Evening Report | July 8, 2021

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Range of estimates signals high degree of uncertainty regarding U.S. new-crop carryover… USDA will update its U.S. and global balance sheets on July 12 at 11:00 a.m. CT. The following expectations are generated by survey work by Reuters (cotton numbers are from Bloomberg). Note: USDA will not issue survey-based estimates for U.S. corn, soybean and cotton crops but it will incorporate acreage estimates from the June 30 Acreage Report. 

First all-wheat production estimate also coming next Monday… USDA will also issue its first all-wheat production estimate on July 12, including the first survey-based forecasts for other spring wheat and durum. Given the drought conditions in U.S. spring wheat areas, there is a wide range of estimates for other spring wheat and durum crop production.

Conab drops its Brazilian corn crop estimate to 93.4 MMT… Brazil’s USDA equivalent Conab dropped its estimate for the country’s total corn crop more than 3 MMT to 93.4 MMT, which is well (9.0%) under last year’s 102.6-MMT crop. The statistics agency sliced its safrinha corn crop estimate to just under 67 MMT as drought and frost have taken a toll on the late-planted crop. Conab still expects Brazil to export 29.5 MMT of corn this season, with imports projected at 2.3 MMT.

Analysts polled by Reuters on average expect USDA to lower its Brazilian corn crop estimate from 98.5 MMT to 92.21 MMT next week, but the range of expectations is wide, spanning more than 9 MMT.

Conab now estimates Brazil’s soybean crop at 135.9 MMT, a slight 51,000-MT increase from its June forecast and up 8.9% from last year’s crop. Brazil will likely export 86.7 MMT of soybeans, according to Conab.

USDA in June estimated Brazil’s soybean crop at 137 MMT. Traders expect the department to pare its production estimate to 136.76 MMT next week.

Brazil’s wheat crop will likely total 8.5 MMT this season, which would be a 36% surge from last year’s crop. In June, Conab pegged Brazil’s 2021 wheat crop at 6.9 MMT.

Conab stayed the course with its Brazilian cotton crop projection of 2.3 MMT, which would be a 22.0% retreat from last year’s 3.0-MMT crop.

La Niña may reemerge this fall… The U.S. Climate Prediction Center issued a La Niña watch this month, saying that while ENSO-neutral conditions are likely to continue through the Northern Hemisphere summer and into fall, La Niña could emerge during the September through November season and last through the winter of 2021-22. More specifically, its models indicate there is a 51% chance for ENSO-neutral conditions from August to October, and a 66% chance of La Niña emerging during the November to January period. There is a historical tendency for a second winter of La Niña to follow the first. The last stretch of cooler sea surface temperatures gave way to ENSO-neutral conditions this spring. Past La Niñas have been associated with heat and dryness in southern Brazil and across Argentina. 

Drought still spreading in northern and western areas of the Corn Belt… Today’s U.S. Drought Monitor showed rains through July 6 did little to ease drought in the western Corn Belt. “Another week of hot, dry weather in the Pacific Northwest, Northern Rockies, Northern Plains, and Upper Midwest led to the expansion of drought conditions,” today’s update says.

Drought expanded in Minnesota and Iowa as temperatures climbed 6 to 9 degrees above normal and rainfall was light or below normal. “Rainfall deficits of 4 to 10 inches are present over the last 90 days,” today’s summary notes. On the other hand, a slow-moving cold front helped ease dryness in the Great Lakes region and eastern United States. Wet weather continued for much of the lower Midwest, leaving that region largely free of drought.

Another hot, dry week and some isolated showers resulted in a mix of degradation and improvement for the High Plains. Drought expanded in parts of Wyoming, North Dakota, South Dakota, and Nebraska that missed out on the heaviest rainfall. Rains did help to ease long-term drought in northern and central areas of North Dakota as well as in Wyoming and eastern Nebraska. But 100% of North Dakota is dealing with some form of drought, 92% of which is classified as severe or worse.

Meanwhile, monsoon thunderstorms brought wet weather to eastern New Mexico and West Texas, resulting in large one-category improvements. All but western areas of the Lone Star state are virtually free of drought.

Biden says he’ll deliver message on cybersecurity to Putin… Asked if he had a message for Russian President Vladimir Putin on cybersecurity after his briefing on the subject Wednesday, President Joe Biden said, “I will deliver it to him.” Biden and his administration are considering potential options for a response to new Russian-linked cyberattacks, White House Press Secretary Jen Psaki told reporters aboard Air Force One Wednesday. While Biden had not decided on a course of action for responding to the ransomware attack on software company Kaseya and other potential attacks last week, there would be more to come. Compounding concerns was a new attempted attack, first reported by Bloomberg News on Tuesday afternoon, by Russian government-linked hackers on the Republican National Committee (RNC). The RNC put out a statement Tuesday denying that its data had been stolen, but acknowledging that Synnex, a third-party technology services provider, had been compromised last week.

Japan declares a new state of emergency due to Covid-19… The restrictions will continue during the Summer Olympics, making it likely the organizers will drop plans to allow some spectators at the Games. Officials are set to discuss spectator levels later today.

U.S. solar growth to top wind in 2022 for first time... Growth in large-scale U.S. solar capacity is projected to exceed that of wind next year for the first time, according to a report from the U.S. Energy Information Administration (EIA). Solar’s surge comes as the country boosts its dependence on renewable power. The EIA’s Short-Term Energy Outlook estimates that wind and solar capacity will reach 15% of U.S. generation by 2022 from 11% last year.