Evening Report | July 5, 2022

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Corn conditions deteriorate slightly more than expected… USDA rated 64% of the corn crop either “good” or “excellent” as of Sunday, down from 67% in those categories a week earlier and even with the same date in 2021. Traders expected a good-to-excellent reading of about 65%.

 

This week

Last week

Year-ago

Very poor

2

2

2

Poor

7

6

7

Fair

27

25

27

Good

53

55

50

Excellent

11

11

14

 

Soybeans conditions also erode… USDA rated 63% of the U.S. soybean crop in good-to-excellent condition as of Sunday, down from 65% from a week earlier but above 59% a year earlier. Traders expected a good-to-excellent reading of about 64%.

 

This week

Last week

Year-ago

Very poor

2

2

3

Poor

7

6

8

Fair

28

27

30

Good

54

55

49

Excellent

9

10

10

 

Cotton crop shows further slippage… USDA rated 36% of the U.S. cotton crop good-to-excellent as of Sunday, down from 37% a week earlier and below 52% on the same date last year. The crop rated poor-to-very-poor also expanded, to 31% this week from 30% a week ago.

 

This week

Last week

Year-ago

Very poor

16

12

1

Poor

15

18

9

Fair

33

33

38

Good

33

34

44

Excellent

3

3

8

 

Spring wheat makes strong improvement… USDA rated 66% of the spring wheat crop good-to-excellent as of Sunday, up from 59% a week earlier and up from 16% a year earlier. This week’s good-to-excellent figure far exceeded trade expectations for about 59%. The spring wheat crop was 20% headed, up from 8% a week earlier but behind the 57% five-year average for that date.

 

This week

Last week

Year-ago

Very poor

2

3

18

Poor

6

5

32

Fair

26

33

34

Good

59

53

14

Excellent

7

6

2

 

Winter wheat harvest over half complete… USDA reported 54% of the U.S. winter wheat crop was harvested as of Sunday, up from 41% a week earlier and ahead of the 48% average for the previous five years. Harvest progress fell short of analysts’ expectations average about 57% complex.

 

Canadian wheat, canola acreage higher expected... Canadian farmers planted 25.4 million acres to wheat tis year, up from 25.0 million acres forecast in April and 2 million acres (8.7%) more than last year, according to Statistics Canada (Stats Can). Spring wheat area at 18.2 million acres rose 10.5% from last year. The increase in total wheat area was likely attributable to favorable prices and strong global demand.

Canadian canola acreage totaled 21.2 million acres, according to Stats Can, up 500,000 acres from spring intentions but down 1.1 million acres (4.7%) from last year. MarketsFarm analyst Mike Jubinville said high spring prices may have increased farmers shifting to canola, though the price situation has sure changed from a month ago.

Jubinville noted, “Personally, I was looking for some loss to canola and wheat acres, shifting to shorter season barley and oats... but we did not see that in this report. Aside from environmental conditions, high input prices, high crop prices resulting from low national and global supply, and the ongoing conflict in Ukraine likely impacted farmers’ final seeding decisions.”

 

EU wheat exports rise nearly 7%... Soft wheat exports from the European Union in the 2021-22 season totaled 27.47 MMT, up 6.8% compared with 25.71 MMT in 2020-21. EU wheat exports consisted of 8.3 MMT from France, 6.4 MMT from Romania, 3.9 MMT from Germany, 3.3 MMT from Bulgaria, 1.7 MMT from Lithuania, 1.5 MMT from Latvia and 1.5 MMT from Poland.

 

Australia issues La Niña Watch... El Niño–Southern Oscillation (ENSO) indicators are mostly at neutral levels and the 2021–22 La Niña event has ended, according to the Australian Bureau of Meteorology. However, it says “observations and climate model outlooks suggest La Niña may re-form later in 2022.” As a result, the bureau issued a La Niña Watch, which means there is around a 50% chance of La Niña forming later in 2022. This is approximately double the normal likelihood. La Niña events increase the chance of above average winter–spring rainfall across much of northern and eastern Australia.

In the U.S., La Niña events tend to favor warmer and drier weather over the southern U.S., which can sometimes push up into Corn Belt. The U.S. Climate Prediction Center (CPC) in June stated, “Uncertainty remains over whether La Niña may transition to ENSO-neutral during the summer, with forecasters predicting a 52% chance of La Niña and a 46% chance of ENSO-neutral during July-September 2022. After this season, the forecast is for renewed cooling, with La Niña favored during the fall and early winter.” CPC is scheduled to release its updated ENSO forecast later this week. 

 

Normal port operations continue despite expired contract... Union dockworkers at 29 West Coast shipping hubs were unable to reach an agreement with port employers before the current contract expired last Friday. Both sides have pledged to continue normal operations at ports until an agreement is reached. Still, the prospect of an informal work slowdown has shippers on edge. More than 150 agriculture and business groups are urging the Biden administration to get the two sides in labor talks on West Coast shipping operations to extend their current contract while a new agreement is finalized.

The contract between the Pacific Maritime Association (PMA), which represents port operators, and the International Longshore and Warehouse Union (ILWU), which represents dock workers, expired July 1. In a letter to President Joe Biden, the groups also suggested the administration work with PMA and ILWU to get them to remain at the negotiating table, negotiate in good faith until a new contract is reached and agree not to engage in any activity, such as a strike or lockout, that disrupts port operations. The agriculture and business organizations want to avoid disruptions such as those that occurred in late 2014 into early 2015 at West Coast ports. Work slowdowns then cost the U.S. meat industry millions of dollars in lost export sales.

 

Brazil releases ‘Plano Safra 2022-23’... Brazil’s “Plano Safra 2022-23” (Harvest Plan 2022-23) will include with R$ 340.8 billion ($63.9 billion) in available funds, which represents an increase of 36% compared to the prior year. The Harvest Plan is the equivalent of the farm bill in the U.S., but Brazil releases it annually.  The majority of Brazil’s Harvest Plan consists of loans for production, marketing, and investments with subsidized interest rates depending on the borrower’s size of operation. 

The amount of money available for lower interest subsidized loans increased 18% to R$ 195.7 billion.  The amount of money available for loans with market intertest rates increased 69% to R$ 145.18 billion. The prime interest rate in Brazil is currently 13.25%.

Small and medium size producers are given a priority in the Harvest Plan 2022-23, with most of the lower interest subsidized loans going to these two groups.  For larger producers, the government allocates resources to various financial institutions for production loans at generally market interest rates. For most of the remaining producers and cooperatives there is R$ 243.4 billion available at an interest rate of 12%. Terms and conditions of these loans will be negotiated between the individual burrower and the financial institution.

 

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