No Bull, January 19

Drive Me Crazy

We hit 60 degrees earlier this week which called for a hike. Tripp drives me crazy doing the things nine-year-old boys do to drive their mother crazy.

The little blonde tornado though… whew.

Between insisting on walking, insisting on being carried, the dramatic out of breath moments, or exclamations of, “Gosh!”

Genevieve will drive you crazy.

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Pedal to the Metal

As mentioned in Tuesday’s HOT TAKE, December’s NOPA crush was a letdown at 177.5 million bushels as both operational and logistical problems have plagued the industry.

Plants have every incentive in the world to run pedal to the metal as lofty crush margins are producing record returns but when Mother Nature and the railroad don’t cooperate - crush is restricted no matter what margins may be.

Big margins = big incentive for expansion and that is just what we are about to get with nearly 700 million bushels of added crush capacity announcements in recent months.

No - they won’t all get built and doubtful any of them are completed on time, but you get the picture. Stay tuned!

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Climbing in the Driver’s Seat

Electric vehicles hit a milestone in 2022, accounting for 10% of new vehicles sales worldwide. China takes the largest share where nearly one in five vehicles sold in 2022 were electric.

Global sales of fully electric vehicles totaled 7.8 million units, up 68% from the year prior according to a recent article by the Wall Street Journal.

The US lags China and Europe in EV sales, but it did see electric’s share of total sales rise to 5.8% last year - compared with 3.2% the year before.

Tesla still dominates the EV market with a 65% US market share in 2022, down from 72% in 2021.

Runner-up Ford is at 7.6% - up 126% year-on-year, as legacy car manufacturers continue to see their electric footprint grow.

The U.S. auto industry posted its worst sales year in more than a decade in 2022 as supply-chain snarls and empty dealership lots dealt a blow to car companies.

Domestic sales totaled 13.7 million in 2022, down 8% from 2021 and the lowest sales figure since 2011. Interesting to note sales had topped 17 million for five consecutive years before the pandemic hit in 2020.

Slowly but surely supply chains seem to be getting back on track and dealerships are accumulating inventory.

In the market for a new car? Check out the makes below with more availability if you are looking for a deal.

Check out @GuyDealership on Twitter if you are looking for a good auto-related follow. You can also follow me @SusanNOBULL.

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Tapping the Brakes

After decades of rapid growth in China, it seems as if the most populous country in the world is tapping the brakes.

China’s economy expanded by 3% in 2022, its weakest growth since 1976 (excluding 2020’s 2.2%). Beijing’s strict zero-Covid policies were a direct hit on the economy, falling well-below their official growth target of 5.5%.

The economy wasn’t the only thing to take a step back in 2022 as China’s population fell for the first time in more than 60 years.

According to the National Bureau of Statistics, China’s total population fell by 850,000 in 2022 to 1.41175 billion people.

China’s birth rate hit its lowest on record in 2022 at 6.77 per 1,000 people.

Longer term, United Nations experts see China’s population shrinking by 109 million by the year 2050 - more than triple the decline of their previous forecast in 2019. By the end of the century China’s population is expected to shrink by 45%, according to the UN.

This is a seismic shift for a country whose economic growth has relied on an abundance of inexpensive labor in years past. Their infamous one-child policy is coming back to bite them which stands to bite the rest of the global economy as well.

China’s population explosion coupled with rising incomes (and a taste for a western diet) has been the driver behind their exponential increase in soybean imports the past two decades - up tenfold since the year 2000.

For calendar year 2022, soybean imports totaled 91.1mmt - a more than 5% decline from 2021. This marks the second calendar year drop since imports surpassed 100mmt in 2020.

You might remember this one from Sunday’s Weekender where we discussed China’s quest to reduce its dependence on imports by reducing soybean meal inclusion rates in hog diets in the coming years.

Rabobank research suggests China would see a 20% reduction in annual soybean imports by the year 2030 if reduced-meal diets are adopted going forward.

That, plus their aging population and slowing economy makes you wonder if the growing beast is about to be tamed.