Evening Report | May 16, 2022

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Corn planting nearly half done... USDA reports 49% of the U.S. corn crop was planted as of Sunday, an advance of 27 percentage points during the week and in line with pre-report expectations. But planting remains well behind the five-year average of 67% for mid-May.

In the top 12 production states, planting stood at 55% in Illinois (70% on average), 40% in Indiana (54%), 57% in Iowa (80%), 60% in Kansas (64%), 31% in Michigan (41%), 35% in Minnesota (72%), 65% in Missouri (79%), 62% in Nebraska (77%), 4% in North Dakota (41%), 31% in Ohio (41%), 31% in South Dakota (54%) and 34% in Wisconsin (52%).

Corn emergence increased nine points over the past week to 14%, still 18 points behind average.

 

Soybean planting nearing one-third completed... USDA said 30% of the soybean crop was planted, an advance of 18 percentage points over the past week but still nine points behind average. Traders expected 29% of the crop to be planted.

In the top 13 production states, planting stood at 57% in Arkansas (52% on average), 38% in Illinois (45%), 28% in Indiana (37%), 34% in Iowa (53%), 32% in Kansas (28%), 32% in Michigan (30%), 11% in Minnesota (47%), 19% in Missouri (28%), 44% in Nebraska (51%), 2% in North Dakota (24%), 18% in Ohio (25%), 15% in South Dakota (28%) and 26% in Wisconsin (31%).

USDA estimated 9% of the crop was emerged as of Sunday, three points behind average for mid-May.

 

Winter wheat conditions decline... USDA rates 27% of the U.S. winter wheat crop as “good” to “excellent,” down two points from the previous week. Traders expected a one-point increase. The portion of crop rated “poor” to “very poor” increased two points to 41%.

 

This week

Last week

Year-ago

Very poor

24

21

6

Poor

17

18

13

Fair

32

32

33

Good

24

26

41

Excellent

3

3

7


USDA reports 48% of the winter wheat crop has headed, an increase of 15 points over the past week but five points behind the five-year average. The Kansas crop moved from 30% headed the previous week to 60% as of Sunday, two points more advanced than normal.

 

Spring wheat planting slower than anticipated... Only 39% of the U.S. spring wheat crop was planted as of Sunday, four points slower than traders expected and 28 points behind the five-year average. Top producer North Dakota was only 17% seeded, 43 points behind normal. Minnesota had only 5% of its spring wheat crop planted, 70 points behind average.

 

Cotton planting in line with average... The U.S. cotton crop is 37% planted, an increase of 13 percentage points over the past week and right in line with the five-year average. Planting was 30% completed in Texas and 39% done in Georgia, both three points behind their respective averages.

 

Vilsack: ‘Deep concern’ with India wheat export ban... USDA Secretary Tom Vilsack said on Monday he has “deep concern” about India’s wheat export ban at a time when there are already global supply worries. “What we need is transparency in the market, what we need is a market that is helping to get goods to those who are in need,” Vilsack said on a call with journalists.

 

USDA unveils $6 billion in payments for 2020, 2021 crop disasters... USDA said commodity and specialty crop producers impacted by natural disaster events in 2020 and 2021 will soon begin receiving emergency relief payments totaling approximately $6 billion through the Farm Service Agency’s (FSA) new Emergency Relief Program (ERP; formerly called WHIP+) to offset crop yield and value losses. ERP will have two phases, similar to the Emergency Livestock Relief Program (ELRP).

For impacted producers, existing Federal Crop Insurance or Noninsured Crop Disaster Assistance Program (NAP) data is the basis for calculating initial payments. USDA estimates that Phase 1 ERP benefits will reach more than 220,000 producers who received indemnities for losses covered by federal crop insurance and more than 4,000 producers who obtained NAP coverage for 2020 and 2021 crop losses.

ERP covers losses to crops, trees, bushes, and vines due to a qualifying natural disaster event in calendar years 2020 and 2021. Eligible crops include all crops for which crop insurance or NAP coverage was available, except for crops intended for grazing. Qualifying natural disaster events include wildfires, hurricanes, floods, derechos, excessive heat, winter storms, freeze (including a polar vortex), smoke exposure, excessive moisture, qualifying drought, and related conditions.

For drought, ERP assistance is available if any area within the county in which the loss occurred was rated by the U.S. Drought Monitor as having a: D2 (severe drought) for eight consecutive weeks; or D3 (extreme drought) or higher level of drought intensity.

The second phase of both ERP and ELRP programs will fill gaps and cover producers who did not participate in or receive payments through the existing programs that are being leveraged for phase one implementation. When Phase 1 payment processing is complete, the remaining funds will be used to cover gaps identified under Phase 2.

To streamline and simplify the delivery of ERP Phase 1 benefits, FSA will send pre-filled application forms to producers where crop insurance and NAP data are already on file. This form includes eligibility requirements, outlines the application process and provides ERP payment calculations. Producers will receive a separate application form for each program year in which an eligible loss occurred. Receipt of a pre-filled application is not confirmation that a producer is eligible to receive an ERP Phase 1 payment, USDA said.

Click here for more details.

 

Study looks at impacts of higher crop and input prices on farms... A report from the Agricultural and Food Policy Center at Texas A&M University analyzed impacts of farms due to higher crop and input prices. The report, titled “Economic Impact of Higher Crop and Input Prices on AFPC’s Representative Crop Farms” concludes: “As the nation struggles to recover from the COVID-19 pandemic, a number of supply chain disruptions continue to wreak havoc on agricultural input markets, both in terms of availability and prices. The purpose of this report was to analyze the impact that increased input prices are having on AFPC’s 64 representative crop farms. To carry out that work, we reached out to our 489 representative farm panel members to obtain estimates of the amount they spent on inputs last year and the amount they expect to spend this year. Following are the key highlights of the analysis:

  • A major point of reference for this report – net cash farm income in 2021 – included a significant amount of ad hoc assistance. Absent another infusion of assistance in 2022, we estimate that significant increases in input prices will result in a huge decline in net cash farm income in 2022 (compared to 2021).
  • Despite the significant reduction from 2021, high commodity prices will likely still result in positive net cash farm income for most of AFPC’s representative farms. The noticeable outlier is rice – two-thirds of the rice farms are facing losses in 2022.
  • Finally, much of our analysis hinges on producers being able to lock in high commodity prices at average yields. With drought ravaging half of the country (and many other areas facing excess moisture), this assumption may be overly optimistic. This is perhaps the most important point to note because producers are beginning to plant a crop that will require them to put an enormous – indeed historic – amount of capital at risk.

Click here to view the full report.

 

NOPA April crush smaller than expected... Members of the National Oilseed Processors Association (NOPA) crushed 169.8 million bu. of soybeans in April, down 12.0 million bu. (6.6%) from March and 2.6 million bu. less than traders expected. Still, April crush rose 9.5 million bu. (5.9%) from year-ago and was the second largest tally for the month, behind 2020.

NOPA implies the full April crush at 181.0 million bushels. For the first eight months of 2021-22, we estimate the crush at 1.492 billion bu., which would be up 1.4% from the same period last year. At that level, crush over the final four months of 2021-22 would need to total 723 million bu. to reach USDA’s forecast of 2.215 billion bu. – or a monthly average of 181 million bushels. Given strong crush margins through August, crush is likely to reach or exceed USDA’s forecast.

Soyoil stocks fell to 1.814 billion lbs. at the end of April, the smallest monthly figure since September and 25 million lbs. less than traders expected. Soyoil inventories declined 4.9% from March but rose 6.6% from last year.

 

Bernanke says U.S. economy could be heading toward a period of stagflation... Former Fed Chair Ben Bernanke, who headed the U.S. central bank during the 2008 financial crisis, warns the nation is headed for a situation, much like the 1970s, where Americans were losing their jobs but still facing higher prices at the grocery store and at the pump. “Even under the benign scenario, we should have a slowing economy,” Bernanke told the New York Time’s DealBook, ahead of the release of his new book, 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to Covid-19. “So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high.”

Bernanke is still hopeful a recession can be avoided. He said the Fed’s credibility with the public is going to be crucial to its ability to fight inflation, and it is something he is deeply worried about given how polarized the nation appears to be. In addition, he remains concerned that supply chain problems continue for all types of goods.

Even so, Bernanke says backing away from a 2% inflation target would be a mistake. He says current Fed chair Jerome Powell should make it clear the Fed’s inflation target remains unchanged. And do whatever it takes to bring inflation back to that level. “In everyday life, we judge the credibility of promises more by the reputations of the promise-makers than by the exact words they use,” Bernanke writes in the book. “The same principle applies to central bank promises.”

 

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