Evening Report | August 4, 2022

Click here to view weekly export sales/commitments charts and here for report details.

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

Three grain ships expected to leave Ukrainian ports on Friday... Three ships carrying grain are expected to set sail from Ukrainian ports on Friday, according to Turkish state media quoting Defense Minister Hulusi Akar.

Turkish Foreign Minister Mevlut Cavusoglu discussed the grain export agreement’s implementation by phone with UN chief Antonio Guterres and separately with U.S. Secretary of State Antony Blinken, without disclosing further details. Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan were also scheduled to discuss the export agreement.

A team of inspectors the included representatives from Ukraine, Russia Turkey and the UN said in a statement that the first ship’s successful passage this week offered “proof of concept” the agreement can hold up.

Slightly more corn, soybean and spring wheat acres covered by drought... As of Aug. 2, 66% of the U.S. was experiencing abnormal dryness/drought, according to the U.S. Drought Monitor, down two percentage points from the previous week. But the Drought Monitor commentary noted, “Weather and drought conditions varied widely in the contiguous U.S. this week. From the Desert Southwest and southern Colorado eastward into the Texas Panhandle, western Kansas, eastern Colorado, northern Oklahoma, and Arkansas, heavy rainfall fell in some areas, leading to localized improvements in ongoing drought... Drier weather also led to expansion of drought conditions in parts of the central Great Plains and Upper Midwest. Similar conditions in Texas led to expansion of drought conditions there, while recent precipitation led to some improvements in southwest Texas.”

Across the Corn Belt, dryness/drought covers 25% of Illinois (down 4 points from last week), 29% of Indiana (down 21 points), 60% of Iowa (up 4 points), 80% of Kansas (down 1 point), 48% of Michigan (up 2 points), 34% of Minnesota (up 4 points), 59% of Missouri (down 7 points), 90% of Nebraska (up 1 point), 2% of North Dakota (up 1 point), 9% of Ohio (down 7 points), 64% of South Dakota (up 4 points) and 48% of Wisconsin (up 2 points).

USDA estimates the drought footprint at 31% for corn (up 2 points from last week), 28% for soybeans (up 2 points), 17% for spring wheat (up 1 point) and 65% for cotton (down 5 points).

Click here for the related map and additional details.

Fallout from Pelosi’s trip to Taiwan has begun... China’s leading electric-vehicle battery maker is putting on hold plans to announce its first North American plant, the Wall Street Journal reports. The move by Tesla supplier Contemporary Amperex Technology is one of the first business actions following House Speaker Nancy Pelosi’s (D-Calif.)  visit to Taiwan that has roiled trade tied to the region and complicated relations between the U.S. and China. Beijing’s military drills have also raised concerns about commercial shipping traffic in the Taiwan Strait, but companies haven’t reported significant disruptions. CATL was aiming to announce a plan as early as this month for a plant in North America.

In Taiwan, Pelosi met with executives from contract chip maker Taiwan Semiconductor Manufacturing and with Apple supplier Pegatron.

Zelenskyy wants Xi’s help to end war... Ukrainian President Volodymyr Zelenskyy seeking “direct talks” with China’s Xi Jinping to help end Russia’s invasion of Ukraine, according to the South China Morning Post (SCMP). The Ukrainian leader has urged Beijing to use its economic and political power to press Moscow to comply with international norms. In the exclusive interview with SCMP, Zelenskyy also says he hopes China and other countries will “unite” to support Ukraine’s reconstruction.

In 2021, China was Ukraine’s top trading partner, with a trade turnover worth almost $19 billion, according to figures from Ukraine’s embassy in China. “I’m confident, I’m sure that without the Chinese market for the Russian Federation, Russia would be feeling complete economic isolation,” he said. “That’s something that China can do — to limit the trade (with Russia) until the war is over.”

Panama Canal tentatively schedules locks’ closure to perform maintenance work... On Aug. 11, 17, 18, and 23, the Panama Canal Authority is closing the west lane of the Canal’s Gatun Panamax Locks for 4 hours per day to perform scheduled maintenance work. During the outages, the locks’ daily transit capacity is estimated at 31-33 vessels — down from the normal capacity of 34-36 vessels. On Aug. 28, the west lane of the Gatun Locks is scheduled to close for 5 hours, reducing capacity slightly, to 30-32 vessel hours per day. No major delays are anticipated.

On Sept. 1, the same locks are scheduled for 8 days of major outage, reducing the capacity to 21-23 vessel hours per day. The locks’ exact transit capacity depends on vessel mix, transit restrictions and other factors. The majority of U.S. grain destined to Asia transits the canal.

U.S. trade deficit narrows sharply amid record exports... The Commerce Department reported the trade deficit decreased 6.2% to $79.6 billion in June, down from May’s revised deficit of $84.9 billion. That marked the first time the deficit has been below $80 billion since December 2021. Exports of goods and services rose 1.7% to an all-time high of $260.8 billion, while imports slipped 0.3% to $340.4 billion. Trade was the economy’s only bright spot in the second quarter, adding 1.43 percentage points to GDP after being a drag for seven straight quarters.

Weekly jobless claims rise... The number of Americans filing new claims for unemployment benefits increased 6,000 to a seasonally adjusted 260,000 for the week ended July 30, suggesting some softening in the labor market, though overall conditions remain tight. Jobless claims remain below the 270,000-300,000 range that economists say would signal a slowdown in the labor market.

Other data on Thursday showed a sharp decline in layoffs announced by U.S.-based companies in July. The still-low level of unemployment claims and brisk pace of hiring support views the economy is not in recession despite gross domestic product contracting in the first half.

Wells Fargo said, “Initial jobless claims have been trending higher since last November in one of the clearest signs that labor market conditions have begun to deteriorate. However, the recent trend in continuing claims adds weight to the argument that the economy is not currently in recession. That said, the recent uptick bears some resemblance to the months that preceded prior recessions, suggesting that the start of a recession may not be far off.”

EPA won’t meet glyphosate deadline... EPA said in court filings this week it will not meet the court-ordered Oct. 1 deadline for the agency to review its cancer assessment and to conduct an Endangered Species Act (ESA) review of the herbicide glyphosate. EPA asked the U.S. Court of Appeals for the Ninth Circuit to give the agency more time, indicating it would be unable to issue a new interim decision or final registration decision for glyphosate until 2026 because of the complexity of the issues involved and the lengthy timeframe needed to complete its ESA review and consultation with the federal wildlife agencies. The court is not expected to rule until the petitioners in the case file their response to EPA’s request. EPA said at most by Oct. 1 it could only provide a partial analysis of some of the issues in the case and that such an analysis would have “no regulatory or real-world effect.”