Evening Report | July 30, 2021

( )

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

 

Your Pro Farmer newsletter is now available… Weather continues to drive market action, with the calendar flip to August increasing forecast scrutiny for traders in the soybean market. Scouts on a spring wheat tour through North Dakota confirmed low yield potential due to long-lasting and severe drought this week. Also of note, African swine fever was detected in the Dominican Republic and odds for an infrastructure bill clearing are on the rise. This issue also features a deep dive into what’s needed to improve USDA data. Access it here.

 

Datagro calling for a 4% rise in soybean planting in 2021-22, dramatic rebound in corn production…  Survey work by the agribusiness consultancy Datagro shows Brazilian farmers will likely increase soybean plantings by 4% in 2021-22, planting 40.57 million hectares (100.2 million acres) to the crop. This would be the 15th year in a row acreage has expanded. Datagro forecasts that could lead to a 144.06 MMT soybean crop in 2021-22, a 5% increase from this season’s 133.996 MMT crop. Planting should get underway in September.

The consultancy also expects corn production to recover in 2021-22, projecting a dramatic rebound in total corn production to 119.67 MMT. The verdict is still out on this season’s crop, but most expect it to come up short of 90 MMT.

 

IKAR cuts Russian wheat crop forecast on declining yields… The ag consultancy IKAR has slashed its Russian wheat crop forecast by 3 MMT, dropping its production forecast to 78.5 MMT, Interfax news agency reported, citing IKAR head Dmitry Rylko. He explained a drop in yields primarily in the Central and Volga regions drove the decline. These areas of the country have been dealing with heat and dryness since July.

 

U.S. Q2 GDP short of expectations… The U.S. economy expanded 6.5% in the second quarter, up from 6.3% GDP in the first quarter but well shy of expectations for 8.4% growth. Economic growth is expected to slow amid a rise in the Delta variant of Covid, along with materials and labor disruptions, though the Fed expects any impacts will weigh less on the economy than the initial outbreak.

 

Cotton AWP continues rising… The Adjusted World Price for cotton rose to 78.47 cents per pound, effective today (July 30), up from 76,58 cents per pound the prior week. This marks the fifth week in a row of increases in the AWP and the eighth consecutive week above 70 cents per pound. Meanwhile, USDA will establish Special Import Quota #15 for 53,310 bales of Upland cotton Aug. 5, applying to cotton purchased no later than Nov. 2 and entered into the US not later than Jan. 31.

 

EPA announces plans to revert to foundational WOTUS, while it works to refine new rule… Today, the U.S. Environmental Protection Agency and Army Corps of Engineers announced plans to engage the public as it works to revise its definition of “waters of the United States.” The Trump administration had replaced an Obama-era WOTUS rule that many in the ag sector said represented federal overreach with a more palatable Navigable Waters Protection Rule (NWPR). The measure lifted federal jurisdiction over some small streams and ditches, but the measure was not codified into law.

Consequently, the Biden administration is again working to rewrite the rule, unnerving the ag sector. EPA and Army say their intent is to develop “a reasonable, effective, and durable definition of WOTUS that protects public health, the environment, and downstream communities while supporting economic opportunity, agriculture, and other industries.”

To do so, the agencies plan to revise the definition of WOTUS by following a process that includes two rulemakings. In a press release issued today, EPA explained, “A forthcoming foundational rule would restore the regulations defining WOTUS that were in place for decades until 2015, with updates to be consistent with relevant Supreme Court decisions. A separate, second rulemaking process would refine this regulatory foundation and establish an updated and durable definition of “waters of the United States.”

EPA and Army will hold a series of engagement opportunities, including the chance for stakeholders and the public to provide written recommendations and a series of public meetings in August to hear perspectives on both rules. The agencies are also initiating Federalism and Tribal consultations for the foundational rules. The agencies also plan to convene 10 “regionally focused and inclusive roundtables” during the coming fall and winter to discuss their experience and the definition of WOTUS.

AgriTalk spoke with Radhika Fox, assistant administrator for the office of water at EPA, about the announcement today. Listen here.

Bottom line: An updated WOTUS is likely a long way off.

 

Climate issues key in USDA nomination hearing for Bonnie... Members of the Senate Agriculture Committee focused much of their attention on climate and related farm program issues during the confirmation hearing for Robert Bonnie to be USDA undersecretary for farm production and conservation. Bonnie is currently deputy chief of staff on policy at USDA and is senior climate adviser. “I think there are enormous opportunities to utilize USDA programs to encourage, to finance adoption of climate agricultural practices, to create new markets and new opportunities for producers both in agriculture and forestry. We’ll obviously look at ways to do that,” Bonnie said. He also has authored a document on climate change and agriculture, including suggesting the formation of a carbon bank at USDA. But he sought to assure lawmakers that actions on climate at USDA will have to have support of farmers. “We have to do things that are going to have agriculture’s support,” he said.

As for using the Commodity Credit Corporation (CCC) to establish a carbon bank at USDA, Bonnie pledged to “put it in front of people, let them look at it, and make sure that what we do is consistent with agriculture’s needs.” Sen. Roger Marshall (R-Kan.) zeroed in on the CCC aspect, noting that using funds from the CCC are to be aimed at commodities. Marshall said he did not see how carbon would be considered a commodity. “Whatever you do in the CCC has to be about commodity production,” he said. “Thinking about how you take advantage of that and create opportunities for producers that may grow those commodities using climate-smart agriculture and forestry is the potential link with the CCC. It’s those opportunities and new markets that I think are consistent with the CCC.”

As for crop insurance, Senate Ag Committee Ranking Member John Boozman (R-Ark.) questioned using the program to fight climate change as was suggested in the Climate 21 Project document Bonnie helped write. “It is the most important safety net tool right now for producers. I think we want to continue to expand opportunities for making crop insurance available to more producers and more types of agriculture,” Bonnie said.

 

CRP question… Senator Chuck Grassley (R-Iowa) discussed USDA’s intentions with the Conservation Reserve Program (CRP). Noting that he is supportive of voluntary conservation programs, Grassley said: “I hope the department remains mindful that many young, beginning farmers struggle to access farmland and often cannot compete with land idling government payment programs [like] CRP. These set aside programs also send market signals to competitors to increase production acreage.”

Grassley recalled that USDA announced in May a $10 million initiative to quantify the climate benefits of Conservation Reserve Program (CRP) contracts. He asked: “When quantifying the climate benefits of [a] land idling program like CRP, will this initiative consider the carbon emissions that occur as other countries increase production to seize U.S. market share?”

Bonnie said that USDA plans to analyze the carbon storage of working lands programs in addition to CRP. He also said it is “vitally important that we get the right lands in the program. We don’t want to take highly productive land in the program. We want to target to the most environmentally sensitive [land],” he said, adding that “there should be lot of agreement” on which lands are prioritized for CRP.

 

White House, automakers said to plan pledge for 40% of cars to be EVs by 2030… The Biden administration and a group of major carmakers plan to voluntarily pledge that at least 40% of all cars and SUVs in the country will be electric by 2030, a share that could be raised to 50% with significant federal investment, according to three people briefed on the plan. The transportation sector is the U.S.’s largest contribution to greenhouse gas emissions at 29%.

 

Market Watch… Find weekly price updates, along with our monthly and quarterly price outlooks for a variety of ag markets here.

 

Latest News

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.

Timeline and Issues in Getting Baltimore Port Channel Reopened
Timeline and Issues in Getting Baltimore Port Channel Reopened

Exxon Mobil and SAF | Fed governor says ‘no rush’ to lower rates | Russia aids Cuba | Key USDA reports today

Cattle Strength Wanes | March 28, 2024
Cattle Strength Wanes | March 28, 2024

Japan works to support Yen, Eurozone cuts production forecast and the Biden Administration will repair Baltimore Bridge...

Ahead of the Open | March 28, 2024
Ahead of the Open | March 28, 2024

Corn, soybeans and wheat traded in tight ranges overnight, with grains showing relative strength into the break.

Weekly wheat sales exceed expectations, while soybeans miss
Weekly wheat sales exceed expectations, while soybeans miss

Weekly wheat sales were just above the pre-report range for the week ended March 21, while soybean sales missed the expected range by 36,000 MT. Corn sales held steady at 1.21 MMT.