Evening Report | June 10, 2021

Click here for weekly export sales charts or here for report highlights.

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

USDA slashes already tight U.S. corn ending stocks for both marketing years… USDA lowered ending stocks for both 2020-21 and 2021-22 by 150 million bu., whereas the market had expected much smaller cuts from May. Cotton and wheat carryover also came in lighter than expected. On the other hand, soybean carryover climbed a bit more than expected for both 2020-21 and 2021-22.

USDA's updated winter wheat production estimate came in just shy of expectations and up nearly 12% from last year’s crop. Implied other spring wheat and durum wheat combined production is 589 million bu., unchanged from last month.

You can find more report highlights or detailed analysis on our website.

Conab slices 10 MMT off its Brazilian corn crop peg... Conab, Brazil’s USDA equivalent, slashed its total corn crop estimate for Brazil by more than 10 MMT from May, dropping its production estimate to 96.39 MMT. Its safrinha corn crop estimate now stands at just 69.96 MMT. The smaller crop size also led to a 5.5-MMT drop in Conab’s corn export forecast, with the statistics agency now calling for Brazil to ship 29.5 MMT of corn in 2020-21. USDA was less aggressive than Conab, dropping its Brazilian corn crop forecast from 102.0 MMT in May to 98.5 MMT, with exports now projected at 33 MMT. Some private analysts peg Brazil’s corn crop under 90 MMT.

Conab’s soybean crop forecast for Brazil edged 452,000 MT higher to 135.86 MMT, with exports expected to total 86.65 MMT. USDA projected Brazil’s soybean crop at 137 MMT, with exports expected to total 86 MMT.

Brazil’s wheat crop will likely climb 11% from 2020 levels to 6.94 MMT this season, according to Conab. The agency estimated Brazil’s cotton crop at 2.34 MMT, which would be a 22% drop from the 2019-20 season.

Exchange raises its Argentinean corn crop forecast, citing stronger-than-expected harvest results… The Buenos Aires Grain Exchange raised its corn crop forecast for Argentina from 46 MMT to 48 MMT, citing better harvest results than anticipated. Harvest advanced to 37.8% complete, the exchange reports. Argentina’s soybean harvest is nearly complete, with just over 1% of the crop left to be collected. The exchange maintained its production estimate of 43.5 MMT.

Drought worsens in Upper Midwest… “Warm and dry conditions dominated the West while the Southern Plains and South recorded the most precipitation for the week as well as cooler-than-normal temperatures,” according to today’s National Drought Summary.

The reporting period ended June 8 did not account for the full extent of this week’s rains on the Northern Plains. Nevertheless, today’s update showed some improvement to severe and extreme drought in southwest North Dakota and northwest South Dakota given recent moisture. But drought expanded and intensified in southeast South Dakota and into northeast Nebraska. “Temperatures were well above normal in the Dakotas where widespread areas of 12-15 degrees above normal were observed, with several places over 100 degrees F,” according to today’s update.

Unusually warm weather also stretched into the northern Midwest, where it contrasted with cool conditions in Missouri and Illinois. Very little rain fell in the upper Midwest over the past week, resulting in the expansion and intensification of drought in Minnesota, Wisconsin and Iowa. Michigan also saw dryness/drought expand, as did northern areas of Illinois and Indiana.

Of particular note, 89.0% of Iowa is now impacted by abnormal dryness or drought, a 26.8-percentage-point surge from the week prior. And 56.7% of the state is dealing with moderate to severe drought. All of Minnesota is impacted by abnormal dryness/drought, with the main southern producing counties the hardest hit.

Conditions on the Southern Plains have flipped over the past few weeks from one of drought to ample precipitation, with cool temperatures helping to limit evaporation. Texas, Oklahoma and Kansas are now largely free of drought or dryness. Find related maps here.

ENSO-neutral could give way to La Niña as year winds down… ENSO-neutral conditions (neither El Niño nor La Niña conditions are present) continued during May, with near-normal sea surface temperatures observed across most of the equatorial Pacific Ocean, according to the Climate Prediction Center (CPC). It says most models call for ENSO-neutral conditions to persist through fall 2021. But by late fall and winter, the odds of a La Niña pattern emerging rise to around 50%, “reflecting the historical tendency for a second winter of La Niña following the first,” CPC says. But if La Niña conditions do develop, they are only expected to persist for a relatively short period.

National Farm Council head not convinced there’ll be carveouts in Mexican ban for GMO corn used in feed… In an interview with Reuters, National Farm Council President Juan Cortina said at least eight import permits for genetically modified corn are being held up, despite the fact the country’s ban on GMO corn is not set to take effect for three years. Regarding delays of up to two years, Cortina says, “They're not giving us extensions, there haven't been any administrative changes, they just don't respond.”

Cortina also says the government intends to apply the GMO ban to grain used in animal feed, countering assertions from U.S. Ag Secretary Tom Vilsack that his Mexican counterpart had assured him the ban would not apply to GMO corn used in livestock feed. Considering the U.S. exports around 16 MMT of GMO corn to Mexico for use in livestock feed each year, this is a major difference.

Cortina believes the Supreme Court will likely have the final say on the legality of the ban. Thus far, courts have sided with the government.

Shipments of weedkillers using the chemical glyphosate have also been stalled due to permit delays, according to Cortina. That comes despite language specifying that the government must develop an alternative before any such ban takes effect.

USDA sends Dairy Donation Program plan to OMB for review… USDA has sent its interim final rule for the Dairy Donation Program (DDP) to the Office of Management and Budget (OMB) for review. USDA offered up general guidelines for the program in April. The program will require that a donation and distribution plan must be submitted to and approved by USDA and the reimbursement will be at least equivalent to the minimum classified value of milk used to make the donated product on the date of manufacturing. The program will also require records related to donating and receiving products must be maintained and available for review and/or audit. Eligibility for the program is open to dairy farmer cooperatives and processors who “account to” a federal milk marketing order (FMMO) and donate dairy products to any private or public nonprofit food distribution entity.

The program will also allow for retroactive reimbursements back to Dec. 27, 2020, when the legislation was signed into law. The reimbursement rate will be set at a level that encourages the donation, reduces volatility, maintains traditional FMMO price relationships, or stabilizes on-farm milk prices. USDA has said dairy organizations should plan on that reimbursement rate being equal to the minimum classified value of the milk when the donated product was processed. The rule at OMB will contain more details on that reimbursement rate.

There will also be a supplemental reimbursement available for those that also participate in the Milk Donation Reimbursement Program (MDRP), equal to the difference between the MDRP reimbursed level and the value reimbursed in the DDP. But those supplemental payments will not be made until the DDP becomes effective.

The dairy industry has been awaiting the DDP effort, particularly in the wake of the Biden administration ending the popular Food Box program which included dairy products provided to recipients and fostered additional demand for U.S. dairy products.

Legislative proposal wants to identify race of farm aid recipients… Agriculture Committee members Representative Bobby Rush (D-Ill.) and Senator Cory Booker (D-N.J.) introduced legislation to tackle what they said were discriminatory lending practices by USDA that disproportionately affect black farmers. The bill would require USDA to track and publicly disclose the race and gender of those who apply for farm aid, including those who are rejected.

Fertilizer shippers are asking investigation of service problems at CSX… For the past several months, CSX has had serious rail service problems, hindering the fertilizer industry’s ability to serve its farmer customers,” Corey Rosenbusch, chief executive of The Fertilizer Institute (TFI), wrote in a letter to the Surface Transportation Board last week. “While we understand CSX is trying to fix its network, TFI urges the Board to conduct enhanced oversight to ensure it is successfully done as quickly as possible,” Rosenbusch wrote. The fertilizer shippers pointed out service problems in 10 states on the CSX system, with New Orleans, Chicago, and Birmingham, Alabama, being focal points for delays.

CSX CEO Jim Foote last week said the railroad is working to improve its service and hire and train new crews. “In most of the markets — rail, truck, anything — there’s more demand than there is transportation product supply. It’s as simple as that,” Foote says. “The transportation product is struggling in our case for one reason and one reason only: We’ve been trying to hire since the beginning of the year.”