Evening Report | August 3, 2022

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

Midday European weather model still shows significant rain for areas of western Corn Belt... World Weather Inc. says today’s midday European (ECMWF) weather model suggested through mid-morning Sunday rains of 1.00 to 2.50 inches would occur from eastern South Dakota into much of central and southern Minnesota with totals to 1.00 inch in northwestern Iowa and extreme northeastern Nebraska. The forecaster notes, “The outlook is still similar to last night’s run with a slight northwestward shift in the greatest rain. The GFS (U.S.) model also shifted this rain event to the northwest at midday today with amounts of only 0.50 to 1.00 inch and local totals to 1.25 inches. At the same time the GFS took much of the rain out of Iowa that was there previously. The ECMWF model also reduced rain in northern Illinois and Missouri for tonight and Thursday.”

For days 5 and 6, the ECMWF model increased rainfall from northeastern Nebraska through northern Iowa with 1.00 to 2.00 inches and local totals to 2.25 inches, which is up from 0.50 to 1.50 inches previously with a few 2.00-inch amounts in extreme northeastern Nebraska. Rainfall was reduced in southern and eastern Illinois, Indiana, Ohio and northern Kentucky during the early part of next week.

Lack of extreme heat helping limit crop stress... World Weather says, “Just like 1956, timely rainfall continues to occur in the eastern two-thirds of the Midwest perpetuating good crop development. Perfect conditions are certainly not out there in a widespread manner, but many fields are looking good and expected to yield well even some of those that have had below-normal precipitation... Rainfall in recent weeks in South Dakota, southern Minnesota, western Iowa and eastern Nebraska has slipped quite a bit behind the average and recent temperatures have been hot enough to induce some notable stress, but one does not have to travel very far into the western Corn Belt to run into higher relative humidity which has buffered the temperatures and conserved soil moisture between rain events. Without the excessive heat and seriously low precipitation many crops are capitalizing on the timeliness of rain and dealing with the warm weather in stride. Crops in the Missouri River Valley, however, are an exception. Those crops have been subjected to more threatening temperatures more often, but the extremes have rarely moved east of the river valley and it seems the stretches of truly driest weather in those areas have been too short to seriously impact production.”

World Weather believes crop stress will be limited over the next two weeks, but could increase later in August and early September depending on the tropics and the speed of the jet stream. The forecaster notes, “Tropical activity has been minimal so far this year in the Atlantic Ocean Basin, including the Gulf of Mexico and Caribbean Sea. That has allowed the ridge of high pressure to be controlled by weather patterns similar to those of 1956. Once the tropics become active later this month and in September the storms approaching North America will have influence on the high pressure ridge intensity and position. If there is going to be a change toward more stressful conditions in the Midwest it will occur with the help of the tropics.”

Hefty insurance coverage needed on Ukraine grain shipments... The London insurance sector is preparing to cover Ukrainian grains and fertilizer shipments through a secure corridor, voyages that may need up to $50 million of insurance coverage per cargo, industry sources involved told Reuters. London’s marine insurance market has placed the Black Sea region on its high-risk list and insurance costs have soared.

For each voyage, every ship will need separate layers of coverage, including for the cargo and for the ship itself, known as hull and machinery cover. An additional premium is also charged by underwriters for entering such areas.

Lloyd’s insurer Ascot and broker Marsh have launched a facility for grain traders to provide up to $50 million in cargo cover for every voyage, Marsh’s global head of marine and cargo Marcus Baker said. “We have had some enquiries in the last couple of days and we fully expect that to gain traction,” he told Reuters, adding $50 million was more than enough for most grain shipments.

While there were issues to be resolved related to the corridor and the ports, Baker said: “The fact we have this in place means when it does happen, we can get moving.” He declined to comment on pricing but said the facility would include a “no claims bonus” – a refund for a voyage without mishap. He also said other insurers could join Ascot in providing the coverage.

SovEcon cuts Ukraine wheat crop estimate, raises corn forecast... SovEcon lowered its 2022 Ukraine wheat crop estimate by 800,000 MT to 19.9 MMT, which would be down nearly 40% from last year, due to smaller harvested area amid the ongoing war.

The Russia-based consulting firm raised its corn crop estimate by 1.5 MMT to 29.6 MMT amid a higher yield forecast due to improved weather conditions in major growing regions in northern and central Ukraine.

The Ukrainian government raised its 2022 total grain crop forecast to a range of 65 MMT to 67 MMT from 60 MMT previously. It did not give a breakdown of production by crop.

USDA forecasts the Ukrainian wheat crop at 19.5 MMT and the corn crop at 25.0 MMT.

SovEcon says there is a “big question mark” with Ukraine’s 2023 wheat crop, as “a large part of the Ukrainian wheat belt in the South is controlled by Russia” and seeding should start in a month.

Russia’s ag ministry proposes longer soybean, rapeseed duties... Russia’s ag ministry making the export duty on soybeans permanent and extending the export duty on rapeseed by one year, according to a published draft resolution. The current duties are in effect until the end of August.

OPEC+ agrees to minuscule oil output increase... OPEC+ will reportedly raise oil output by 100,000 barrels per day (bpd) from September. OPEC and its allies led by Russia, known as OPEC+, have been previously increasing production by about 430,000 to 650,000 bpd a month although they have struggled to meet full targets as most members have already exhausted their output potential.

The increase, equivalent to less than a minute and a half of global oil demand, is seen as an insult to President Joe Biden after his trip to Saudi Arabia last month to persuade OPEC’s leader to pump more to help the U.S. and global economy.

“That is so little as to be meaningless. From a physical standpoint it is a marginal blip. As a political gesture it is almost insulting,” Raad Alkadiri, managing director for energy, climate, and sustainability at Eurasia Group, told Reuters.

Signs of cooling labor market... U.S. job openings fell in June to their lowest level in nine months and hiring slowed, new signs of a cooling labor market. The Labor Department on Tuesday said there were a seasonally adjusted 10.7 million job openings in June, down from 11.3 million in May. That was the lowest level since September. Despite the decline, total job openings remained well above the number of people unemployed but looking for work.

Economists expect Friday’s employment data to show the U.S. economy added 250,000 non-farm payrolls in July, down from a gain of 372,000 in June. The unemployment rate is expected to hold at 3.6%.

USDA accepting applications for 2022 ELAP... Producers are now able to file applications with the county Farm Service Agency (FSA) office for payments under the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish (ELAP) program for 2022 losses. The program provides emergency assistance to producers for losses because of disease, adverse weather, or other conditions, including losses because of blizzards and wildfires. USDA has updated the payment rates for 2022 eligible livestock grazing, honeybee colonies and feed loss for 2022, livestock and forage hauling mileage and 2022 water handling