Evening Report | May 4, 2023

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Kremlin accuses U.S. of drone attack... Russia said on Thursday the U.S. was behind an alleged drone attack on the Kremlin aiming to kill President Vladimir Putin. Kremlin spokesman Dmitry Peskov, without providing evidence, said Ukraine had acted on U.S. orders with the alleged drone attack on the Kremlin on Wednesday. White House national security spokesperson John Kirby said Peskov was “just lying,” saying the U.S. neither encouraged nor enabled Ukraine to strike outside its borders. Kyiv has also denied involvement in the incident.

“Attempts to disown this (attack on the Kremlin), both in Kyiv and in Washington, are, of course, absolutely ridiculous. We know very well that decisions about such actions, about such terrorist attacks, are made not in Kyiv but in Washington,” Peskov said.

Technical meeting Friday on Black Sea grain deal... Technical personnel from Turkey, Russia, Ukraine, and the United Nations will meet on Friday to discuss the Black Sea grain deal, Turkish Defense Minister Hulusi Akar said. The evacuation of Turkish-flagged ships and grain shipments from Black Sea ports as part of the deal will be discussed, Akar said. Friday’s meeting would be technical and it would be followed up by a deputy ministers’ meeting next week.

“We continue our efforts to ensure that the grain initiative continues in a fast, safe and planned manner. We got the impression from discussions that these efforts will produce positive results,” Akar said.

Dryness/drought spreads in Midwest... As of May 2, 46% of the U.S. was covered by abnormal dryness/drought, unchanged from the previous week, according to the Drought Monitor. It noted, “During the final week of April, the Southern Great Plains along with the Lower Mississippi Valley also received widespread precipitation with amounts exceeding two inches across southeastern Colorado, northern and eastern Oklahoma, and northeastern Texas. Late April was mostly dry across the Central to Northern Great Plains and Middle Mississippi Valley.”

USDA estimated drought covered 27% of corn production areas, 20% of soybeans and 13% of spring wheat. USDA estimated 49% of U.S. winter wheat areas were covered by drought.

In HRW areas, dryness/drought covered 91% of Kansas (63% D3 or D4), 56% of Colorado (1% D3, virtually no D4), 59% of Oklahoma (33% D3 or D4), 68% of Texas (21% D3 or D4), 99% of Nebraska (47% D3 or D4), 86% of South Dakota (0% D3 or D4) and 71% of Montana (0% D3 or D4).

In SRW areas, dryness/drought covered 54% of Missouri, 49% of Illinois, 7% of Indiana, 0% of Ohio, 0% of Michigan, 0% of Kentucky and 14% of Tennessee. None of the drought in these SRW states is classified as D3 or D4.

For the Midwest, the Drought Monitor stated: “Based on increasing 30 to 60-day precipitation deficits, 30 to 60-day SPIs, and CPC's leaky bucket soil moisture, abnormal dryness (D0) and moderate drought (D1) was expanded across Iowa, Illinois, western Indiana, and Missouri. A swath of short-term severe drought (D2) was introduced to central Missouri where 60-day precipitation deficits exceed 4 inches and have support from soil moisture indicators for D2 intensity.”

For the Plains, the Drought Monitor said, “Rainfall of 1.5 to 2 inches, or more, during the past week along with SPI at various time scales and soil moisture supported a 1 to 2-category improvement to southeastern Colorado. For similar reasons, a 1-category improvement was made to southwestern Kansas. However, 12-month SPI still supports D3-D4 across much of western and central Kansas. Based on the NDMC's short and long-term objective blends and CPC's leaky bucket soil moisture, D1-D3 expansion was warranted for northern Kansas and south-central Nebraska. D3 was increased westward across west-central Nebraska following a very dry April.”

In the South, the Drought Monitor commented: “Balancing longer term SPIs and recent widespread rainfall (1 to 3.5 inches), a 1-category improvement was made to parts of Oklahoma and Texas. Improvements were also made to parts of central Texas along with the Texas Gulf Coast after more than 1.5 inches of rainfall this past week. CPC’s leaky bucket soil moisture and 90 to 120-day SPI supported a slight expansion of moderate (D1) to severe (D2) drought in west-central Texas. Based on soil moisture considerations and impact reports (very dry pastures), extreme (D3) drought was increased in coverage across the Texas Panhandle.”

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U.S. records ag trade deficit in March... The U.S. exported $15.86 billion in ag goods during March against imports of $17.68 billion, resulting in a deficit of $1.83 billion. That was down from a surplus of $49.1 million in February. Through the first half of fiscal year (FY) 2023, U.S. ag exports totaled $100.18 billion against imports of $98.94 billion for a surplus of $1.24 billion. USDA forecasts FY 2023 ag trade exports at $184.5 billion and imports at $199.0 billion, which would suggest a deficit of $14.5 billion.

U.S. trade deficit narrows sharply in March as exports rise... The U.S. trade deficit contracted 9.1% to $64.2 billion in March from an upwardly revised $70.6 billion level for February. Exports increased 2.1% to $256.2 billion, while imports slipped 0.3% to $320.4 billion.

Exchange keeps Argentine crop estimates unchanged... The Buenos Aires Grain Exchange kept its Argentine crop estimates at 22.5 MMT for soybeans and 36 MMT for corn.

The exchange rated the Argentine soybean crop 2% good/excellent (down one point from the previous week), 35% fair (up three points) and 63% poor/very poor (down two points). It rated the country’s corn crop 4% good/excellent (down one point), 42% fair (down one point) and 54% poor/very poor (up two points).

ECB raises rates, Largarde says ‘not pausing’... The European Central Bank (ECB) raised interest rates by 25 basis points to 3.25% as expected and signaled more tightening would be needed to tame inflation. ECB has raised interest rates 375 basis points since last July, when it began the tightening cycle.

While the hike was less than the three consecutive 50-basis-point increases, ECB President Christine Lagarde made it clear its work to tame inflation is not done.

“We are not pausing, that is very clear,” Lagarde said. “We know that we have more ground to cover.” Lagarde said there were still big upside risks to inflation, notably from recent wage deals and high corporate profit margins, and that financial conditions were still not sufficiently tight. She noted the bank’s written statement made reference to future “policy decisions” in the plural, possibly suggesting more than one additional hike.