Evening Report | July 3, 2023

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Independence Day schedule... Markets and government offices will be closed Tuesday, July 4, for Independence Day. There will be no Pro Farmer reports on Tuesday. Grain and livestock markets will reopen at 8:30 a.m. CT on Wednesday, July 5. Have a happy and safe Fourth of July celebration.

Corn conditions inch higher... As of Sunday, USDA rated 51% of the corn crop as “good” to “excellent,” up one percentage point from the previous week, snapping a string of notable declines. USDA’s rating was in line with analysts’ expectations. The potion of crop rated “poor” to “very poor” held at 15%.

USDA reported 8% of the corn crop was silking, one point behind the five-year average.

Soybean conditions continue to decline... USDA rated 50% of the soybean crop as “good” to “excellent,” down one point from the previous week whereas traders expected a one-point increase. The amount of crop rated “poor” to “very poor” rose one point to 15%.

USDA reported 24% of the soybean crop was blooming and 4% was setting pods, four and two points, respectively, behind the five-year averages.

Cotton condition declines... USDA rated 48% of the cotton crop as “good” to “excellent,” down one point from the previous week. The portion of crop rated “poor” to “very poor” increased three points to 21%. The Texas crop was rated 34% “good” to “excellent” and 32% in the bottom two categories.

Cotton development was equal to the five-year averages, with 42% squaring and 11% setting bolls.

Spring wheat condition declines again... USDA rated 48% of the spring wheat crop as “good” to “excellent,” down two points from last week whereas traders expected a two-point increase. The amount of crop rated “poor” to “very poor” held at 12%. In top producer North Dakota, the crop was rated 40% in the top two categories and 17% in the bottom two.

USDA reported 51% of the U.S. spring wheat crop was headed, five points ahead of the five-year average for the date.

Winter wheat harvest still lagging... Winter wheat harvest increased 13 percentage points to 37% done as of Sunday, though that was still nine points behind the five-year average. Harvest stood at 86% in Texas (87% on average), 80% in Oklahoma (92%) and 46% in Kansas (63%).

Soy crush shy of expectations but record-large for May... U.S. processors crushed 189.3 million bu. of soybeans during May, according to USDA, a record for the month though 1.2 million bu. less than traders on average expected. The crush pace rose 2.3 million bu. (1.2%) from April and topped last year’s May record by 8.4 million bu. (4.6%).

Soybean crush needs to run 1.1% above year-ago during the final three months of 2022-23 to hit USDA’s forecast. Crush has been an average of 3.0% above year-ago during the past four months, which projects the final tally 10 million bu. above USDA’s forecast of 2.220 billion bushels.

Corn-for-ethanol use tops expectations... Corn-for-ethanol use totaled 437.5 million bu. in May, according to USDA, which was 6.2 million bu. more than traders anticipated. Corn ethanol use rose 23.5 million bu. (5.7%) from April but fell 9.1 million bu. (2.0%) from May 2022.

Corn-for-ethanol use would need to increase 7.2% above year-ago over the final three months of 2022-23 to hit USDA’s current forecast of 5.250 billion bushels. We expect USDA to lower its forecast in next week’s WASDE Report as the current pace projects use to be 64 million bu. too low.

Price and crop insurance impacts... Southern Ag Today took a look at the potential price protection a producer has if they purchased crop insurance by considering the futures price as of June 30 relative to the Projected Crop Insurance Price released by USDA/RMA. Results: Harvest month futures contracts for corn, soybeans, rice and cotton were lower relative to their respective Projected Price with corn having a substantially lower price.

Says Southern Ag Today: “If the 2023 growing season were to end today (June 30), holding 2023 harvest yield the same as APH yield, 85% Revenue Protection would already trigger an indemnity for corn with ZCZ23 being 83% of the Projected Price. The current harvest month corn futures price would also trigger an indemnity under Enhanced Coverage Option (ECO) and Supplemental Coverage Option (SCO), assuming no difference in the county expected harvest yield and established APH. This is because ECO and SCO trigger an indemnity once county-level revenue falls below 95% and 86% of the county-level revenue guarantee, respectively. We also see ECO would trigger an indemnity for rice, assuming no change in the expected harvest yield.”

Firm raises Brazil corn crop estimate... Brazil’s safrinha corn harvest remains behind year-ago at 17% completed as of last Thursday, but yields are strong. As a result, AgRural raised its Brazilian total corn crop estimate to a record 132.3 MMT, including 102.9 MMT for the safrinha crop.