Evening Report | Oct. 7, 2021

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Near-even mix of drought improvement and degradation for country’s midsection… Several rounds of storm systems led to some drought improvement across the country’s midsection the week ended Oct. 5, but temperatures remained unseasonably warm in the Midwest and Northern Plains.

A slow-moving cold front brought a line of showers from the Dakotas to Texas, easing dryness across the Plains. “Significant rains fell over portions of western and central Kansas, central and northeast Nebraska and into central South Dakota as well as southeast North Dakota,” today’s Drought Summary says. But in western areas of South Dakota, extreme and severe drought expanded, with Nebraska and Wyoming also seeing a new area of extreme drought introduced. “Areas of eastern Colorado had moderate drought conditions expand this week while severe drought expanded in far southeast Colorado and into southwest Kansas,” today’s update says.

The U.S. Drought Monitor shows 84.6% of the High Plains is dealing with abnormal dryness or drought, a 1.2-point dip from last week and 9.0 points under year-ago levels. The comparison to year-ago reminds just how long the region has been dealing with drought.

Much of the South received welcome rains over the past week, putting the brakes on recent dryness. Areas that missed out included the Oklahoma and Texas Panhandles, east and west Texas and western Arkansas. Today’s update shows 39.6% of the region is impacted by abnormal dryness or drought, a 5.6-point improvement from the week prior.

Temperatures were warm for the Midwest the week ended Oct. 5, with northern Minnesota, eastern Iowa and northern Illinois recording deviations of 12 to 16 degrees. Scattered precipitation fell across the region, improving drought conditions in central and southern Missouri, western Indiana, northwest Iowa and Minnesota. In contrast, drought worsened in northern Missouri, southern Iowa, northern Wisconsin and the Upper Peninsula of Michigan. As of Tuesday, 42.8% of the Midwest was dealing with abnormal dryness or drought, a marginal 0.2-point increase from the week prior. Find related maps here.

Analysts expect smaller corn and larger soybean crop estimates from USDA… On average, analysts surveyed by Reuters expect corn harvested acreage to edge around 100,000 acres higher, but for USDA’s yield to dip 0.3 bu., trimming its production estimate to 14.973 billion bushels.

On soybeans, analysts expect production to rise just over 40 million bu. to 4.415 billion bu., with a rise in yields expected to more than make up for a slight cut in harvested acres.

The reports will be out at 11:00 a.m. CT on Oct. 12. The following expectations are based on survey work by Reuters (Bloomberg for cotton).

USDA’s soybean carryover estimate expected to rise sharply… U.S. soybean carryover is expected to more than double to 373 million bu. after USDA’s Quarterly Grain Stocks Report revealed USDA underestimated last year’s crop. Corn carryover is also expected to climb from September, but by a much smaller, 24 million bushels. Wheat stocks are expected to slide roughly 30 million bu. from September.

Conab expects year-over-year gains in Brazilian soybean, corn, wheat and cotton crops… Brazil’s 2021-22 soybean crop, planting of which is underway, will likely total a record 140.75 MMT, forecasts Conab. This is the statistics agency’s first projection for the 2021-22 crop. That would be a 3.43-MMT increase from Conab’s estimate of the 2020-21 bean crop. It expects planted acreage to climb 2.5% this season.

Conab expects the country’s total corn crop to rebound to 116.31 MMT, a sharp increase from the 2020-21 season that resulted in an 87.00 MMT crop. Conab expects corn plantings to rise 4.8% this season.

Brazil’s wheat crop will likely jump from 6.24 MMT to 8.19 MMT this season, according to Conab. It expects cotton production to rise by 322,000 MT in 2021-22 to 2.68 MMT.

China to sell cotton reserves in the midst of harvest… China has announced plans to auction off cotton from state reserves beginning Oct. 8 and reportedly lasting through November. While sales of its cotton reserves are not unusual, the timing of them (right in the midst of harvest) is. Cotton prices are soaring amid strong Chinese demand.

Politico: White House weighs ‘across-the-board’ cuts to social spending bill components… Politico reports the White House is “seriously entertaining the idea of across-the-board haircuts to most items in President Joe Biden’s $3.5 trillion social spending package.” However, “even if the trim-everything strategy is predominantly employed, some programs would likely still have to be cut out completely, according to several sources who either took part in White House discussions or were briefed on its thinking.” Which ones, Politico adds, “remain a topic of intense internal party debate.”

EPA and USDA release broad climate change plans, as per EO…  EPA released a Climate Adaption Action Plan that is part of the Biden administration’s “whole-of-government approach to confronting the climate crisis.” EPA’s plan lays out the final priorities for the agency in the months and years ahead:

• Integrating climate adaptation and consideration of climate impacts into EPA programs, policies, rulemaking processes, and enforcement activities;
• Consulting and partnering with Tribes; state, local, and territorial governments, and other federal agencies; community groups; scientists and adaptation experts; businesses; and other stakeholders to increase the resilience of the nation, with a particular focus on advancing environmental justice; and
• Implementing measures to protect the agency’s workforce, facilities, critical infrastructure, supply chains, and procurement processes from the risks posed by climate change.

EPA also notes that as it implements its action plan it will “consider the disproportionate impacts of climate change on those who are already vulnerable, including low-income communities and communities of color, children, the elderly, Tribes, and Indigenous people.”

USDA also released its climate adaption and resilience plan today in response to Biden’s executive order. USDA’s Adaption Plan aligns with USDA’s renewed and broad efforts to prioritize climate action and increase resilience to climate actions among American producers, landowners and communities, according to a related press release. The plan identifies the following climate threats to ag and forestry and outlines five cross-cutting adaptation actions USDA can take:

1. Build resilience across landscapes with investments in soil and forest health.
2. Increase outreach and education to promote adoption and application of climate-smart adaptation strategies.
3. Broaden access to and availability of climate data at regional and local scales for USDA Mission Areas, producers, land managers, and other stakeholders.
4. Increase support for research and development of climate-smart practices and technologies to inform USDA and help producers and land managers adapt to a changing climate.
5. Leverage the USDA Climate Hubs as a framework to support USDA Mission Areas in delivering adaptation science, technology, and tools.

GM hopes EVs will double its revenue by 2030… General Motors plans to more than double its revenue by 2030 via an influx of new battery-electric models and services, including a new offering to help delivery companies charge and manage electric-van fleets. GM plans to release an electric SUV with a $30,000 price tag, undercutting the cheapest version of Tesla’s Model 3 sedan, the WSJ reports. An electric Chevrolet Silverado truck would compete with Ford Motor’s F-150 Lightning electric pickup, and GM says a dedicated electric-truck plant is also in the works. The switch from combustion engines carries risk, from consumer concerns about finding places to charge to potential shortages of battery capacity in the rush to go electric.

Biden’s approval rating hits new low in Quinnipiac poll... Biden’s job approval rating hit a new low eight months into his term. His approval rating has dropped to 38%, according to a Quinnipiac University poll released Wednesday — down from 42% three weeks ago. While the Quinnipiac poll has Biden at an all-time low approval rating, an analysis of various polls by FiveThirtyEight shows it remains at 44%. One potential reason for the low rating in the Quinnipiac poll is that his approval among Republicans and independents, who make up the largest portion of the sample, has cratered, according to Quinnipiac — with a 32% approval rating from independents and a 4% approval rating from Republicans. Biden held an 80% approval rating among Democrats.

Meanwhile, Bloomberg reports Virginia gubernatorial Democratic candidate Terry McAuliffe cast Biden and his party’s lawmakers in Congress as a liability in the final weeks of the campaign, with polls showing a tightening race.