Evening Report | Aug. 27, 2021

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

 

Corn, soybean producers: Finish old-crop sales… Weather has turned less threatening with rains across areas of the Corn Belt this week. With the end of the 2020-21 marketing year quickly approaching, we advise hedgers and cash-only marketers to sell the remaining 5% of 2020-crop corn and soybeans.

 

Your Pro Farmer newsletter is now available… With crop condition ratings for corn and soybeans still sliding, the market remains focused on the weather. Dry areas of the northern Midwest received rain this week and more is in the forecast. Rainfall will be more sporadic in the eastern Corn Belt. On News page 4 we take a deeper dive into the data collected during last week’s Crop Tour and how that played into Pro Farmer’s crop estimates. You’ll also find updates on USDA’s ag trade outlook, various pandemic-related farm aid, and reports EPA proposed retroactively lowering the 2020 RFS levels. Access it here.

 

SovEcon slices its Russian wheat export forecast… The ag research firm SovEcon has slashed its Russian wheat export estimate by 3.2 million metric tons (MMT) to 33.9 MMT, which would be the lowest export volume in five years. The firm cited its lower production forecast, its current slow export pace and strong competition from other suppliers like Ukraine and the European Union for the cut. Over the past month, the firm’s production forecast has dropped from 82.3 MMT to 76.2 MMT on cuts to winter wheat area and low spring wheat yields due to hot, dry summer weather. SovEcon expects slow exports to continue for at least the next few months, with domestic grain prices climbing and unpredictable changes in the formula-based export tax.

 

Low water levels also causing problems for farmers in Paraguay… Argentina isn’t the only South American country being impacted by historically low water levels along key waterways. Grain ships and vessels traversing the Paraguay River in Paraguay are only loading to around half capacity due to lower water levels. Industry sources cited by Reuters note that cargo holds on ships are being left empty, delays are common, and farmers are being forced to store crops they couldn’t ship. Paraguay is the world’s fourth largest soybean exporter. Experts do not expect water levels to improve notably until at least 2022, signaling these trade disruptions are here to stay for some time.

Juan Carlos Muñoz, director of the Center for Fluvial and Maritime Ship-owners of Paraguay, reports the situation is “very complicated year since 96% of Paraguay's overseas trade is handled by the river and this implies a very important impact on the national economy.” He adds that delays regarding the delivery of fertilizer could also impact soybean planting that would normally begin next month.

 

Fed edging closer to tapering… Chair Jerome Powell said Friday the Fed could start dialing back its economic stimulus this year, as one of the two goals it wants to achieve before starting to taper has been met. But he said the Fed will continue to closely monitor the Covid Delta variant, which is lowering consumer sentiment.

 

Ethanol trade outlook… FY 2021 U.S. ethanol exports are forecast at $2.2 billion, down $60 million from the previous year with “higher export unit values only partially offsetting lower export volume,” USDA said. Much of the shift is on Brazil, as U.S. exports of fuel ethanol to Brazil in FY 2021 “have fallen to levels not seen in a decade.” USDA also noted that Colombia’s lower blend mandate has cut U.S. exports to that destination. Lower sales of ethanol to Mexico and Nigeria also factored into the mix as those had reached record marks last year. U.S. industrial ethanol sales to India are lower due to higher U.S. prices and the substitution of surplus sugar supplies to ethanol. U.S. sales to Canada and South Korea are up on fuel demand recovery and record demand for industrial product, respectively.

 

Kerry heads to China with coal on agenda… Special Climate Envoy John Kerry heads to China next month with plans to prod the world's largest carbon emitter on taking stronger climate steps as the crucial United Nations summit looms this fall, Axios notes. Kerry will be in Tianjin, China from Sept. 1-3 after an Aug. 31 meeting in Tokyo. The Wall Street Journal says Kerry will “press Chinese leaders to declare a moratorium on financing international coal-fired projects.”

 

White House revised long-term budget and growth projections… The White House gave Congress revised budget and growth projections over the next 10 years, forecasting a 2.2% rate of yearly economic expansion. The administration’s stronger projection incorporates new analysis on the impact of President Joe Biden’s multitrillion-dollar economic agenda. Inflation is forecast to more than double, rising to 4.8% in the fourth quarter, the White House projects, but quickly abate in 2022.

 

Market Watch… Our Market Watch table features monthly and quarterly price outlooks along with weekly prices for a variety of ag markets. Check it out.

 

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Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.