Evening Report | Aug. 9, 2021

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Corn ratings lifted by moisture and milder temperatures… Rains and mild temperatures over the past week helped lift corn condition ratings two percentage points to 64% “good” to “excellent” (G/E). Analysts polled by both Reuters and Bloomberg had expected USDA’s G/E rating to hold steady at 62%. Last year at this point, the department put 71% of the crop in the top two categories.

As of Sunday, USDA reports 95% of the crop was silking, 56% was in dough and 8% was dented. That compares to 94% silking, 51% in dough and 11% dented for the 2016 through 2020 average.

Soybean crop ratings steady to lower… Milder temps and needed rains had less of an impact on the soybean crop, though late weekend rains could show up more so in next week’s update. USDA continues to rate 60% of the crop G/E, which was in line with expectations. But the amount of soybeans rated “poor” to “very poor” climbed a percentage point to 13%.

Today’s update shows 91% of the crop was still blooming as of Aug. 8, two points more than the five-year average. Seventy-two percent of the crop is setting pods, which compares to 73% last year at this time and 68% for the five-year average.

Spring wheat ratings edge higher amid quick harvest… USDA rated 11% of the spring wheat G/E as of Sunday, a one-point improvement from the week prior whereas analysts had expected a steady rating. A late-season rise in ratings is not unusual, even in years when ratings are historically low, and can reflect the removal of abandoned acres from the calculation. The amount of spring wheat rated P/VP also dipped three percentage points to 61%.

A small crop and high abandonment have allowed harvest to advance quickly. USDA reports 38% of it had been harvested as of Sunday, a 21-point surge from last week and five points more advanced than analysts polled by Reuters expected on average. The five-year average puts harvest progress at 21%.

Just 5% of the winter wheat crop left to be harvested… Winter wheat harvest advanced four percentage points over the past week to 95% finished. Analysts surveyed by Reuters had expected the department to report 96% of the crop had been harvested. The five-year average harvest progress for this point in the season is 91% complete. This marks USDA’s final update on winter wheat progress for the season.

Big jump in cotton ratings after one-week dip… Cotton condition ratings shot higher over the past week, with USDA rating 65% of the crop G/E, a five-point increase from last week. Cotton ratings improved steadily during July but set back to start August. Also, the amount of cotton rated P/VP slipped a percentage point to 7%. In top-producing Texas, 63% of the crop is rated G/E, with just 7% of the state’s crop rated P/VP.  

Cotton development continues to lag, though overall concerns about that are fairly limited. USDA reports 88% of the crop is squaring (96% for the five-year average), 63% is setting bolls (68% on average) and 5% of the crop has bolls open (11% on average).

Abiove expects smaller Brazilian soy crush in 2021, despite bigger crop… Brazil will likely export 86.7 MMT of soybeans in 2021, according to the country’s oilseed processors association Abiove. Exports would be up notably from 2020 when 82.9 MMT of soybeans were shipped. Abiove pegs this year’s crop at 137.5 MMT, a 9.6-MMT increase from 2020.

Despite the big year-over-year rise in production, soy processing is expected to slow from last year’s 46.8 MMT to 46.5 MMT, given uncertainty regarding the country’s biofuel mandate, according to the association. Brazil lowered the volume of biodiesel blended with diesel at the pump from 13% to 10% on April 9 in an attempt to temper fuel prices. In mid-July, the country raised the blending requirement to 12%, which was still shy of the original 13% target for the year. Around 70% of Brazil’s biodiesel is produced from soyoil.

Abiove also said government data shows Brazil exported 2 MMT of soymeal last month, marking a record for July.

Slow safrinha corn harvest continues… Brazilian farmers have harvested 58% of their safrinha corn crop, well behind 70% harvested last year at this time, reports agribusiness consultancy AgRural. This was a weekly advance of nine percentage points, with weather improving over the past week. Of the top producing provinces, harvest is farthest behind in Parana. Harvest is nearing completion in Mato Grosso do Sul. AgRural reports that crop failure was less severe in top-producing Mato Grosso than in other center-south producing provinces.

Tyson to hike retail food prices in September, citing ‘unprecedented’ inflation… Tyson Foods Inc. reported stronger-than-expected earnings for the third quarter, with adjusted earnings of $2.70 per share topping expectations by $1.08. But the company says it cannot increase prices for chicken and prepared foods fast enough to keep pace with rising raw material prices. In the last quarter, Tyson hiked average pork prices by 39.3%, beef prices by 11.6% and chicken prices by 15.6%. Sales volume increased despite the price rises.

In a conference call with analysts, CEO Donnie King said Tyson has increases prices for restaurant customers in response to inflation and the company plans to hike retail prices on Sept. 5, with more increases planned. “Costs are hitting us faster than we can get pricing at this point,” King said, describing inflation as “unprecedented and accelerating.”

Tyson increased its total sales forecast for fiscal year 2021 to a range of $46 billion to $47 billion, which is up from its previous forecast for $44 billion to $46 billion in sales.

USDA marks 7% surge in farm real estate… The value of the nation’s farm real estate, a measurement of the value of all land and buildings on farms, rose 7% for 2021, reports USDA. Its annual update pegged the average value of an acre of farm real estate at $3,380, up $220 per acre from 2020.

The annual survey pegged the average value of U.S. cropland at $4,420 per acre, an increase of $320 per acre (7.8%) from the previous year. This year’s figure marks a record high in cropland values. Until this year, the value of U.S. cropland had hovered narrowly between 2017’s $4,030 an acre and 2015’s $4,100 an acre. U.S. cropland crossed the $4,000 mark in 2014. This year’s average is up 75% compared to 2007’s $2,530 an acre.

The Northern Plains led increases in cropland values, as Kansas, Nebraska and the Dakotas registered an average annual gain of 12%. The Lake States follow with a regional increase of 9.1%. Wisconsin marked a 10.7% rise followed by a 9.8% gain in Minnesota. The Corn Belt notched an 8.3% gain, with Indiana pacing the surge with a 9.5% boost. Iowa followed with an 8.9% increase. Illinois notched an 8.2% rise. The Delta had the smallest annual gain at 1.7%. Find more details.

Blueprint for human infrastructure reconciliation package released… Senate leaders today released a fiscal 2022 budget resolution on the $3.5 trillion “human infrastructure” package that Democrats plan to clear without any Republican votes. The package includes progressive priorities like subsidies for childcare, tuition-free community college, additional Medicare benefits and potentially a pathway to citizenship for people in the country illegally.

The budget plan would also direct the Agriculture Committee to draft provisions related to rural development, clean energy, child nutrition and debt relief. Far-left lawmakers and school nutrition groups have pushed for the reconciliation package to permanently make school meals free for all students, regardless of their household income. That policy has effectively been in place temporarily since last year in response to the Covid pandemic. Also of note, Senators led by Kirsten Gillibrand (D-N.Y.) hope to offer farm debt relief for small agricultural producers and stem the tide of farm bankruptcies, while USDA deals with a legal battle to send debt relief to farmers of color after decades of discrimination.

The blueprint assumes just $1.75 trillion in offsets, including tax hikes for upper-income households and corporations. The Senate is expected to take up the budget plan as soon as Tuesday after wrapping up its bipartisan infrastructure bill. 

UN climate report a ‘code red for humanity’… Earth’s climate is getting so hot that temperatures in about a decade will probably blow past a level of warming that world leaders have sought to prevent, according to a report released Monday that the United Nations calls a “code red for humanity.” The Intergovernmental Panel on Climate Change (IPCC) report, which calls climate change clearly human-caused and “unequivocal,” makes more precise and warmer forecasts for the 21st century than it did last time it was issued in 2013.

The earth has already warmed by 1.1 degrees Celsius since the 19th century. Within the next two decades, according to the report, warming to more than 1.5 degrees Celsius above preindustrial levels is virtually inevitable — leading to more frequent heat waves, droughts and extreme weather events similar to those that have ravaged countries in recent weeks.

The report’s findings will also help inform policymakers as the world prepares to gather for the United Nations Climate Change Conference in Glasgow, Scotland, in November.

Signal to Noise Podcast… Pro Farmer Washington Policy Analyst Jim Wiesemeyer and Agritalk Host Chip Flory talk crop insurance, weather, meat sector consolidation and transparency, ASF, Covid-19 aid, the two-part infrastructure effort and more on this week’s episode of Signal to Noise. Listen here.

GFN: Ignorance is taking away choice… "The Well, the Wealthy, and the Worried are the folks who think they can afford to overlook the incredible benefits of GMOs," writes Bill Horan, an Iowa farmer, in this guest post. Read more.

Chart trend… The daily and weekly charts for corn and soybeans still pointed sideways. Find more updates to our short-term, intermediate- and long-term trends for commodity and key outside markets here.