Evening Report | March 23, 2023
Check our advice monitor on ProFarmer.com for updates to our marketing plan.
Rains stabilize Argentine crops, but damage already done... The Buenos Aires Grain Exchange kept its Argentine soybean and corn crop estimates at 25 MMT and 36 MMT, respectively, noting recent rains stabilized crops for now. But production potential remains severely reduced by prolonged drought.
The exchange rated the Argentine soybean crop 2% good/excellent (unchanged from the previous week), 25% fair (up two points) and 73% poor/very poor (down two points). It rated the country’s corn crop 6% good/excellent (down one point), 36% fair (up three points) and 58% poor/very poor (down two points).
Exchange: Argentine soybean imports to rise sharply amid drought... Argentina’s soybean imports will surge 139% from last year to 7.9 MMT in 2022-23 due to heavy losses caused by a historic drought, the Rosario Grain Exchange said. That would be in line with the up to 8 MMT estimate for soybean imports the president of Argentina's grain processing chamber CIARA indicated last week.
During the first two months of this year, Argentina’s soybean crush fell 33% versus last year to the lowest volume since 2013.
Drought footprint unchanged, but winter wheat drought area shrinks... As of March 21, 52% of the U.S. was covered by abnormal dryness/drought, unchanged from the previous week. USDA estimated 51% of U.S. winter wheat areas were covered by drought, down two points from the previous week. Drought coverage for winter wheat included 13% “moderate” (D1), 11% “severe” (D2), 13% “extreme” (D3) and 14% “exceptional” (D4).
In HRW areas, dryness/drought covered 84% of Kansas (52% D3 or D4), 53% of Colorado (2% D3, virtually no D4), 66% of Oklahoma (37% D3 or D4), 78% of Texas (14% D3 or D4), 100% of Nebraska (34% D3 or D4), 100% of South Dakota (0% D3 or D4) and 84% of Montana (0% D3, no D4).
The Drought Monitor stated: “Continued dry conditions in the Oklahoma and Texas panhandles led to expansions of severe and exceptional drought where soil moisture and groundwater levels continued to drop. In the northern Texas Panhandle, the winter wheat crop is in danger of total failure, which is indicative of the soil moisture and precipitation deficit problems in the area. In areas that mostly missed out on heavier rains in central Texas, streamflow continued to drop amid growing precipitation deficits, leading to expansion of drought and abnormal dryness in some locations. Farther south, in the Big Bend region and in south-central Texas, localized improvements were made due to benefits from recent heavier rainfall. Abnormal dryness and moderate and severe drought expanded slightly eastward in southeast Kansas and southwest Missouri, where streamflows and soil moisture decreased amid mounting short-term precipitation deficits.”
In SRW areas, dryness/drought covered 8% of Missouri, 0% of Illinois, 0% of Indiana, 0% of Ohio, 10% of Michigan, 0% of Kentucky and 0% of Tennessee. None of the drought in these SRW states is classified as D3 or D4.
Click here for additional information and related maps.
Negative PDO may turn U.S. Midwest drier later this year... Ocean surface water temperatures off the North American Pacific Coast have shown a steady cooling trend in recent weeks. This trend has occurred while the north-central Pacific Ocean experiences warming ocean water. This phenomenon is associated with a negative phase of Pacific Decadal Oscillation (PDO). World Weather Inc. says the ocean surface temperature changes recently have been reinforcing the negative PDO event at a time when normally negative PDO weakens. This year’s negative PDO has been strengthening in recent weeks and it has been significantly negative for 21 straight months. There has been no other time since 1950 that PDO was strongly negative for such a long period of time.
At the same time, NOAA’s ENSO forecast model continues to predict a strong evolution toward El Niño late this spring and early summer. World Weather says 1957 and 1976 are the two years most like this one in which a multi-year La Niña was followed by El Niño, with 1976 being the most comparable year.
World Weather concludes, “The sudden change from a persistent multi-year La Niña event to an aggressive El Niño would leave the atmosphere confused because of significantly different weather pattern influences around the world. There would be a period of months in which areas of dryness and wet biased conditions may evolve in various places in the world as the atmosphere quickly shifts from the La Niña pattern to El Niño. During that period of confusion, if the PDO is still strongly negative it will help induce stronger ridge building in a part of North America. If that happens, forecasters, traders and producers may be surprised to see dryness returning to a part of the region from the central Plains into a part of the Midwest. That does not mean a full-blown drought, but reduced precipitation and warmer temperatures for some areas might induce some crop stress.”
Perspective: The 1976 growing season was not favorable for corn and soybean yields. The 1976 corn yield of 88.0 bu. per acre was 90.7% of previous record. The soybean yield of 26.1 bu. per acre was 90.3% of the previous record.
Russia could buy up to 10 MMT for grain reserve... The Russian government will consider increasing grain purchases for state reserves to 10 MMT in 2023-24, Interfax news agency quoted Deputy Prime Minister Viktoria Abramchenko as saying. Russia purchased 3 MMT of domestic supplies for the state intervention fund in 2022-23.
Cold Storage Report: Meat stocks trend less than normal during February... Beef stocks fell during February, which is typically the case, though this year’s decline was more than average. Pork stocks rose last month, which is normal, though the increase was less than average. Beef stocks show evidence of reduced beef production and solid demand. Pork production also fell slightly from February 2022.
Beef stocks in frozen storage at the end of February totaled 500.2 million lbs., down 34.1 million lbs. (6.4%) from January, whereas the five-year average decline during the month was 14.7 million pounds. Beef inventories dropped 31.4 million lbs. (5.9%) from last year but were 5.8 million lbs. (1.2%) above the five-year average.
Pork stocks at the end of February totaled 521.2 million lbs., up 2.3 million lbs. (0.4%) from January, far less than the five-year average increase of 35.4 million lbs. during the month. Pork stocks rose 42.9 million lbs. (9.0%) versus February 2022 but were 46.4 million lbs. (8.2%) below the five-year average.
Total poultry stocks at 1.188 billion lbs. increased 29.3 million lbs. (2.5%) from January and 107.5 million lbs. (10.0%) from year-ago. Chicken breast meat stocks at 245.1 million lbs. jumped 40.7% from year-ago and were record-large for the end of February.
USDA announces upcoming changes to wheat S&D tables... Starting with the May 12 report, USDA’s wheat balance sheets by class will add separate lines for imports, food use and feed and residual use. This will provide a more inclusive picture of usage by wheat class.
Republicans press EPA’s Regan on WOTUS rule... Several Republican members during a Wednesday hearing questioned EPA administrator Michael Regan about his decision to issue a rule governing which U.S. waterways fall under federal jurisdiction before the Supreme Court issues an opinion on the matter in Sackett v. EPA, expected before the end of this term. “We recognize that the Sackett case will have some impact on the rule,” Regan said. “But what we didn’t want to do was wait until after June, wait for the Supreme Court, and then start a two-year process, which would have left farmers and ranchers in limbo.”
Regan said the January WOTUS rule — which codifies a pre-2015 definition of waters of the U.S. — carefully embeds two post-2015 Supreme Court rulings, as well as eight exemptions requested by the agricultural sector.
Sen. Markwayne Mullin (R-Okla.) said the decision by EPA and the Army Corps of Engineers to issue their rule while the issue is still before the Supreme Court amounts to “just gambling” that the court won’t overturn it.
BOE raises interest rates... The Bank of England (BOE) raised interest rates 25 basis points, pushing the benchmark rate to 4.25%. This was its 11th consecutive increase in interest rates that began in December 2021, although it was the smallest rise since June of last year. BOE said price growth remained on course to fall sharply in the April-June period, despite inflation’s surprise jump to 10.4% in February that was announced Wednesday.
