Evening Report | June 17, 2022

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Your Pro Farmer newsletter is now available... The first high-pressure ridge of the growing season formed over the central U.S. last week, causing temps to rise well above normal. That sparked concerns in the corn market and caused some cattle death losses in the Plains. The summer weather outlook calls for above-normal temps across virtually the entire country, along with below-normal precip over the western Corn Belt and Plains. On the economic front, recession concerns heightened as the yield curve inverted and the Fed got more aggressive in its fight to contain inflation. There is now concern the Fed will tighten monetary policy too far, too fast. Other central banks around the world, including the Bank of England are raising rates, but at a slower clip. Meanwhile, there are some new ideas for the farmer safety net in the next farm bill, as preparations are starting for that process. We take a look at what could be some revolutionary changes to the farm bill on News page 4. We cover all of these items and much more in this week’s newsletter, which you can access here.

Markets, gov’t offices closed Monday... Markets and government offices are closed for the Juneteenth federal holiday on Monday, June 20. Therefore, there will be no Pro Farmer market updates. Enjoy the extended weekend.

‘Punishingly hot’ temps, spotty rains... Temps will be “punishingly hot” across the Plains and Corn Belt this weekend and into early next week, according to World Weather Inc., before the heat dome shifts over the Delta and Southeast. Scattered rains will ease some of the stress on crops. Another high-pressure ridge is expected to build over the Plains the final week of June. This would allow ridge-riding rains to develop in northern and eastern areas of the Corn Belt.

Putin: Ukrainian grain could be used to buy weapons... Russia continued to attack Ukrainian food supplies being shipped via rail and truck, signaling it has no intentions of allowing grain exports to broadly restart. Russian President Vladimir Putin said there is risk Ukrainian grain could be used to pay for weapons.

Putin continued to blame the U.S. and its western allies for “snapping up” good on the global market and driving up food prices. He said Russia stood ready to boost its exports of grain and fertilizers, and that Russia would send food exports to Africa and the Middle East.

All indications from Putin and other Russian officials continue to signal the country is using food as weapon of war, looking to capitalize on Ukraine’s severely crimped ability to export grains.

Russian wheat export tax rises again... Russia’s wheat export tax for June 22-28 will be $142.00 per metric ton, based on an indicative price of $399.40 per metric ton. The tax is up $10.40 from the previous week and has surged of $31.50 since the end of May.

Sugar the latest food supply scare... Brazil’s state-run Petrobras approved a gasoline and diesel price increase that could cause mills to process more cane for ethanol than sugar. Meanwhile, India could limit sugar exports at 6 million metric tons (MMT) to 7 MMT in 2022-23 to ensure ample domestic supplies, down from a limit of 10 MMT through September.

Granholm to meet with refining execs next week... U.S. Energy Secretary Jennifer Granholm is expected to meet with refining executives on June 23 to discuss gasoline prices, sources familiar with the matter told Reuters. The planned talks come as President Joe Biden, under pressure over high gasoline prices, has demanded that oil refining companies explain why they are not putting more fuel on the market as they reap windfall profits.

According to AAA, the national average price for regular unleaded gasoline is $5 per gallon, up 63% from last year, with nine states and the District of Columbia above that level. California has the highest average gas price at $6.42.

Finally, success at the WTO... In a big show of unity for the World Trade Organization (WTO), several deals were inked deep into overtime at the group's twelfth ministerial meeting in Geneva. "The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time," announced Director-General Ngozi Okonjo-Iweala. It took nearly five days of wrangling, but delegates cheered after they passed a package of six agreements, which could put renewed momentum behind the $28 trillion global trading system.

• Under an arrangement known as compulsory licensing, member countries agreed to a vaccine patent waiver as a way to boost supplies of Covid-19 shots to lower income countries.
• Another deal was reached on overfishing after India insisted on a 25-year exemption based on its status as a developing country. Nations will be prohibited from providing subsidies for illegal or unreported fishing, as well as financial aid to vessels fishing in unregulated international waters. The agreement was the culmination of two decades of negotiations and the first regulated trade deal ever reached at the WTO on sustainability grounds.
• Trade ministers temporarily extended duty-free trade in digital products like music and movies. Without renewing the 1998 accord, higher prices could have been in store for cross-border purchases made by customers of Amazon Prime, Apple Music and Netflix.

Soybean group leads coalition letter to USDA on competition in the seed market... The American Soybean Association (ASA) this week provided comments to USDA’s request for information on competition in the seed market, “underscoring the need to ensure growers have access to affordable inputs and a healthy market.” In the comments, ASA outlined recommendations regarding the state of the soybean industry, regulatory improvement, intellectual property, and risks of regulatory disruption, but cautioned USDA against jeopardizing long-term market sustainability for short-term gain, considering that seed access and prices are not currently a significant challenge for growers.

ASA comments: “Agricultural inputs, including fertilizer, fuel, seeds, pesticides, among others, are central to how soybean growers produce. To be economically sustainable, farmers need inputs that are affordable and do not exceed the price at which a grower can sell their crop,” ASA states in the letter. “Affordable, sustainable inputs are vital for U.S. growers helping to feed a growing global population. In this current production environment in which input prices are high and global input and food supplies have dwindled due to the ongoing supply chain crisis and the invasion of Ukraine, access to affordable inputs is more important than ever.