targeted in nature due to the longer-term deficits and above-normal temperatures increasing the evaporative demand and slowing soil recharge.

Farther south in the High Plains Region, surface low pressure developed late in the period in the wake of the system farther north and moved north-northeastward across the central U.S. Rainfall from this system mainly fell over drought-free areas of eastern Kansas before moving into the Midwest and Great Lakes.

However, some locations did receive meaningful rainfall; enough to warrant 1-category improvements in northeastern and southeastern corners of the state. Another storm system began propagating across the western U.S. on the final day of the period (Monday-Tuesday), bringing precipitation in various forms to the eastern Rockies.

However, given the intensity of drought in the higher-terrain areas of the High Plains Region, the late arrival of precipitation did little to warrant any improvements this week, given the duration and intensity of drought in those areas.

West

An active storm track across the western U.S. this week brought seasonal to cooler than normal temperatures and beneficial precipitation to much of the region. Improvements were mainly limited to portions of the Pacific Northwest and Four Corners due to improving soil moisture conditions.

For the Four Corners region, this precipitation was on the heels of an active Southwest Monsoon season, so reduced evaporative demand coupled with above-normal precipitation led to immediate improvements. For much of the remainder of the West, more precipitation is needed to recharge soil moisture and increase groundwater levels, stream flows, and reservoir levels.

The only minor degradations of drought in the Western Region was in southeastern New Mexico and western Montana, where above-normal temperatures and high evaporative demand warranted expansion of D0 (abnormally dry) and D3 (extreme drought) areas, respectively.

Northeast

The Northeast received little to no rainfall this week and areas where rain did fall were already drought-free. Luckily, antecedent conditions across much of the Northeast are wet. However, parts of northern New York and New England have battled longer-term dryness and drought conditions for much of this year.

Given the above-normal temperatures this past week coupled with the widespread lack of rainfall in the areas with drier antecedent conditions, expansion of D0 (abnormal dryness) was warranted across portions of northern New York and southward along the Green Mountains in Vermont.

A localized area of D0 was also introduced in southwestern Maine, where short-term dryness (2-4 inch 30-day deficits) have resulted in meaningful losses to topsoil moisture and nearby USGS 7-day average stream flows falling below the 10 percentile of the historical average.

D0 was also expanded in central West Virginia for similar reasoning; warm conditions, below-normal precipitation, and average stream flows falling below normal (below the 24th percentile of the historical average). Additionally, some northward D2 (severe drought) expansion along the Canadian border was warranted in western Maine where long-term dryness was further exacerbated by the lack of rainfall and above-normal temperatures this week.

Looking Ahead

During the next 5 days (October 14 – 18, 2021), a strong surface low pressure system will track across the Northern Plains and Upper Midwest, bringing the potential for heavy rainfall.

Along the tail end of the trailing frontal boundary associated with this low pressure system, the remnants of Tropical Depression Pamela from the East Pacific are expected to bring a surge of moisture to the south-central U.S. Surface low pressure is expected to develop along the remnant frontal boundary and move quickly northeastward bringing increased chances of rainfall from the Middle Mississippi Valley to the Northeast.

Despite the active pattern across the central and eastern U.S., temperatures are likely to moderate across the Northern Plains and Midwest by the end of the week, while in the East temperatures will likely be more variable due to the passage of frontal boundaries. In the West, temperatures are expected to be relatively seasonal during the next 5 days, with an abrupt cool down toward Tuesday.

The CPC 6-10 day extended range outlook (October 19 – 23, 2021) favors below-normal rainfall from the eastern Rockies to the East Coast, with weak tilts in the odds toward above-normal precipitation across portions of the Southern Plains and the Florida Peninsula.

Enhanced chances of above-normal precipitation are favored along the West Coast inland to the western Great Basin. Above-normal temperatures are favored across much of the CONUS, with the exception of portions of southern and central California, where near to below-normal temperatures favored.