Evening Report | July 1, 2022

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Your Pro Farmer newsletter is now available... USDA’s Grain Stocks Report failed to produce any major surprises, while soybean planted acres came in well shy of what traders anticipated and corn plantings increased a little more than expected. With the flip of the calendar to July, focus will be on weather, especially for the corn crop as it moves through pollination. The upcoming Fourth of July holiday is typically a time when the current price trend accelerates or reverses, based on the end-of-June reports and weather. USDA’s Cattle on Feed Report showed placements fell more than anticipated after being stronger than expected for two straight months. The Hogs & Pigs Report showed the U.S. hog herd continued to contract and producers indicated no intentions of expanding through fall. We cover all of these items and much more in this week’s newsletter, which you can access here.

Independence Day holiday schedule... Grain and livestock markets will trade normal hours today ahead of the holiday weekend. Markets and government offices are closed Monday, July 4, for Independence Day. Therefore, there will be no Pro Farmer market reports on Monday. Grain and livestock markets will resume trade at 8:30 a.m. CT on Tuesday, July 5. Have a happy and safe holiday.

Corn Belt rains forecast ahead of corn pollination... A few waves of rain will move through the Corn Belt during the next two weeks, according to World Weather Inc. The rainfall is not likely to be uniform across the region, though there should be sufficient moisture to support crops in most areas. World Weather says a high-pressure ridge over the Plains and Delta will restrict rainfall in those regions.

Soybean acres could drop even more... USDA cut soybean planted acreage by 2.63 million acres from March intentions. Since 1986, this is the 14th time USDA has cut planted soybean acres in June. In 10 of those years, final acres ended lower than the June estimate by an average of 872,000 acres. With 15.8 million acres of soybeans still to be planted as of June 1, odds favor USDA finding fewer soybean plantings when it resurveys soybean acres in North Dakota, South Dakota and Minnesota in July.

Low response rate to USDA’s Acreage survey a concern... The farmer response rate to USDA’s June Acreage survey was low at just under 52% — and a cause for concern in our opinion. The fewer responses USDA receives, the more inferences it must make in estimating planted acreage. We believe this will increase attention on FSA certified acreage, which will start to be released in August — and could lead to larger adjustments to acreage estimates.

Lance Honig, Chief of Crops Branch at NASS, told us: “More response is always better. We are likely to see more variability in the data with lower response. I would expect this to show up first in the smaller geographic areas — in other words state estimates as opposed to the U.S. So, the national estimates are likely less impacted, with the possibility of more movement between the states as we move through the season. But of course, only time will tell for sure.”

Gas demand could get a holiday boost but usage is lagging... Gasoline demand may get a bump this July 4th holiday weekend as a record number of drivers hit the road. About 42 million people are expected to travel, topping 2019 levels by half a million, AAA says. Average pump prices fell to $4.842 a gallon as of today from $5.016 in mid-June.

But recent record gas prices have curbed demand. In the four-week period through June 24, gasoline demand was 2.0% under the same period last year.  Amid the inflated prices, consumers are traveling less during the peak summer driving season. Unless that changes, ethanol production will slump as plants slow production to avoid a backlog of supplies.

Final 2020, 2021 and 2022 RFS levels published in Federal Register... The final Renewable Fuel Standard (RFS) levels for 2021 and 2022 and revised 2020 standards were published today in the Federal Register. EPA announced the plan June 3, including an alternative compliance plan for small refiners. The alternative compliance plan was published June 8, but the final RFS levels were not published until today. They are effective Aug. 30.

Record May soybean crush... U.S. processors crushed a record 180.9 million bu. of soybeans in May, according to USDA, which was in line with expectations and virtually steady with April. The crush pace increased 7.4 million bu. (4.3%) versus May 2021.

Soyoil stocks totaled 2.384 billion lbs., which was down 40 million lbs. from April but 45 million lbs. more than traders expected. Soyoil stocks rose 246 million lbs. from last year.

Corn-for-ethanol use slightly less than expected... Corn-for-ethanol use totaled 446.1 million bu. in May, up 30.1 million bu. (7.2%) from April but 3 million bu. less than traders expected. Corn-for-ethanol use slipped 1.9 million bu. (0.4%) from year-ago. Corn used for ethanol and other purposes totaled 503.4 million bu., up 39.3 million bu. (8.5%) from April and 7.1 million bu. (1.4%) more than last year.

Production of dried distillers grains with solubles (DDGS) totaled 1.897 short tons, up from 1.705 million short tons in April but down rom 1.943 million short tons last year.

Russia converts grain export taxes to rubles, rates fall sharply... The Russian government converted base prices for calculation of wheat, barley and corn export duties to rubles. State-run TASS news agency reported Russian Prime Minister Mikhail Mishustin signed the decree enacting the change.

“Base prices were earlier pegged to the dollar rate; now they will be calculated in rubles. The base price for sunflower oil will be 82,500 rubles ($1,473) per MT (instead of $1,000 earlier), for oil cake - 13,875 rubles ($247.9) per MT ($185 earlier), for wheat and meslin - 15,000 rubles ($268.6) per MT ($200 before) and for barley and corn - 13,875 rubles ($248.4) per MT ($185 earlier)," the Russian Ministry of Agriculture said.

For July 6-12, the wheat export tax is set at 4,600 rubles ($85.80) per MT, down sharply from $146.10 per MT for June 29 – July 5, which used the dollar-based rate.

Russia is expected to harvest a bumper crop and have record exports in 2022-23.

Argentine wheat crop most delayed in a decade... Argentina’s 2022-23 wheat crop is the country’s most delayed in a decade, as drought and coming frosts have caused farmers to put off planting for better conditions, according to the Rosario Grain Exchange. On Thursday, the Buenos Aires Grain Exchange warned it may have to cut it wheat planted area forecast further from the current 6.3 million hectares if weather conditions don’t improve.

Lawmakers send letter to STB on poor rail service; concerns mount over ag shipment woes... Reps. Jim Costa (D-Calif.) and Ralph Norman (R-S.C.) led a bipartisan letter sent June 29 to the Surface Transportation Board (STB) outlining lawmakers’ concerns about deficient rail service that has impeded agricultural shipments. More than 50 lawmakers signed the letter, which highlighted poor service experienced by feed mills, integrated livestock and poultry operations, and other agricultural operations.

“This has led to shutdowns and slowdowns at ethanol plants, soybean crushers, flour mills, and livestock and poultry feed mills that are severely challenging agricultural supply chains and leading to lower prices for producers and higher food prices for consumers,” they wrote. “Instances of severely delayed feed deliveries to farmers to support these operations are all too common, and at grain export destinations, vessels endure long loading wait times due to delayed train delivery. During this time the grain exporter, not the railroad, pays demurrage charges to the shipping company.”

Lawmakers also said the “ability for the fertilizer and grain and feed industries to ship by rail is imperative for curbing the impending food shortages many parts of the world are facing. For these reasons, timely and uninterrupted fertilizer and grain rail shipments are vital to the country’s interests.”

Port of Oakland told owners of cargo containers they are over-extending their welcome... The Port of Oakland beginning today will cut the number of days from seven to four that cargo containers can stay at the marine terminal tariff-free, and potentially start raising penalties, CNBC reported. The objective is to reduce congestion at the port. “Our belief is that the rates are still low because customers are still using the terminals as storage facilities,” Danny Wan, executive director for the Port of Oakland, told CNBC.

EPA is proposing revising its registration for atrazine... “We are disappointed by EPA’s decision,” said Iowa farmer and National Corn Growers Association (NCGA) President Chris Edgington. “We can feed and fuel the world and fight climate change, but we can’t do these things without modern farming tools, and atrazine is a tool that is critical to our work.” The latest development marks a step backward in EPA’s commitment to transparency and the use of the best available science, Edgington said. However, he noted that EPA listened to growers’ requests and agreed to additional scientific review. The proposal has a 60-day public comment period.