Evening Report | June 9, 2023
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Your Pro Farmer newsletter is now available... USDA updated its corn and soybean balance sheets to reflect old-crop usage trends. But as expected, there were no changes to the yield projections despite drought continuing to expand. Dryness/drought now covers much of the Corn Belt, with USDA estimating 45% of corn production areas and 39% of soybeans now face drought stress. While El Niño is established and expected to strengthen, that doesn’t mean weather will improve. Given declining soil moisture and below-average corn and soybean conditions, timely rains will be needed the remainder of the growing season. There were a couple new twists in the war between Ukraine and Russia. A dam in southern Ukraine was destroyed, which could result in additional Ukrainian crop losses. And an explosion on a pipeline that used to transport ammonia from Russia via Ukraine was damaged, potentially putting the Black Sea grain deal in jeopardy. With the debt limit issue resolved, attention in Washington will turn to the new farm bill. Crop insurance and the commodity title, along with SNAP (formerly food stamps) will be key battle grounds during the farm bill debates. We cover all of these items and much more in this week’s newsletter, which you can access here.
Mostly neutral June WASDE Report... As expected, USDA made modest changes to its old- and new-crop balance sheets in today’s WASDE Report. The winter wheat crop estimate was also little changed from last month. Click here to view our full report reaction.
With no major surprises, focus will be on weather as traders look ahead to the Acreage and Grain Stocks Reports at the end of the month.
Canada joins U.S. in battle over Mexico’s biotechnology law... Canada will join dispute settlement consultations between the U.S. and Mexico over genetically modified (GM) corn, as a third party, Ottawa said. “Canada shares the concerns of the U.S. that Mexico’s measures are not scientifically supported and have the potential to unnecessarily disrupt trade in the North American market,” Canadian Agriculture Minister Marie-Claude Bibeau and International Trade Minister Mary Ng said in a joint statement. “Doing trade based on science is important for us and usually with Mexico and the U.S. we’re very aligned,” Bibeau told Reuters. “It’s very surprising that Mexico is stepping out of this position for corn.”
Canada is not a major corn exporter, but Mexico is one of its largest markets for canola, much of which is also GM.
UN focused on improving Russian exports to save Black Sea grain deal... Top United Nations trade official Rebeca Grynspan met with Russia’s Deputy Foreign Minister Sergei Vershinin in Geneva on Friday as Moscow threatens to walk away from the Black Sea grain deal. The UN has helped boost Russian exports of food and fertilizers, facilitating a steady flow of ships to its ports and lower freight and insurance rates, spokesperson Stephane Dujarric said, in hopes of extending the deal beyond the mid-July deadline. He noted, “The past months have shown tangible progress” on improving Russian exports but added: “Challenges remain but we will spare no effort to overcome all remaining obstacles.” Dujarric said in the coming weeks UN officials would remain focused on trying to further improve Russian food and fertilizer exports before July 17.
Japan meteorologists: High odds El Niño will persist through fall... Japan’s weather bureau said El Niño had formed and forecast a 90% chance it would continue into the northern hemisphere autumn. That’s in line with forecasts from the U.S. Climate Prediction Center and the Australian Bureau of Meteorology. Key will be how long it takes for El Niño conditions to become a dominant factor in global weather patterns.
Putin: Russia will move nuclear weapons into Belarus next month... Russia will start deploying tactical nuclear weapons in Belarus after the facilities are ready on July 7-8, President Vladimir Putin said. Putin told Belarusian President Alexander Lukashenko, “Everything is proceeding according to the plan. You know, on July 7-8 the preparations of the relevant facilities will be completed, and we will immediately begin activities related to the deployment of the weapons in question on your territory.”
USDA’s Taylor updates ag trade mission with Japan... USDA Undersecretary of Agriculture for Trade Alexis Taylor gave a post-mission briefing on the U.S./Japan ag trade mission. It involved 11 state departments of agriculture and 40 agribusinesses and aimed to strengthen the U.S./Japan ag trade relationship. The briefing covered a range of U.S./Japan trade matters such as ethanol exports, Indo-Pacific Economic Framework for Prosperity (IPEF), potato exports and the effects of European Union Protection of Geographical Indications. She mentioned recent progress in market access for U.S. potatoes in the Japanese market and cited the U.S./Japan Trade Agreement (USJTA) as a key factor benefiting over 90% of American food and ag exports.
Taylor also touched on the administration’s preference for trade and investment framework agreements (TIFAs) over free-trade agreements (FTAs). TIFAs like IPEF are considered more effective in addressing technical barriers, ensuring transparency and science-based approaches in addressing ag trade concerns.
USDA plans to host six trade missions this year, having already visited Panama, the Netherlands and Japan, with upcoming trips to Chile, Malaysia, Singapore and Angola. Propelled by these efforts, USDA trade missions led to 12-month projected sales of $42 million last year.
RFS meetings continue... Office of Management and Budget (OMB) meetings on EPA’s biofuels plan for 2023 and beyond are ongoing, addressing the Renewable Fuel Standard (RFS) obligations. Proponents of the renewable natural gas industry have criticized EPA’s proposals related to Renewable Identification Numbers (RINs) and awarding eRINs to electric vehicle (EV) manufacturers instead of those producing the fuel for EVs. Reports suggest EPA has reconsidered this eRIN plan since proposing RFS levels for 2023-2025 in December 2022.
Additionally, groups supporting biodiesel and renewable diesel have pressured EPA, arguing that the initial RFS package proposed levels that were too low considering the announced capacity increases. Out of a total of 35 planned meetings, 15 will take place between today and June 13. EPA has until June 14 to finalize its RFS plans.
McConnell: Time ticking on getting new farm bill this year... Senate Republicans will do their part to smooth the way, but time is already running out for Congress to write the new farm bill, said Senate Republican Leader Mitch McConnell (R-Ky.). The race is on to get a draft bill written before the August recess.
CBO made big cotton error in updated farm bill baseline... Sources inform us the Congressional Budget Office (CBO) got the price ratio incorrect between cotton seed and lint. CBO is working with congressional staff to correct the matter
