Evening Report | August 8, 2022

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Corn crop conditions drop more than expected... As of Sunday, USDA rated 58% of the corn crop “good” to “excellent,” down three percentage points from last week. Traders expected a one-point decline. The portion of crop rated “poor” to “very poor” increased two points to 16%.

USDA reported 90% of the crop was silking, three percentage points behind the five-year average. The portion of crop in dough stage reached 45%, up 19 points on the week but still four points behind average. USDA reported 6% of the crop was dented, three points behind normal for this date.

Soybean crop conditions drop as expected... USDA rated 59% of the soybean crop “good” to “excellent,” down one point from last week and in line with traders’ expectations. The portion of crop rated “poor” to “very poor” held at 11%.

USDA reported 89% of the soybean crop was blooming, one point ahead of the five-year average. The portion of crop setting pods stood at 61%, five points behind average.

Cotton conditions sharply deteriorate... USDA rated 31% of the cotton crop “good” to “excellent,” down seven percentage points from the previous week. The portion of crop rated “poor” to “very poor” increased six points to 34%. In Texas, only 14% of the crop is rated “good” with none in the top category, while 48% of the crop is rated in the bottom two categories.

USDA reported 69% of the cotton crop was setting bolls, five percentage points ahead of the five-year average. The amount of crop with bolls open stood at 9%, in line with average.

Spring wheat conditions unexpectedly decline... USDA rated 64% of the U.S. spring wheat crop as “good” to “excellent,” down six points from last week. Traders expected crop conditions to hold steady. The amount of crop rated “poor” to “very poor” increased a point to 8%.

Spring wheat harvest stood at 9% done as of Sunday, 10 points behind average. North Dakota hasn’t harvested any spring wheat yet, whereas 13% of the crop is normally cut by this date.

Winter wheat harvest inches toward the finish line... U.S. winter wheat harvest increased only four percentage points over the past week to 86% completed, five points behind the average pace. Aside from the Pacific Northwest, winter wheat harvest was virtually wrapped up.

India may scrap wheat import duty... India could scrap a 40% duty on wheat imports and cap the amount of stocks traders can hold to try to dampen record-high domestic prices, government and trade officials told Reuters. “We are exploring all possible options to bring down the prices,” said a senior government official who held a discussion with industry officials last week.

If the government does remove the duty, and international prices also fall, then traders say they could start importing, especially during the upcoming festival season, when higher demand typically drives domestic prices higher. “If global prices fall by another 20% and Indian prices continue their rally, then maybe, sometime after a few months, imports might become feasible,” a trader told Reuters. India last imported wheat in its 2017-18 fiscal year (April to March).

The country’s trade ministry said it would restrict the export of some wheat-derived products like finely milled “maida” and semolina from Aug. 14, with only an inter-ministerial committee allowed to clear their shipment, though shipments of the items are generally small.

Procedural details of grain export deal released... Ships exporting Ukraine grain through the Black Sea will be protected by a 10 nautical mile buffer zone, according to long-awaited procedures agreed to by Russia, Ukraine, Turkey and the United Nations that were seen by Reuters. Insurers and shipping companies have been seeking more details on how the corridor will work for empty ships that will sail into three Ukrainian ports involved in the initiative comprising Odesa, Chornomorsk and Yuzhny. They have also sought assurances the journey is secure with no threat of mines or attacks to both the ships and their crews. These are typically covered in accepted maritime practices known as standard operating procedures.

According to the procedural agreement, the Joint Coordination Center will provide information on the planned movement of ships through the maritime humanitarian corridor, which will be shared with Russia, Ukraine and Turkey’s military to prevent incidents. Then as the vessel moves through the maritime humanitarian corridor it will be protected by a 10 nautical mile circle buffer zone around it. “No military vessel, aircraft or UAVs (drones) will close to within 10 nautical miles of a merchant vessel transiting the Maritime Humanitarian Corridor, excluding territorial seas of Ukraine,” according to the document.

One insurance industry source said the procedures “read as a reassuring set of rules. But will all sides stick to it?”

Lebanon rejects Ukrainian corn shipment... The Lebanese trader who purchased the corn on board the first bulk carrier to leave the Ukrainian port of Odessa last week rejected the cargo and a new buyer is being sought, according to the Ukrainian Embassy in Beirut. “According to the information provided by the shipper of the Ukrainian grain aboard the Razoni, the buyer in Lebanon refused to accept the cargo due to delays in delivery terms,” the embassy said in a Facebook post. “So the shipper is now looking for another consignee to offload his cargo either in Lebanon/Tripoli or any other country/port.”

No change in U.S. assessment on China’s timeline toward Taiwan... Washington has not changed its assessment on China’s timeline for potentially taking Taiwan militarily, a senior Pentagon official said on Monday. Asked if the Pentagon’s assessment that China would not try to retake China militarily in the next two years had changed since House Speaker Nancy Pelosi’s visit to Taiwan last week, Under Secretary of Defense for Policy Colin Kahl said: “No.” He elaborated, “Clearly the PRC (People’s Republic of China) is trying to coerce Taiwan, clearly they’re trying to coerce the international community and all I’ll say is we’re not going to take the bait and it’s not going to work.”

Kahl said the U.S. military would carry out passages through the Taiwan Strait in the coming weeks.