Evening Report | September 6, 2022

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Corn crop conditions stabilize... As of Sunday, USDA rated 54% of the corn crop “good” to “excellent,” unchanged from the previous week, though there was a one-point decline in the top category. Traders expected USDA to rate the crop 53% “good” to “excellent.” The amount of crop rated “poor” to “very poor” remained at 19%.

USDA reported 92% of the crop was in dough, 63% was dented and 15% was mature, behind the five-year averages by one-percentage point, four points and three points, respectively.

Soybean ratings nearly unchanged... USDA rated 57% of the soybean crop “good” to “excellent,” unchanged from the previous week, though there was a one-point decline in the top category. Traders expected the rating to decline to one point to 56%. The amount of crop rated “poor” to “very poor” increased one point to 14%.

USDA reported 94% of the crop was setting pods and 10% was dropping leaves, two and four points behind the respective averages for the date.

Cotton crop conditions improve... USDA rated 35% of the cotton crop “good” to “excellent,” up one percentage point from the previous week. The amount of crop rated “poor” to “very poor” dropped five points to 31%.

USDA reported 97% of the crop was setting bolls, one point ahead of average. The portion of crop with bolls open stood at 39%, seven points ahead of average.

Spring wheat harvest nears three-quarters complete... As of Sunday, USDA reported 71% of the U.S. spring wheat crop was harvested, 12 percentage points behind the five-year average. North Dakota producers had cut 62% of their crop, 18 points behind average.

Winter wheat planting off to normal start... USDA reported 3% of the U.S. winter wheat crop was planted as of Sunday, in line with the five-year average. Producers had planted 3% of intended acres in Texas (1% on average) and 5% in Oklahoma (0%). Planting efforts have yet to begin in Kansas, whereas farmers typically have 1% of the crop seeded on this date.

NASS to review corn, soybean acreage for September crop report... USDA’s National Agricultural Statistics Service (NASS) will review all available data, including survey data, satellite-based data and the latest information from USDA’s Farm Service Agency and Risk Management Agency for planted and harvested acreage for corn, soybeans and other crops in preparation for the Sept. 12 Crop Production Report. If the data review justifies any changes, NASS will publish updated planted and harvested acreage estimates.

It is normal practice for NASS to review the acreage data in September for chickpeas, cotton, dry edible peas, lentils, peanuts and rice. The review typically takes place in October for corn, sorghum, soybeans and sugarbeets. However, that data is sufficiently complete this year to consider adjustments this month. In October, NASS will review acreage for canola, dry edible beans and sunflowers. 

IHS Markit cuts corn, soybean crop estimates... Private analytics firm IHS Markit Agribusiness cut its corn and soybean yield and crop estimates from its forecasts last month, according to Reuters. The firm now reportedly forecasts the U.S. corn yield at 171.6 bu. per acre and production at 14.040 billion bu., down from its August estimates of 176.9 bu. per acre and 14.497 billion bu., respectively.

IHS Markit cut its soybean yield and production estimates to 51.3 bu. per acre and 4.471 billion bu., down from last month’s forecasts of 51.8 bu. per acre and 4.530 billion bu., respectively.

Argentine FX boost spurs active soybean trading... Argentina’s daily soy trading volume hit its highest level in five and a half years, the country’s Rosario Grain Exchange said, after the government announced a higher foreign exchange rate during September. As we reported in “First Thing Today,” the exchange rate for Argentine soybean farmers was increased to 200 pesos per U.S. dollar, up from the previous rate of 139 per dollar.

The exchange said in a report Argentine soy operations registered on Monday, the first day the new foreign exchange rule came into effect, was close to 800,000 MT, which it said was the highest daily trading volume since early 2017.

Farmer sentiment improves, but concerns remain... The Purdue University/CME Group Ag Economy Barometer farmer sentiment index rose 14 points in August to a reading of 117. The rise in the overall measure of agricultural producer sentiment was driven by increases in both the Index of Current Conditions, which rose 9 points to 118, and the Index of Future Expectations, which climbed 16 points to 116.

Producers were less worried about their farm’s financial situation than in July, although they remain concerned about a possible cost/price squeeze. When asked about their biggest concerns for the next year, over half (53%) of respondents noted higher input costs. Other concerns included rising interest rates, input availability and lower output prices. Despite the improvement in sentiment, all three indices remained well below year ago levels.

Inflation high, but U.S. consumers’ relative purchasing power has never been higher... An index that considers inflation when measuring the dollar’s strength relative to currencies of major U.S. trading partners in July topped its previous peak from 2002. That showed how the dollar’s surge has helped mitigate rising domestic prices. The Real Effective Exchange Rate for the dollar, calculated by the Bank for International Settlements, measures the currency against a group of key U.S. trade partners, taking into account the changing prices of goods and services in each relevant economy.

Freight rates on the main ocean trade routes falling... The drop in freight rates comes during what is typically the industry’s peak season after cargo owners shipped holiday goods early and inflation dented consumer demand. The cost to ship a 40-foot container from China to the U.S. West Coast now stands around $5,400 a box, down 60% from January, according to the Freightos Baltic Index. Market conditions have made a sharp reversal from earlier in the pandemic. Freight rates jumped roughly 10-fold in 2021 because supply-chain disruptions, port backlogs and a surge of cargo left importers scrambling for space on box ships. This year, many retailers ended up with too much inventory after they raced to import goods earlier than usual, anticipating shipping delays and demand that didn't materialize.

More union, freight deals... A group of large U.S. freight railroads has reached tentative agreements with two more labor unions — the International Brotherhood of Electrical Workers and the American Train Dispatchers Association, which together represent approximately 6,000 freight rail employees — the National Carriers’ Conference Committee announced in an emailed press release. This brings the total to five of 12 unions that have announced tentative agreements.