Evening Report | October 18, 2021

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Corn harvest passes halfway point... USDA reports corn harvest was 52% complete as of Sunday, an 11-point increase from the previous week and 11 points ahead of the five-year average. But harvest progress was two points shy of what traders surveyed by Reuters expected. Of the top 18 producing states, only Kentucky, Ohio, Pennsylvania and Tennessee are running behind average on corn harvest.

Soybean harvest also a little slower than anticipated... USDA says 60% of the soybean crop was harvested as of Sunday, up 11 points from last week and five points ahead of the five-year average. But like corn, soybean harvest fell two points shy of what traders expected. Soybean harvest is running ahead to well ahead of normal in the western Corn Belt, but the pace is lagging the five-year average across the eastern Corn Belt, Mid-South, Delta and Southeast.

Cotton harvest continues to lag... Cotton harvest advanced eight points over the past week to 28 complete, though that was six points behind the five-year average for mid-October. Harvest in top producing Texas is 35% done versus the normal 31%. But harvest is slower than average in states to the east of there, with some of those states well behind normal.

Winter wheat planting hits 70% complete... USDA reports U.S. winter wheat seeding advanced 10 points over the past week but was one point shy of the five-year average. Planting in Kansas is three-quarters complete versus the normal 68% in mid-October. Winter wheat seeding has been slowed in some states by recent rains.

USDA says crop emergence jumped 13 points over the past week to 44%, though that was still three points shy of the five-year average.

USDA will release its first winter wheat crop condition ratings of the year next Monday.

Brazil soybean planting second fastest on record… Brazilian producers had planted 22% of their soybean acres as of Oct. 14, the second fastest on record for that date behind the 2018-19 season, according to AgRural. Soybean planting jumped 12 percentage points on the week. Planting of Brazil’s full-season corn crop increased seven points to 45% done, one point ahead of last year at this time.

SovEcon projects Russia’s wheat crop will rise nearly 7%... Russia’s wheat production is expected to increase 5.2 MMT (6.9%) to 80.7 MMT in 2022, based on the initial projection from SovEcon. The Russia-based consultancy said, “Ample rains in early autumn helped moisture reserves all over the country. On average, winter wheat now is in the best shape seen for several years.” SovEcon expects Russia's 2022 total winter and spring wheat planted area to be unchanged from this year’s crop at 28.7 million hectares but winterkill is expected to be substantially lower.

SovEcon expects sharp drop in Russian wheat shipments this month… SovEcon forecasts Russian will export 3.3 MMT of wheat in October, down 28.9% from last year. It expects Russia to shipment 3.8 MMT of grain (wheat, barley and corn) this month, down 31.0% compared with last year.

Ukraine grain exports increase sharply... Ukraine has exported 16.5 MMT of grain since July 1, up 1.7 MMT (11.7%) from the same period last year. Ukraine’s grain exports to date included 10.7 MMT of wheat, 4 MMT of barley and 1.5 MMT of corn. Ukraine likely had record grain production of around 80.3 MMT this year and is expected to export 61.5 MMT of that supply, up 16.8 MMT (37.6%) from last year. Ukraine’s ag minister expects the country to export 23.1 MMT of corn, 16.6 MMT of wheat and 4.2 MMT of barley in the 2021-22 marketing year.

Gleanings for 2022 acreage from our talks with farmers, industry sources… Following are some conversations we’ve had recently regarding potential acreage next year.

• U.S. soft red winter wheat producers are asking their crop insurance agents about prevent- plant. So much so that several agents told us that the expected boost in acres for the 2022 crop may not be as high as initially thought.
• Fertilizer contacts signal a growing number of farmers are keeping their options open until next year relative to prices and availability of fertilizer, etc. “The U.S. market is going to have to bid up the price of corn to make sure plantings do not go down significantly,” one analyst told us at an industry confab. Sources also note that the nitrogen price and availability issues may impact Brazil’s safrinha corn crop.
• If new-crop cotton prices hit 92-cents-plus it would boost planting intentions for 2022, a cotton industry official told us. The source expects a boost in plantings next year, but stressed the price-trigger as a motivating factor. Demand has been so good for U.S. cotton that the industry source frets that logistical snafus could impact shipments ahead.

Some Democrats are brushing off a new carbon tax, sensing an opportunity… Why? Centrist Sen. Joe Manchin (D-W.Va.) has told the White House he strongly opposes the $150 billion clean electricity program in the administration’s $3.5 trillion social policy plan. “I’ve had a carbon pricing bill in my desk for the last three years just waiting for the time,” said Sen.  Ron Wyden, the Oregon Democrat who chairs the Senate Finance Committee. But a carbon tax is politically touchy: Industries could pass along higher costs, making Democrats vulnerable to claims that they are raising taxes on the middle class; climate campaigners say a tax allows companies to continue polluting, albeit at a higher cost; and, crucially, it is also unclear if Manchin would support a such a tax, the New York Times notes. White House staff members are now rewriting legislation without the clean electricity provision, trying to cobble together a mix of other measures. The alternatives are unlikely to lead to the same kind of rapid reduction in emissions. They may include:

• About $300 billion to extend existing tax credits for utilities, commercial businesses and homeowners that use or generate electricity from zero-carbon sources.
• $32 billion in tax credits for individuals who purchase electric vehicles.
• $13.5 billion for electric car charging stations and $9 billion to update the electric grid.
• $17.5 billion to reduce carbon dioxide emissions from federal buildings and vehicles.