Evening Report | June 22, 2023

Check our advice monitor on ProFarmer.com for updates to our marketing plan.

Corn, soybean drought areas continue to expand... As of June 20, the Drought Monitor showed 56% of the U.S. was covered by abnormal dryness/drought, up one percentage point from the previous week. Drought continues to expand across corn and soybean areas. USDA estimated drought (D1 or higher) covered 64% of corn production areas (up seven points from last week), 57% of soybeans (up six points), 15% of spring wheat (up 11 points) and 16% of cotton areas (down two points).

For the Midwest, the Drought Monitor noted: “Despite predominantly near to below normal temperatures across much of the Midwest, excluding the Upper Midwest and the western Corn Belt, much of the region did not see appreciable rainfall. As a result, short-term (30 to 90 day) dryness continued to worsen, leading to widespread deterioration. The exception to this was across the eastern Corn Belt and into parts of Kentucky, where 7-day rainfall totals helped to improve drought conditions, or at least halt further degradation. Ohio is the greatest beneficiary of the heavy rains this week and saw the most improvement, with several areas receiving more than 2 inches of rainfall.”

For the Plains, the Drought Monitor stated: “Much of the Northern Plains received below average rainfall this week, adding to short-term precipitation deficits. In conjunction with the below average weekly rainfall, above normal temperatures and high winds (typical for this region) only acted to exacerbate worsening drought conditions by increasing evaporation from soils and vegetation. As a result, widespread degradation of abnormal dryness (D0) and drought was warranted this week across the Dakotas. Degradation was also warranted farther southward, extending across the eastern Great Plains all the way to Kansas, despite more seasonal daytime high temperatures this week. Conversely, across western portions of the High Plains region, another round of improvements is warranted, as yet another week of above normal rainfall (with many areas receiving upwards of 2 inches of rainfall, with locally higher amounts) was observed across many areas, leading to improvements to long-term drought conditions.”

Click here for additional information and related maps.

Exchange lowers Argentine corn crop estimate, wheat planted area... The Buenos Aires Grain Exchange cut its Argentine corn crop estimate by 2 MMT to 36 MMT as drought reduced yields more than previously expected. The exchange also reduced its wheat planted area forecast by 200,000 hectares to 6.1 million hectares.

Feedlot supplies will drop year-over-year for ninth straight month... USDA’s Cattle on Feed Report on Friday afternoon is expected to show the U.S. feedlot inventory as of June 1 down 3.4% from year-ago at 11.438 million head. That would be the nineth straight month of year-over-year declines in feedlot numbers. Analysts expect USDA to show May placements increased 1.7% from year-ago, while marketings are likely to be up 1.6%.

EPA says SAF will reduce renewable diesel production... EPA assumes there will be rising production of sustainable aviation fuel (SAF), but that will cut into renewable diesel production. “Historically, greater incentives have been available for renewable diesel production, which has caused many of these production facilities to maximize renewable diesel production,” EPA explained. “In the near term, we expect that any increase in SAF production will result in a corresponding decrease in renewable diesel production.”

But renewable diesel production capacity is clearly on the rise, having reached 2.9 billion gallons as of January 2023. “A number of parties have announced plans to build new renewable diesel production capacity with the potential to begin production by the end of 2025,” EPA said. “This new capacity includes new renewable diesel production facilities, expansions of existing renewable diesel production facilities, and the conversion of units at petroleum refineries to produce renewable diesel.”

Still, EPA said they “expect that renewable diesel production through 2025 will be limited to a level below production capacity primarily due to limited feedstock availability.”

EPA noted the Energy Information Administration (EIA) “currently projects that renewable diesel production capacity could reach nearly 6 billion gallons by 2025, though it is possible that not all these announced projects will be completed, and not all of those that are completed will necessarily produce renewable diesel in the 2023–2025 timeframe addressed by this rule.”

WOTUS update... Republicans are pushing the Biden administration to quickly apply the recent Supreme Court ruling which significantly reduces the wetlands subject to Clean Water Act regulations. Key Republican lawmakers penned a letter to EPA Administrator Michael Regan and Assistant Secretary of the Army for Civil Works Michael Connor, urging prompt compliance with the majority opinion. They argue the administration wasted time by finalizing its Waters of the U.S. rule in January when a Supreme Court ruling was on the way. Since the recent ruling in Sackett v. EPA is seen as less complex, the lawmakers believe it should be implemented faster. Following the May 25 decision, both EPA and Army Corps of Engineers are reviewing the ruling and have temporarily halted issuing determinations on applicable wetlands and streams.

Drought forcing Panama Canal to constrain traffic... Officials managing the Panama Canal will impose stricter measures on large ships crossing the waterway, which has been hit by the worst drought in more than a century. As a result of the shallower waters, container ships will face lower limits on the weight they can carry. The new restrictions will take effect on Sunday.

UFCW reaches deal with PSSI... The United Food and Commercial Workers International Union (UFCW), which represents 1.3 million essential workers in grocery stores, meatpacking plants and other essential industries across North America, announced an agreement with PSSI to offer union contracts to workers across the country.