Evening Report | September 19, 2022

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Corn crop conditions decline again... As of Sunday, USDA rated 52% of the corn crop “good” to “excellent,” down one percentage point from the previous week. Traders expected condition ratings to be unchanged. The portion of crop rated “poor” to “very poor” increased one point to 21%.

 

This week

Last week

Year-ago

Very poor

9

9

5

Poor

12

11

10

Fair

27

27

26

Good

41

41

45

Excellent

11

12

14


USDA reported 87% of the crop was dented, 40% was mature and 7% was harvested. Those were one percentage point, five points and one point behind the respective five-year averages.

 

Soybean conditions lower than expected... USDA rated 55% of the soybean crop “good” to “excellent,” down one point from the previous week, whereas traders expected conditions to remain unchanged. The amount of crop rated “poor” to “very poor” held at 15%.

 

This week

Last week

Year-ago

Very poor

5

5

4

Poor

10

10

10

Fair

30

29

28

Good

46

45

47

Excellent

9

11

11


USDA reported 42% of the soybean crop was dropping leaves and 3% was harvested. Those were five percentage points and two points behind the respective five-year averages.

 

Cotton conditions unchanged... USDA rated 33% of the cotton crop in the top two categories as of Sunday, unchanged from the previous week. But the portion of crop rated “poor” to “very poor” increased two points to 39%. In top producer Texas, 15% of the crop was rated “good” to “excellent” and 56% was rated “poor” to “very poor.”

 

This week

Last week

Year-ago

Very poor

17

15

1

Poor

22

22

7

Fair

28

30

28

Good

29

29

51

Excellent

4

4

13


USDA reported 59% of the crop had bolls open, eight percentage points ahead of the five-year average. The crop was 11% harvested, which was in line with average.

 

Spring wheat harvest running at average pace... USDA reported 94% of the U.S. spring wheat crop was harvested, in line with the five-year average. After a delayed start, North Dakota stood at 91% harvested, two percentage points behind average. South Dakota and Montana had wrapped up their spring wheat harvests.

 

 

Winter wheat planting slightly ahead of normal... As of Sunday, 21% of the U.S. winter wheat crop was seeded, four points ahead of the five-year average. Planting stood at 33% in Texas (16% on average), 13% in Oklahoma (13%) and 15% in Kansas (10%). USDA reported 2% of the crop was emerged, in line with the five-year average.

 

Bunge to sell oilseed processing business in Russia... Bunge said on Monday it has agreed to sell its oilseed processing business in Russia to Karen Vanetsyan, the controlling shareholder of Exoil Group. The sale includes the sunflower processing plant in Voronezh. Bunge did not reveal financial details about the deal.

Bunge invested $130 million in construction of the Voronezh plant which it opened in 2008, according to the Russian version of its website. The plant has annual capacity to process 540,000 MT of raw material which makes it possible to produce more than 200 million bottles of sunflower oil.

 

Poland opens new waterway to break Russia dependence... Poland’s leaders celebrated the opening of a new yet unfinished canal on Saturday, which they say will mean their ships no longer must secure Russia’s permission to sail from the Baltic Sea to ports in the Vistula Lagoon. The event was timed to mark 83 years since the Soviet invasion of Poland during World War II. It was intended to demonstrate symbolically that Moscow’s say over the economy and development of the area, bordering the Russian-controlled Kaliningrad exclave, had ended. The government says the waterway gives Poland full sovereignty in the northeastern region, which needs investment and economic development. “The idea was to have this waterway opened and not to have to ask permission anymore from a country that is not friendly and whose authorities do not hesitate to attack and subdue others,” Polish President Andrzej Duda said. He said the investment will pay off through the increase in the value of the land around it, through the development of the cities and ports on the lagoon thanks to increased trade, business and tourism.

However, cargo ships cannot use the passage until the approach to the Port of Elblag is deepened. There has been some controversy in Poland over the expense of the project.

 

Pork producers list industry priorities during NPPC fly-in... The National Pork Producers Council (NPPC) held its fall Legislative Action Conference last week, meeting with their members of Congress to discuss pork industry priorities. Over the two-day event, NPPC said its producers asked lawmakers to:

  • Trade policy: Press the Biden administration to join the 11-nation Comprehensive and Progressive Trans-Pacific Partnership and to negotiate an Indo-Pacific Economic Framework trade deal that addresses market access for and non-tariff barriers to U.S. products.
  • Expand the H-2A visa program to year-round agricultural workers, including packing plant employees. Currently, the visa only allows for temporary, seasonal farm laborers.
  • Pass the “Beagle Brigade Act,” authorizing a training center for dogs that can detect animal and plant diseases and pests at the country’s points of entry. Only the Senate must approve the measure; the House passed the bill earlier this year. Producers also asked that the Bureau of Customs and Border Protection agricultural inspection program be fully funded.
  • Next farm bill: Fund in next farm bill the National Annual Vaccine and Veterinary Countermeasures Bank, the National Animal Health Laboratory Network, the National Animal Disease Preparedness and Response Program, and the National Veterinary Stockpile. Producers also asked for an increase in funds to help reduce the population of feral swine, which can carry foreign animal diseases.
  • Trade promotion: Reauthorize and fund — also through the farm bill — the Market Access and the Foreign Market Development programs to promote U.S. agricultural exports and authorize a USDA catastrophic risk insurance program to help mitigate risks for pork producers.

 

Tai again defends continued China tariffs, murky on road ahead... U.S. tariffs levied against Chinese products in 2018 were not “punitive” tariffs, according to U.S. Trade Representative (USTR) Katherine Tai and are not “punishing” China. Tai said the tariffs are just a trade tool. “They can be used in lots of different ways. In some contexts, they are used as sanctions. These are not sanctioning tariffs. The tariffs that were put down in 2018 were really rebalancing tariffs; they are tariffs to try to level the playing field to overcome unfairness that we have seen and the impacts on the U.S. economy.  So that is a legal fact, but that is also a fact with respect to policy.”

Regarding the first talks with Taiwan under the Initiative on 21st Century Trade, Tai said she expects negotiations will take place soon. Tai downplayed the possibility of an “early harvest” of successes under the U.S. Indo-Pacific Economic Framework (IPEF) following the ministers’ meeting last week.

 

EVs took off. Car makers weren’t ready... A Wall Street Journal article notes that more buyers are lining up for electric vehicles (EVs), catching car companies flat-footed and triggering a race for more batteries, factories and materials. Some highlights:

  • A few years ago, auto executives weren’t sure there would be enough buyers for plug-in electric models. Now, they worry they can’t build them fast enough, while they intensify a multibillion-dollar rush to accelerate timelines and bring factories online.
  • EVs account for only about 6% of overall U.S. vehicle sales. But that percentage has tripled in the last two years, while sales of other types of vehicles have declined, according to research firm Motor Intelligence. General Motors Co., Ford, Rivian Automotive Inc. and other auto makers say they have waiting lists of longer than a year for their new electric models.
  • In July, five of the six fastest-selling vehicles in the U.S. were electrics or plug-in hybrids, which pair a battery with a gas engine, according to data from consumer site Edmunds.com. EVs sold in 19 days on average in July compared with 47 days a year earlier — and went four days faster than internal-combustion vehicles, Edmunds data show.

 

Interest rates will eventually top inflation... Interest rates have always topped inflation by the end of a Federal Reserve tightening cycle, notes Deutsche Bank’s chief U.S. economist, Matt Luzzetti. Currently, inflation sits several percentage points higher, and Luzzetti says the fed funds rate will need to reach 4.9% by the first quarter of 2023.

 

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