Evening Report | October 2, 2023

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Corn harvest nearly one-quarter complete... As of Sunday, USDA reported corn harvest was 23% done, two percentage points ahead of the five-year average but two points slower than expected. Crop development remains ahead of average, with 82% mature versus 75% for the five-year average.

USDA’s crop condition ratings held at 53% “good” to “excellent,” though there was a one-point increase in the top category. The portion of crop rated “poor” to “very poor” remained at 18%.

Soybean harvest a little slower than expected... USDA reported 23% of the soybean crop was cut, one point ahead of average but two points slower than traders expected. USDA said 86% of the crop was dropping leaves compared to 77% on average.

USDA’s soybean crop condition ratings ticked up two points to 52% “good” to “excellent.” The portion of crop rated “poor” to “very poor” declined one point to 17%.

Cotton harvest not quite one-fifth complete... Cotton harvest advanced five points to 18% as of Sunday, which was one point ahead of the five-year average. The Texas harvest was 28% done, four points ahead of average for this date. USDA reported 75% of the crop had bolls opening, two points ahead of average.

USDA’s crop ratings held at 30% “good” to “excellent.” The amount of crop rated “poor” to “very poor” increased one point to 43%.

Winter wheat planting running behind average... USDA reported winter wheat seeding was 40% done, up 14 points from last week but three points behind the five-year average. Planting stood at 45% in Texas (42% average), 27% in Oklahoma (38%) and 37% in Kansas (38%).

USDA said the winter wheat crop was 15% emerged versus 16% for the five-year average.

Soy crush declines more than expected in August... U.S. processors crushed 169.0 million bu. of soybeans during August, according to USDA, which was 2.6 million bu. less than the average pre-report estimate. Crush dropped 15.8 million bu. (8.5%) from July and 6.1 million bu. (3.5%) from year-ago. The August total brought 2022-23 crush to 2.212 billion bu., 8 million bu. less than USDA’s current forecast.

Soyoil stocks fell to 1.772 billion lbs. at the end of August, which was lower than anticipated and sharply below both the figures from July and year-ago.

Corn-for-ethanol use down from July but up from year-ago... Corn-for-ethanol use totaled 442.6 million bu. during August, according to USDA, which was down 12.6 million bu. (2.8%) from July but up 12.0 million bu. (2.8%) from last year. The August total brought 2022-23 corn-for-ethanol use to 5.177 billion bu., 18 million bu. less than USDA’s current forecast.

Production of dried distillers grains with solubles slipped to 1.783 million tons from 1.784 million tons in August and was sharply below 1.868 million tons in August 2022.

Did USDA put politics in gov’t contingency plans?... USDA's updated contingency plans released late Friday afternoon included a shift under the Agricultural Marketing Service (AMS) that shifted the Market News function from being an excepted operation in the August 2020 plan due to its importance to the agriculture industry, to now being activity that would not take place in the event of a shutdown. Link to updated USDA plans.

Both the August 2020 and updated contingency plan have a section under AMS on the impacts of a shutdown. AMS noted that no Market News means buyers and sellers would be “unable to determine market value of an agricultural commodity being traded, creating uncertainty in the market about market trends and reluctance to move products, particularly livestock, to market.”

The document also contained a potentially politically motivated statement that echoes an often-used comment from the Biden administration: the “brunt of the impact will be most keenly felt by producers, growers, and other small farmers; most affected will be the small farmers who market their commodities through formula arrangements, where the determination of price is based on published data.”

There was a major change for the Farm Service Agency (FSA). The Farm Service Agency (FSA) August 2020 contingency plan lists several operations that will continue, with some of them including Market Assistance Loans; provision of new Direct and Guaranteed Farm Operating Loans and servicing those loans; emergency loans; Farm Storage Facility Loans; servicing existing Conservation Reserve Program contracts but no new signups can be made; Dairy Margin Coverage; sugar Price Support Loans, continued implementation of the 2018 Farm Bill, including Agricultural Risk Coverage and Price Loss Coverage efforts; Livestock Forage Disaster and presumably other emergency aid programs. Action on the National Organic Certification Cost-Share Program would halt.

However, under the updated contingency plan that finally became available this morning after an issue kept the document from being available over the weekend, “FSA employees will cease all program delivery activities.” If a shutdown continues past 10 days, the plan said that one farm loan employee per service center will be on call in order to complete certain loan processing items in order to protect the security interest of the government. “This will not include any new loan processing,” the plan stated.

However, the package noted that those paid with Inflation Reduction Act (IRA) funding who oversee policy development and program activities under IRA Section 22006 “will continue their work to the extent feasible, up to application approval during the first two weeks of a lapse in appropriation.” The plan also indicated that during the first two weeks of a shutdown would include “review and processing of distressed borrower payments up to application approval.” A shutdown longer than two weeks would prompted officials to reevaluate the contingency plan “to consider whether it is appropriate to fund additional staff or to add excepted staff necessary to support the funded activity, to potentially include payment processing.”

EU crop monitor raises Russian grain crop estimates... The European Union’s crop monitoring service MARS raised its estimates for Russia’s main 2023 cereal crops, with total wheat production now seen at 89.7 MMT, up from 86.7 MMT forecast in June but still down 14% from the 2022 record.

MARS also raised its estimate for Russia’s total barley crop to 21.9 MMT, up 1.5 MMT from its prior forecast. The corn crop is now pegged at 17.0 MMT, up 1.8 MMT.

Argentine grain export revenue plunges... Argentina’s September grain/soy exports grew 15% compared to August but tumbled 75% from last year to just over $2 billion, a report by the Argentine Chamber of the Oil Industry (CIARA) and the Grain Exporters Center (CEC) said. Through the first nine months of 2023, Argentine grain/soy exports dropped 50% compared to last year.

EU introduces carbon border adjustment mechanism... The European Union is accelerating a push to become the first climate-neutral continent and taking a first step toward moving other parts of the world to follow suit. The measure will eventually place a levy on carbon-intensive imports so that European companies forced to comply with the continent’s strict climate laws won’t face unfair competition from producers outside the bloc. From Oct. 1, the start of the first phase of the so-called Carbon Border Adjustment Mechanism, importers from six carbon-intensive industries will be required to start reporting on their emissions.

The mechanism has already faced pushback from the EU’s major trading partners including Russia and China, who argue that it undermines the principles of free trade. It’s also added to trade tensions between the EU and U.S, with the Biden administration asking earlier this year for its steel and aluminum exports to be exempt.