Commodity

Global cotton production poised for full recovery

To say the 202/21 season was disappointing for the global cotton industry is a major understatement, given the mayhem and confusion that occurred when the Covid-19 virus ground the global supply chain to a halt, the International Cotton Advisory Committee (ICAC) says in its latest update. While it would be naïve to say things are back to normal — only about 3 percent of people in less-developed countries have been vaccinated, far behind those in richer countries — there are some signs that the recovery is in full swing, it notes. Three of the world’s top five producers (Brazil, Pakistan, and the USA) are showing increases in production versus 2020/21 and while that will not quite bring things back to ‘normal’, it is a sign that the industry’s recovery is still in full swing. Current projections show an increase of 6 percent in global production in 2021/22 versus the prior season.

Record rice crop brings problem for farmers in India

Farmers in India are gathering in the largest rice crop in history, which promises record exports, while making sure to keep up their longest-running protest, set to turn a year old this month. The sit-in against controversial agriculture reforms is taking place in the capital, miles away from the 2 hectares of lush green rice paddies tended by Sukrampal Beniwal in his village of Munak, in the northern state of Haryana. “We’ll not budge until the government rolls back the laws,” he said, referring to three measures the farmers, demonstrating by the tens of thousands in New Delhi, say will threaten their livelihoods.

U.S. States producing the most oil

With gasoline prices reaching their highest levels since 2014 this fall, consumers, policymakers, and economic experts have lately turned their attention to the state of oil production in the U.S. and worldwide. The COVID-19 pandemic has been an uneasy time for oil, as with many other products and sectors of the economy. The price of oil futures briefly turned negative in the first months of the pandemic, and remained at relatively low levels through most of 2020 and the first part of 2021, a product of reduced demand for fuel and a price war between Russia and Saudi Arabia.

Texas’ oil and gas industry pressured to cut emissions

The Environmental Protection Agency proposed tighter controls Tuesday on the oil and gas industry’s emissions of methane, one of the most potent greenhouse gases that causes climate change. As world leaders meet in Scotland this week to seek international agreements to slow and mitigate the effects of climate change, federal regulators released a draft of a new rule to require oil and gas companies to monitor and reduce emissions of methane, a gas that is released during the drilling of oil wells and can be leaked from oil and gas equipment.

Iron ore back below $100 as China’s steel curbs roil market

Prices slumped as much as 8.6 percent in Singapore on Tuesday as the world’s top steelmaker ramped up efforts to cap annual steel volumes. While China has imposed curbs on production throughout 2021, restrictions are now being rolled out more frequently and limits have been extended into the first quarter in an effort to ensure blue skies for the Winter Olympics. Daily crude steel output in the final third of October dropped to the lowest since March 2020, according to researcher Mysteel, which cited a survey of 247 blast furnaces and 71 electric-arc furnaces. There were frequent requests from local governments to curb production, while lackluster steel demand and softening prices have dampened mills’ willingness to produce, it said. China’s top industry group has previously said steel volumes fell in early and mid-October, while official data showed output plunged to the lowest since 2017 in September. “The probability that iron ore demand slides by at least 20 percent in the fourth quarter is increasing, judging from lower downstream demand,” said Orient Futures Co. analyst Xu Huimin. “We have to monitor if mills will actually reduce production on their own, which will worsen the market a step further.” The iron ore market in October was already at a 15 percent surplus, and cost support is currently at about $80 to $90 a ton, she said.

Dairy outlook: feed and milk prices start to cool

Increases in feed prices have temporarily slowed but remain at levels encouraging contraction of the national dairy herd. Class III and IV milk prices currently are trending toward similar $18 per cwt levels for 2022. Most of 2020 — and the first half of 2021 — saw a wave of ups and downs, first with milk prices, then with feed costs. Though feed costs remain at near-high levels, there has been some reprieve in prices heading into the fall. Certainly, the 2021 corn crop is a bright spot for most dairy producers. Yields in many locations are 20 percent or more over historical farm averages. Producers are using this extra yield to build silage inventories or harvest shelled corn from the acres not needed for silage. With the price of corn at very high levels, this homegrown corn will be a boost to the bottom line. Milk prices are also starting to show some potential stability. Class III and IV futures have come into alignment and are trending to the $18/cwt level for most of 2022. USDA’s World Agricultural Supply and Demand Estimates (WASDE) reduced milk production forecasts for 2021-22 as there is a slower growth in milk per cow and revised the all milk price at $18.45 per cwt for 2021 and $19.20 per cwt for 2022.

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