Evening Report | October 3, 2022
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Corn harvest one-fifth complete... USDA said 20% of the corn crop was harvested as of Sunday, two percentage points behind the five-year average and traders’ expectations. USDA reported 75% of the crop was mature, in line with average for the beginning of October.
The condition of the corn crop remained at 52% “good” to “excellent,” though there was a one-point decline in the top category. The portion of crop rated “poor” to “very poor” remained at 21%.
Soybean harvest a little more advanced than expected... As of Sunday, USDA reported 22% of the soybean crop was harvested, two percentage points more advanced than expected though three points behind average. USDA said 81% of the crop was dropping leaves compared to the average of 79% for this date.
Soybean crop conditions remained at 55% “good” to “excellent.” The amount of crop rated “poor” to “very poor” increased one point to 16%.
Cotton harvest 22% done... USDA said cotton harvest advanced seven points over the past week to 22% complete as of Sunday, five points ahead of the five-year average. Texas was 31% harvested compared with 23% on average. USDA reported 77% of the crop had bolls open, four points ahead of average.
The portion of crop rated “good” to “excellent” remained at 31%, though the “poor” to “very poor” rating increased four points to 36%.
Winter wheat planting, emergence slightly behind average... USDA reported 40% of the winter wheat crop was planted, four points behind average. Texas was five points ahead of average at 48%, though Oklahoma (28% vs. 41%) and Kansas (30% vs. 39%) lagged the normal pace. Crop emergence stood at 15%, two points behind average.
Soy crush mostly as expected... U.S. soy processors crushed 175.0 million bu. of soybeans during August, according to USDA, which was just a little lighter than the average pre-report estimate of 175.6 million bushels. The crush pace declined 6.3 million bu. (3.5%) from July but rose 6.8 million bu. (4.0%) from August 2021.
Soybean crush totaled 2.204 billion bu. in 2021-22, up 67 million bu. (3.2%) from last year though 1 million bu. less than USDA forecast in September.
Soyoil stocks declined to 2.103 billion lbs., down 125 million lbs. from July and 80 million lbs. under year-ago.
Corn-for-ethanol use basically in line with expectations... U.S. corn-for-ethanol use totaled 432.3 million bu. in August, which virtually matched the average pre-report estimate of 432.8 million bushels. Ethanol use declined 13.5 million bu. (3.0%) from July but rose 15.5 million bu. (3.7%) versus August 2021.
Corn-for-ethanol use totaled 5.328 billion bu. in 2021-22, up 6.0% from 5.028 billion bu. in 2020-21 but 2 million bu. less than USDA’s September forecast.
Production of dried distillers grains with solubles fell to 1.868 million short tons from 1.934 million tons in July, though that was up from 1.827 million tons last year.
UN to Fed, other central banks: Pump the brakes... The Federal Reserve and other central banks risk pushing the global economy into recession followed by prolonged stagnation if they keep raising interest rates, a United Nations agency said Monday. The warning comes amid growing unease about the haste with which the Fed and its counterparts are raising borrowing costs to contain surging inflation, the Wall Street Journal reported.
In its annual report on the global economic outlook, the United Nations Conference on Trade and Development (UNCTAD) said the Fed risks causing significant harm to developing countries if it persists with rapid rate rises. The agency estimated that a percentage point rise in the Fed’s key interest rate lowers economic output in other rich countries by 0.5%, and economic output in poor countries by 0.8% over the subsequent three years.
“There’s still time to step back from the edge of recession,” UNCTAD Secretary-General Rebeca Grynspan said. “We have the tools to calm inflation and support all vulnerable groups. But the current course of action is hurting the most vulnerable, especially in developing countries and risks tipping the world into a global recession.”
In a subsequent news conference, Fed Chairman Jerome Powell said the central bank does take account of the impact its policies have on the rest of the world but would continue to lift interest rates to bring inflation under control. “We are very aware of what’s going on in other economies around the world, and what that means for us, and vice versa,” he said. “The forecast that we put together, that our staff puts together and that we put together on our own, always take all of that—try to take all of that into account.”
UNCTAD said rather than increase rates, which will do little to ease shortages of energy and food, policy makers should focus on measures that target price spikes directly, including price caps funded by one-off taxes on the unusually large profits being made by many energy companies.
Russia smuggling Ukrainian grain to help pay for Putin’s war... “An investigation by the Associated Press (AP) and the PBS series Frontline has found the Laodicea, [a bulk cargo ship] owned by Syria, is part of a sophisticated Russian-run smuggling operation that has used falsified manifests and seaborne subterfuge to steal Ukrainian grain worth at least $530 million — cash that has helped feed President Vladimir Putin’s war machine,” the AP reports (link).
Brazil soybean, corn exports slow in September... Brazil exported 4.29 MMT of soybeans during September, according to government data, down from 6.16 MMT in August and 4.83 MMT in September 2021. The country exported 6.78 MMT of corn last month, down from 7.55 MMT in August but up sharply from 2.85 MMT in September 2021.
Key Republicans write GAO Comptroller General re: foreign farmland ownership... House Ag Committee ranking member G.T. Thompson (R-Pa.) and Rep. James Comer (R-Ky.), Republican leader on the House Committee on Oversight and Reform, in a letter to GAO Comptroller General Gene Dodaro, asked the General Accountability Office (GAO) to conduct a study addressing the following:
1. What is known about the extent of and trends in foreign investment in U.S. agricultural land (e.g., by country of investor, by state, by type of land)?
2. How does the Farm Service Agency collect data on a foreign investment in U.S. agricultural land and what steps are taken to ensure data reliability? How have USDA’s data collection methods changed since AFIDA was enacted in 1978?
3. What procedures are in place to ensure proper disclosure of acquired agricultural land by a foreign person or entity and does USDA have a process to ensure accurate disclosure of the transfer or sale of such lands?
4. Do the current standards for filing under AFIDA ensure that land acquired by a foreign person or entity through a U.S. chartered company or corporation is accurately disclosed as a foreign investment in agricultural land?
5. How, if at all, does the U.S. government use the data on foreign investment in U.S. agricultural land to ensure the land is used for its intended purpose and does not pose a threat to national security?
6. What improvements or policy options, including regarding national security, could be made to strengthen reporting of foreign investment in agricultural land?
7. Are there other Departments or Agencies that USDA is or should be partnering with to ensure accurate disclosure of foreign owned agricultural land?
Rep. Thompson said: “Foreign ownership and investment in U.S. agricultural land has nearly doubled in the past decade. This growing trend has elevated concerns regarding national security in a time of uncertainty that is already compounded by challenges to our supply chain infrastructure, high input costs for farmers, and geopolitical pressures. It is critical for Congress to have a thorough understanding of foreign investment in our nation’s agricultural land.”
“China’s ownership of U.S. farmland is a threat to our food security and national security,” noted Rep. Comer. “An affordable, reliable food supply is critical to our nation’s well-being and prosperity, and we must ensure America maintains control of our nation’s resources. We are calling on the Government Accountability Office to report on the scope of this threat to our food supply to inform Congress how we can best protect the security of the American people. Americans need transparency about the federal government’s efforts to address this growing problem.”
The letter was signed by scores of other House Republicans.
Worst ever bird flu in Europe poses risks for 2023... Europe has experienced its worst bird flu crisis ever this year with nearly 50 million poultry culled, and the persistence of the virus over the summer has raised the risk of widespread infections next season, the EU's Food Safety Agency (EFSA) said. The spread of highly pathogenic avian influenza (HPAI is a concern for governments and the poultry industry due to the devastation it can cause to flocks, the possibility of trade restrictions and a risk of human transmission.
“As autumn migration begins and the number of wild birds wintering in Europe increases, they are likely at higher risk of HPAI infection than previous years due to the observed persistence of the virus in Europe,” Guilhem de Seze, a senior official at the EFSA, said in a statement on Monday.
This season’s HPIA epidemic affected 37 European countries in total, the largest geographical reach on record. Overall, this year’s ongoing bird flu crisis is the worst ever seen in Europe with a total of 2,467 outbreaks reported in poultry and 47.7 million birds culled, EFSA said. In addition, 187 detections were notified in captive birds and 3,573 HPAI events were recorded in wild birds.
Tier 1 DMC payments still triggered for August... Payments under the Dairy Margin Coverage (DMC) program will be triggered for August for Tier 1, but no payments will be targeted for Tier 2, based on the difference between the national all milk price and the national average feed cost (margin). The national average margin for August is $8.08 per hundredweight (cwt), triggering Tier 1 payments for those with margin coverage levels of $8.50 ($0.42 per cwt), $9 ($0.92 per cwt), and $9.50 ($1.42 per cwt).
