Evening Report | July 15, 2021

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Worrisome long-term weather maps for spring wheat country and into the western Corn Belt… The National Weather Service’s 30-day forecast favors warm weather across northern and western areas of the Midwest. Cool weather is likely in eastern areas of Texas and Oklahoma and across Mississippi and Arkansas. There are “equal chances” for normal, below-normal and above-normal precipitation across other areas of the Central and Southern Plains and the remainder of the Midwest. Precipitation maps for next month are dry for the far western Corn Belt, wet for the southeastern eastern Belt and inconclusive in between. Wet weather is also likely from eastern Texas to the Northeast.

Ninety-day temperature maps favor heat across most of the country, with the exception of the Gulf Coast area up through northeast Kansas and Missouri where there are equal chances for normal, above-normal and below-normal precipitation. Wet conditions are most likely across the eastern third of the U.S. over to the southeast corner of Texas, with dry conditions likely across the western half of the country and into the Upper Midwest. Find the maps here.

 

Drought persists across western Corn Belt and Northern Plains, eastern Belt largely drought-free… The U.S. experienced extremes over the past week, today’s U.S. Drought Monitor comments, with drought expanding in the West and a tropical storm bringing extreme flooding to southeast Texas. Drought conditions expanded in the Pacific Northwest and above-normal temperatures made their way into the northern High Plains, causing a deepening of drought in areas where rainfall remained below average.

“The central and eastern Corn Belt was a battleground of sorts, with some locations seeing improvement with this week’s heavy rainfall, while other locations missed out, warranting some degradation due to antecedent dryness,” today’s Drought Summary said. Rains the week ended July 13 again favored the central and eastern Corn Belt and parts of the central Great Lakes. Outside of that, one-category degradations occurred. Iowa and northern Illinois saw a mix of improvement and deterioration depending on where the heaviest precipitation fell.

The western half of the High Plains saw above-normal temperatures, while the eastern half saw cool temperatures. Improvements in drought were primarily in the Middle Missouri River Basin, including eastern South Dakota and northeastern Nebraska. “Elsewhere in the Dakotas, Nebraska, and Kansas, below-normal precipitation coupled with antecedent dryness warranted several one-category deteriorations,” today’s update notes. See the maps.

 

NOPA’s June crush slows more than anticipated… Members of the National Oilseed Processors Association say they crushed just 152.4 million bu. of soybeans during June, falling well short of expectations for a crush of 159.5 million bushels. In fact, the tally came in under the lowest trade guess (of 155.5 million bu.) as tight supplies, high prices and seasonal maintenance clipped processing. The June NOPA crush was the lowest since June and down 6.8% from May and 8.9% under last year’s tally. While the June number was well under expectations and recent months, it still marked the third largest June crush on record — behind 2018 and 2020.

Earlier this week, USDA lowered its 2020-21 crush forecast by 5 million bu. to 2.170 million bu. in a nod to the slowdown in crushing in recent months after record processing the first five months of the crop year, and we suspect more cuts may lie ahead. Current weak crush margins make it unlikely soy processing the remaining two months of the crop year will total the 364 million bu. needed to reach USDA’s forecast. We expect the 2020-21 crush to come in closer to 2.155 million bushels.

NOPA reported soyoil stocks ended June at 1.537 billion lbs., the tightest inventory since October and an 8.0% retreat from May. Analysts polled by Reuters expected soyoil to come in around 1.623 billion pounds.

 

Exchange raises Argentine corn crop estimate, optimistic about 2021-22… The Rosario Grain Exchange raised its Argentine corn crop estimate by 500,000 MT to 51 MMT, citing better-than-expected yields. The exchange reports 75% of the crop has been harvested to date. Earlier this week, USDA estimated Argentina’s corn crop at 48.50 MMT.

Looking ahead to 2021-22, the exchange said corn planted acreage could hit record levels, pushing production above 54 MMT. But it also warned “the possibility of a La Nina climate phenomenon has not been ruled out, the lack of certainty still weighs on planting decisions. Climate is the only variable that can alter expected growth on Argentine corn production."

NWS last week said there was a 55% chance La Nina would re-emerge during September through November and a 66% chance the pattern would re-emerge during the November to January period—right in the midst of the South American growing season. La Nina can be associated with drought for areas of Argentina and southern Brazil.

 

Another firm lowers its Russian wheat crop forecast… Russia’s IKAR consultancy lowered its 2021 wheat crop forecast for the country by 2 MMT to 81.5 MMT. It cited hot, dry weather in Russia’s southern regions for the cut. Earlier this week, the ag research firm SovEcon cut its crop estimate to 82.3 MMT and USDA dropped its Russian wheat crop forecast to 85 MMT. In an update this morning, World Weather Inc. said it expects dryness to continue in “Russia’s Southern Region, the lower Volga River Basin and in western Kazakhstan where significant rain will continue needed to stop crop stress.”

 

Schumer plans to tee up infrastructure vote next week… Senate Majority Leader Chuck Schumer (D-N.Y.) said he will tee up a vote next week on taking up the chamber's bipartisan infrastructure proposal, a hardball bid to force consensus on President Joe Biden's domestic agenda before August. The Senate is expected to vote on July 21 on advancing to a debate on the bipartisan plan to spend nearly $600 billion on roads, bridges and broadband that Biden endorsed last month.

The vote to break a filibuster on proceeding to the bill will need 60 votes, and at least 10 Republicans — double the number of GOP senators who joined the president at the White House to tout the agreement. As of this morning, however, the bipartisan negotiators had yet to agree on legislative text for the proposal Schumer aims to force a vote on.

 

Lawmakers reintroduce bipartisan year-round E15 sale bill… Senator Deb Fischer (R-Neb.) said she is reintroducing a bipartisan bill with Senator Amy Klobuchar (D-Minn.) that allows year-round sales of E15. The bill would also expand the biofuels market, Fischer said. The Supreme Court earlier this month reversed a previously held rule allowing year-round sales of E15. The House counterpart of the measure was reintroduced by Representatives Angie Craig (D-Minn.) and Adrian Smith (R-Neb.).

 

Another confab on ag carbon markets yields same conclusion: wait... During an Iowa Farm Bureau virtual event Wednesday, it again was evident that the ag sector should be cautious and patient when it comes to carbon trading/markets. Dr. Joe Outlaw, a respected economist at Texas A&M University, cautioned ag producers to stay on the sidelines and wait for markets to develop before they jump in. “There is absolutely no hurry,” he said during the webinar. There are still a lot of technical challenges and questions and the price of carbon is likely to go up in the future, he said. “There’s a lot more questions out there than there are answers,” Outlaw said.

Outlaw also revealed lawmakers and their staffs are beginning to mull ideas for how to compensate early adopters of practices like no-till and cover crops who may not be able to participate in carbon markets, since the credits are usually generated on new or changed practices. Some early ideas focus on using EQIP or CSP.

 

IRS issues initial monthly child tax credits to bank accounts of around 39 million households… The payments are expected to help some families greatly but they also bring the possibility of unexpected tax bills next year. Additional payments will follow each month through the end of the year. At this point, the payments will not carry over into 2022, though Biden and many Democrats want to extend them beyond this year. For most people, the combined total of the six monthly payments will equal 50% of the child tax credit they're expected to qualify for on their 2021 tax return. They'll claim the other half when they file their 2021 return next year. Find more details.

 

OPEC members reportedly agreed to increase what UAE can eventually pump… There are reports of an agreement between Saudi Arabia and United Arab Emirates (UAE) allowing UAE to increase its oil output. Under the reported deal, UAE would be permitted to raise its base production number of 3.65 billion barrels per day starting in April 2022.

 

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