Evening Report | May 19, 2022

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Wheat tour confirms sharply reduced HRW yield potential... Wheat yield potential in Kansas was estimated at 39.7 bu. per acre, based on samples collected by crop scouts on the annual Wheat Quality Council HRW tour. That’s the lowest tour yield estimate since 2018 and well below the five-year (2016-2021; there was no tour in 2020 due to Covid) average of 47.4 bu. per acre. The tour yield was slightly above USDA’s initial 39-bu.-per-acre estimate for the state.

Tour participants guesstimated the crop at 261 million bu., 10 million bu. under USDA’s initial estimate for the state.

Acreage abandonment remains a major uncertainty as harvest approaches. Kansas farmer and tour scout Gary Millershaski predicted at least 25% of acres will not be harvested in parts of southwestern Kansas hit hard by drought.

Hot summer across U.S.; dry in western Corn Belt, Southern Plains... The National Weather Service 90-day forecast calls for elevated odds of above-normal temps across virtually the entire country for June through August. Below-normal precip is also expected across much of the western Corn Belt with the exception of Minnesota, extreme northeastern South Dakota, the roughly eastern half of North Dakota and southeastern Missouri, which are expected to have “equal chances” of precip during the summer months. Below-normal precip is also likely across crop areas of the Southern Plains.

“Equal chances” of precip are expected across the eastern Corn Belt and Delta. The Southeast is likely to experience above-normal rainfall during summer.

If the forecast verifies, it suggests crop stress could develop across the western Corn Belt and persist in the Southern Plains, while summer weather will depend on the timeliness of rains in the eastern Corn Belt and Delta. Growing conditions should be generally favorable in the Southeast.

Click here to view the extended weather charts.

Winter wheat drought footprint shrinks a little more... Based on U.S. Drought Monitor data as of May 17, 66% of the U.S. winter wheat crop area was experiencing drought, down two percentage points from the previous week. That was down one percentage point from the previous week. USDA classified the drought as 18% “moderate,” 22% “severe,” 21% “extreme” and 5% “exceptional.”

Across HRW areas, dryness/drought covers 90% of Texas (up a point from the previous week), 61% of Oklahoma (up a point), 72% of Kansas (unchanged), 100% of Colorado (unchanged), 98% of Nebraska (unchanged), 73% of South Dakota (down three points) and 95% of Montana (up two points).

Drought monitor commentary noted: “Drought or abnormal dryness contracted in the few areas in Texas and Oklahoma where more than an inch of rain fell on Dx [drought] areas. But abnormal dryness and moderate to exceptional drought expanded in many more areas of Texas. Moderate to exceptional drought expanded in Colorado, extreme to exceptional drought expanded in Kansas, extreme drought expanded in Nebraska, and abnormal dryness expanded in western Montana.”

For other crops, USDA estimates the drought footprint at 21% for corn (unchanged from the previous week), 12% for soybeans (unchanged), 31% for spring wheat (down four points) and 56% for cotton (unchanged).

Click here to view the U.S. Drought Monitor map.

IGC cuts 2022 global corn, wheat production forecasts... The International Grains Council (IGC) cut its global corn production forecast by 13 MMT to 1.184 billion metric tons, reflecting a downward revision to the U.S. crop. IGC reduced its U.S. corn crop forecast by 9.3 MMT (366 million bu.) to 367.3 MMT (14.5 billion bu.) due to the slow planting pace. It kept is forecast for Ukraine’s corn crop at 18.6 MMT, though that would be less than half of its 42.1-MMT crop last year. Global corn production is expected to decline 30 MMT from last year.

IGC cut its 2022 global wheat production forecast by 11 MMT to 769 MMT, with the crop now expected to decline 12 MMT from last year. The smaller production forecast was largely tied to a 3.1-MMT (114 million bu.) cut to the U.S. crop and a 6.3-MMT reduction for India’s crop. IGC raised its 2022 Russian wheat crop forecast to 84.7 MMT, up 2.1 MMT from last month. IGC kept its forecast for Ukraine’s wheat crop at 19.4 MMT, about 40% lower than the 33 MMT it produced last year.

Total global grain production for 2022-23 is forecast at 2.251 billion metric tons, down 40 MMT from the current marketing year, but that would still be the second largest on record. Total world grain consumption is expected to drop 8 MMT from 2021-22, the first year-over-year contraction since 2015-16.

IGC raised its global soybean production forecast for 2022-23 by 4 MMT from last month to a record 387 MMT, which would be up 38 MMT from this year due to expected bigger crops in the U.S., Brazil and Argentina.

India considers allowing shipments of wheat already at ports... India is considering allowing exporters to ship some of their wheat sitting at ports after a sudden ban on exports prevented dealers from loading cargoes, trade and government sources said. The sudden ban on wheat exports announced Saturday trapped about 1.8 MMT of wheat at ports. On Tuesday, the government allowed wheat awaiting customs clearance to be shipped out and also said it would allow sales to Egypt. But exporters are pressuring the government to further relax its ban so they can avoid potentially heavy monetary losses. “We will verify the merit of the demand and no genuine trader will be harassed,” a source who did not wish to be identified told Reuters.

Ukraine grain exports picking up, but still far behind year-ago... Ukraine exported 643,000 MT of grain since the beginning of May, including 617,000 MT of corn, 16,000 MT of wheat and 8,000 MT of barley, according to the country’s ag ministry. Ukraine exported only 300,000 MT of grain March and 1.1 MMT last month due to Russia’s invasion. In May 2021, Ukraine shipped 1.8 MMT of grain.

Since the start of the 2021-22 marketing year on July 1, Ukraine has exported 46.5 MMT of grain, up from 40.9 MMT during the same period last year, thanks to aggressive shipments the first half of the marketing year, prior to Russia’s invasion. Ukraine’s 2021-22 grain shipments include 18.5 MMT of wheat, 21.8 MMT of corn and 5.9 MMT of barley.

Administration authorizes more Ukraine military aid... The Biden administration authorized $100 million of additional military aid to Ukraine on Thursday, the latest in a series of transfers to help Kyiv repel Russia's invasion, U.S. Secretary of State Antony Blinken said. The new transfers will be the tenth time President Joe Biden has used his Presidential Drawdown Authority (PDA) to help Ukraine and would account for the $100 million remaining in that funding, which allows the president to authorize the transfer of excess weapons from U.S. stocks without congressional approval in response to an emergency. Blinken said the $100 million brings total U.S. military assistance to Ukraine to about $3.9 billion in arms and equipment since Russia launched its invasion on Feb. 24.

The U.S. Senate separately on Thursday approved an emergency funding bill for Ukraine that included nearly $40 billion in aid and authorized an additional $11 billion worth of PDA, sending the measure to the White House for Biden to sign into law.