Evening Report | Aug. 12, 2021

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USDA’s initial corn crop estimate well shy of expectations… Its initial soybean crop estimate was also a bit smaller than expected, and USDA sliced its all-wheat crop quite a bit more than the market anticipated. The corn and soybean estimates were based primarily on farmer surveys and satellite imagery. Field samples from USDA won’t come into play until September.

USDA also surprised the market by cutting its U.S. cotton crop estimate by more than 500,000 bales from the July projection; analysts expected a higher production forecast.

U.S. new-crop carryover numbers also favor market bulls… The smaller-than-expected production forecasts also translated to lighter-than-anticipated new-crop carryover projections for corn, soybeans, wheat and cotton. USDA also slashed its 2021-22 global wheat carryover forecast by 12.6 MMT from July to 279.06 MMT, which was 9.1 MMT lighter than expected. USDA made some aggressive (and needed) cuts to its wheat production forecasts for both Canada and Russia. But whereas USDA slashed its Canadian wheat crop (mostly spring and durum wheat) 7.5 MMT from last month, it shaved just 4 million bu. (147 million bu.) off the U.S. spring and durum crops. Find more global crop highlights here.

First data dump of FSA certified acreage… The first FSA certified acreage figures released today showed prevent-plantings of only 2.039 million acres for the 10 major crops — that’s below average. If reported total planted acres for the 10 major crops of 250.9 million acres, the most ever for August dating back to 2011 when FSA started releasing the data. Our initial analysis of the data follows:

For corn, FSA reported planted/failed acres of 90.3 million acres. In the June Acreage Report, USDA estimated corn plantings at 92.7 million acres. FSA data already exceeds USDA’s June acreage estimates in Arkansas, Delaware, Indiana, Mississippi, Missouri, Nebraska and North Dakota, suggesting corn planted acreage will increase.

For soybeans, FSA reported planted/failed acres of 85.3 million acres. FSA data already exceeds USDA’s estimates in Georgia, Iowa, Kansas, Nebraska and North Carolina. But increases in those states could be offset by lower plantings in others. For now, USDA’s June estimate of nearly 87.6 million acres appears to be in the ballpark.

FSA reported planted/failed acres of 10.9 million acres of upland cotton and 116,854 acres of extra-long staple (pima) cotton. Cotton plantings appear to project about 200,000 to 300,000 acres under USDA’s June estimate.

FSA will update certified acreage through January. USDA has historically started to incorporate FSA acreage data into its crop estimates in October.

Rains provided just spotty drought relief for the Midwest and Northern Plains… Rains over the past week did not bring near the relief hoped for in the Northern Plains and western Corn Belt. Today’s U.S.  Drought Monitor for the week ended Aug. 10 notes that interior Wisconsin received heavy rains, but rainfall exceeding an inch was relatively limited elsewhere. “The scattered areas of heavy rain included northeastern and part of southern North Dakota, northeastern South Dakota, a few areas from central Minnesota southward into central Iowa and southeastern Nebraska. Similarly, widely-scattered areas of 1 to locally 3 inches dotted the Midwest, lower Ohio Valley, central and southern Appalachians, and northern New England,” today’s drought summary says.

Consequently, dry areas of the western Great Lakes saw significant improvement, but drought improvement outside of that was limited to small, scattered areas. “Increased drought coverage and intensity was more common, as a large majority of these areas recorded light precipitation at best,” today’s summary says.

Today’s writeup said it was “feast or famine” across the Midwest with heavy rains bringing a broken pattern of improving conditions in southern Minnesota, northern and central Iowa and southern Wisconsin. Of note, D4 drought was introduced in northern Minnesota for the first time on record. For Iowa, the area covered by abnormal dryness or drought edged a little over a point higher to 76%. Dryness expanded in some areas of Missouri, Michigan and Ohio, but nothing intense. Find related maps.

Big Ukraine grain crop prospects helping to offset some concern about Russia’s short wheat crop… SovEcon raised its forecast for Ukraine’s wheat crop by 2.3 MMT to 32.6 MMT, with the Black Sea region research firm citing near- to record yields across the country. Accumulated moisture reserves and the fact the country primarily produces winter wheat has helped it deal with adverse weather far better than its neighbor Russia. Today, USDA hiked its wheat crop forecast for Ukraine to 33 MMT, which would be a record for the country.

 SovEcon also raised its corn crop forecast for Ukraine to 39.3 MMT, a 700,000-MT increase from July. USDA also raised its corn crop forecast for Ukraine to 39.0 MMT.

Biden administration urging OPEC+ to boost output continues in focus… The statement released early Wednesday by the White House urging OPEC+ to boost oil output in a bid to push gasoline prices lower is drawing criticism from several sides. Republicans called out the administration for their efforts to cancel the Keystone XL pipeline and to pause oil and gas lease sales on federal lands and waters. “President Bident canceled an American pipeline on Day One. Seven months later, he is now begging OPEC to pump more oil,” House Minority Leader Kevin McCarthy (R-Calif.) tweeted. “Calling for increased OPEC+ oil production demonstrates the fallacy of the White House Federal lands energy ban,” said the U.S. Chamber of Commerce’s Christopher Guith in a statement. “We need to let the U.S. produce oil under the world’s strictest environmental standards and boost our economy instead of Russia’s and the Middle East.” The Huffpost raised the question of whether the action means Biden is “denying the reality of the global emissions crisis.”