Evening Report | August 5, 2022
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Your Pro Farmer newsletter is now available... Every year there’s somewhat of a divide between the so-called “haves” and the “have-nots” — those areas that receive ample and timely rains and those where weather conditions are unfavorable. As August began, the divide seems to be widening. The southwestern and southern Corn Belt is struggling, while northern, central and eastern areas are faring better. With the growing level of uncertainty toward the corn and soybean crops, USDA will release its first survey-based estimates on Aug. 12. Meanwhile, the first grain shipment from Ukraine’s Black Sea ports under the new grain export deal was inspected without any hiccups last week and more vessels are set to sail. That has alleviated some of the global grain supply concerns, though the situation is still highly volatile. Plus, tensions between the U.S. and China escalated after House Speaker Nancy Pelosi visited Taiwan, which angered Beijing. We cover all of these items and much more in this week’s newsletter, which you can access here.
Rains followed by a return of heat and dryness for western Corn Belt... A cool front is expected to produce rains and temporary relief from crop stress for the western Corn Belt Sunday through Tuesday. But World Weather says “the distribution of rain is not likely to bring high volumes of rain to the west-central or southwestern Corn Belt. Heavy rains are possible in northern and some eastern areas of the region. World Weather says amounts and coverage levels from this rain event will be critical for the driest areas as a period of hot and dry conditions will follow for a week to 10 days.
The forecaster says, “Once the frontal system passes through the Midwest a stronger ridge of high pressure is expected to build into the Great Plains and the Gulf of Mexico may close as a moisture source. The drier air following the frontal system may get trapped over a part of the central and interior southern Plains and the west-central and southwestern Corn Belt where hotter temperatures and limited rain could bring accelerated drying and a new run at crop stress for a while. The setup for the second half of next week through the following weekend is looking a little more interesting in support of faster drying and more heat in a part of the Plains and portions of the western Corn Belt. The area most vulnerable to these conditions may be southwestern Iowa, Nebraska, Kansas and northern and western Missouri. The Delta could also get caught up in a new bout of heat and dryness.”
IHS Markit expects smaller corn crop, bigger soybean production than USDA’s July projections... Private analytics firm IHS Markit Agribusiness forecasts the U.S. corn crop at 14.497 billion bu. on a yield of 176.9 bu. per acre, according to Reuters. The firm forecasts the soybean crop at 4.530 billion bu. with an average yield of 51.8 bushels per acre.
In July, USDA projected the corn crop at 14.505 billion bu. on a yield of 177 bu. per acre and soybean production at 4.505 billion bu. on a yield of 51.5 bu. per acre. USDA will release its first survey-based crop estimates on Aug. 12. Those estimates are based mostly on farmer surveys and satellite imagery, as USDA no longer conducts objective yield surveys for the corn and soybean crop in August.
Ukraine could start new-crop wheat exports via ports in September... Ukraine could start exporting wheat from this year’s harvest from Black Sea ports in September under the export deal brokered by Turkey and the United Nations, Ukraine’s first deputy minister of agriculture said on Friday. Ukraine hopes in several months to increase shipments of grain through safety corridor in the Black Sea to between 3 MMT and 3.5 MMT per month, the official said.
More Ukrainian grain being offered for export... International and local traders started to offer more Ukrainian-origin grain for sale on Friday as the initial shipment from the country cleared inspections earlier this week, three more vessels left Ukraine’s ports today and the first empty inbound ship slated to be loaded with grain is scheduled to arrive. “I think there is more optimism growing, especially with the news that the first empty ship is going to Ukraine to pick up cargo,” a European trader told Reuters.
Traders said offers included a consignment of 50,000 MT of Ukrainian 11.5% protein milling wheat for August shipment at $310 per MT on a free on board (fob) basis from Chornomorsk and another consignment of 30,000 MT for loading in one of the safe corridor ports at $320 per MT fob. Prices offered are about $10 to $20 per MT cheaper than those of Russian 11.5% milling wheat from Russian Black Sea ports.
China announces measures to counter Pelosi’s Taiwan visit... China is halting dialogue and cooperation with the U.S. in a number of areas amid escalating tensions after House Speaker Nancy Pelosi visited Taiwan earlier this week. The eight measures Beijing announced included:
- Canceling dialogue between Chinese and U.S. threater-level military commanders
- Canceling a meeting of Chinese and U.S. defense ministers
- Canceling the China/U.S. Maritime Military Security Consultation
- Halting China/U.S. climate change talks
- Halting China/U.S. anti-drug cooperation
- Suspending China/U.S. cooperation on combating transnational crimes
- Suspending China/U.S. criminal judicial cooperation
- Suspending China/U.S. cooperation on repatriation of illegal immigrants
Agriculture trade deficit expanded in June... The U.S. exported nearly $16.2 billion of ag goods in June against imports of slightly more than $17.2 billion for a deficit of almost $1.1 billion. That was up from a deficit of $656 million in May. Through the first nine months of fiscal year 2022, ag exports stand at $152.5 billion with imports at $145.4 billion for a surplus of $7.0 billion. USDA forecasts fiscal year 2022 U.S. ag exports at $191.0 billion with imports of $180.5 billion for a trade surplus of $10.5 billion.
Beef exports ease but still a June record, pork shipments remain slow... The U.S. exported 315.0 million lbs. of beef in June, which was a record for the month, though down 6.0 million lbs. (1.9%) from May. Beef shipments were 41.5 million lbs. (15.2%) greater than June 2021. Through the first half of this year, the U.S. shipped 1.786 billion lbs. of beef, up 123.0 million lbs. (7.4%) from the same period last year, led by a 35.9% jump in shipments to China.
U.S. pork exports totaled 531.1 million lbs. in June, down 17.6 million lbs. (3.2%) from May and 30.9 million lbs. (5.5%) less than last year. Through the first six months of this year, U.S. pork exports at 3.149 billion lbs. were 675.8 million lbs. (17.7%) behind the same period in 2021. Beef shipments to China during the first half of the year plunged 68.5% from the same period last year.
Strong jobs data a greenlight for more aggressive Fed rate hikes... The U.S. economy added 528,000 non-farm payrolls in July, far exceeding expectations for a gain of around 250,000. In addition, wage growth accelerated, the unemployment fell, average hours rose and the participation rate fell — every metric was stronger than expected. The jobs data signals the economy is not in recession and clears the way for the Fed to keep aggressively raising rates. Odds increased for another 75-basis-point jump in rates at the September monetary policy meeting and economists now believe the Fed will continue its tightening cycle into next year
