Evening Report | October 21, 2021

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Drought builds in West Texas, improvements in other areas... The U.S. Drought Monitor as of Oct. 19 showed some drought improvement in areas of the Southern Plains, but there were areas in West Texas that saw a one-category degradation in drought conditions during the week.

The Drought Monitor commentary notes: “Following rapid expansion of D0 (abnormal dryness) and D1 (short-term moderate drought) during September across Oklahoma and northwest Arkansas, above normal precipitation during the first half of October resulted in a continued decrease in the coverage of D0 and D1. Month-to-date rainfall amounts totaled 2 to 6 inches throughout much of central and eastern Oklahoma along with northwest Arkansas. Farther south into central Texas, recent heavy rainfall also supported minor modification to the ongoing D0 and D1 areas. Abnormal dryness (D0) was maintained for parts of southeast Oklahoma due to ongoing 30 to 60-day indicators and lower rainfall amounts during the past two weeks. Abnormal dryness (D0) and short-term moderate drought (D1) was expanded slightly to include more of southwest Arkansas and northwest Louisiana which missed out on the heavier rainfall this past week and precipitation deficits have increased. Moderate (D1) to severe (D2) drought continues to expand across west Texas where 60-day precipitation deficits range from 2 to 5 inches and soil moisture indicators have worsened.”

For the High Plains, the commentary said, “Improvements were made across parts of Nebraska and Kansas due to weekly precipitation amounts of greater than 1 inch and soil moisture recovery. Likewise, an increase in soil moisture indicators resulted in small improvements across parts of Wyoming.”

The Drought Monitor showed nearly 47% of Texas was covered by some form of abnormal dryness/drought, including nearly all of the Panhandle and West Texas. Dryness/drought covered 94% of Oklahoma, with the worst conditions in western areas of the state. Kansas was 38% covered in dryness/drought, with northwestern and far southwestern areas the driest. 

Across the Midwest, the Drought Monitor stated, “Recent rainfall and improving stream flows resulted in a 1-category improvement to parts of western and northern Minnesota, while insufficient precipitation during the past 30 days prompted an expansion of abnormal dryness (D0) from southeast Minnesota into parts of Wisconsin. Rainfall during mid-October resulted in a slight decrease in the southern extent of D0 and D1 areas of northern Illinois. Also, the spatial extent of D0 was decreased in Missouri based on 30-day precipitation and improving streamflows. SPIs at various time scales, 28-day average streamflows, and soil moisture remain near or above normal throughout the eastern Corn Belt and Ohio Valley.”

Click here to view the Drought Monitor maps.

Unfavorable extended forecast for HRW areas... The extended forecast from the National Weather Service (NWS) calls for increased chances for above-normal temps and below-normal precip across the Southern Plains during the November through January period. Above-normal temps are expected to encompass from Nebraska southward, while below-normal precip is expected over much of Oklahoma and all of Texas. Eastern Oklahoma, Kansas and Nebraska are expected to see “equal chances” for normal, above-normal and below-normal precip during the three-month period.

The forecast suggests the driest areas of HRW country will face some crop stress and timely spring rains would be needed to boost the crop coming out of dormancy. Most of soft red winter (SRW) wheat country is expected to experience a warm but wet 90-day period, with “equal chances” for precip likely over the remainder of the area.

Click here to view the NWS extended forecast maps.

IGC raises global corn crop forecast... The International Grains Council (IGC) raised its forecast for 2021-22 global corn production by 1 MMT from last month, mostly on an improved outlook for the United States. IGC now forecasts global corn production will rise 84 MMT from 2020-21. But due to an expected surge in use, it forecasts global corn ending stocks will rise only 9 MMT year-over-year.

IGC continues to call for a 8-MMT year-over-year increase in global wheat production. But it expects global wheat ending stocks to drop 3 MMT from 2020-21.

IGC also kept its global soybean crop forecast unchanged, calling for a 14-MMT increase in production from 2020-21. It expects global soybean ending stocks to rise 2 MMT from last year.

Contract library for cattle producers... The proposed legislation from Reps. Frank Lucas (R-Okla.), Dusty Johnson (R-S.D.) and Henry Cuellar (D-Texas) would set up a contract library within USDA’s Agricultural Marketing Service for cattle producers. The contract library was among recommendations in a report from Texas A&M University on cattle markets. The effort would be like one already maintained by USDA for hogs/pork, something that supporters of the concept say has provided more transparency for hog producers. It is an issue where there is broad support, including groups or organizations that often find themselves on opposite ends of issues. That and solid bipartisan support could up the odds for the measure being included relative to updates to the Livestock Mandatory Price reporting program.

U.S., others blast China trade policy as WTO conducts review... The World Trade Organization (WTO) is conducting its eighth review of China’s membership in the trade body some 20 years after it joined. “The United States’ most fundamental concerns with China’s trade regime involve China’s industrial policies,” U.S. WTO Charge d’Affaires David Bisbee said in remarks on Wednesday. He argued China’s development policies go beyond “guiding and supporting domestic industries” as is the case for many other WTO members and instead “skew the playing field against imported goods and services and foreign manufacturers and services suppliers through an array of supporting measures.” While the U.S. has engaged with China on trade issues via the WTO and bilaterally, Bisbee declared that has resulted in “modest changes” when China has made good on its promises.

Another issue, he noted, was that China has opted only to address specific practices, and not the underlying policies that have prompted the complaints. While noting the Phase 1 agreement with China resulted in “some progress,” Bisbee stated that “our most fundamental concerns with China’s trade regime remain unaddressed.”

Other countries levied criticism on China’s actions, including Australia, which saw trade aggression by Beijing that has been deployed against the country in several areas. A lack of transparency by Beijing was also cited by the U.K., while the European Union (EU) said China had not made the level of trade and economic reforms that were expected when it acceded to the WTO in 2001.

The review will continue through Friday, with China expected to offer a more-detailed rebuttal.

Homebuilders ask for lifted tariffs on imported materials... U.S. homebuilders want the Biden administration to temporarily lift tariffs on China and Canada to ease supply-chain bottlenecks that are hurting housing affordability. The Biden administration and Congress “should temporarily suspend duties on a wide array of imported building materials and goods, from Canadian softwood lumber to Chinese steel and aluminum,” National Association of Home Builders head Chuck Fowke said.