Meeting Request From Biden Rejected By Chinese President & Exports Slowly Resume As Repairs Continue
Update for September 17th, 2021
At this time most U.S. corn yield estimates have settled into a range from 173 to 177 bushels per acre. Those forecasting a yield below 175 are siting the appearance of “tar spot” as an important factor that is reducing yields in portions of the Eastern Corn Belt. Cooperative weather over the past few weeks has some optimistic that the positive close to the season will be enough to produce corn yields closer to the 177 bushel per acre mark.
Corn demand right now is weak and shipments of U.S. corn are the lowest since February 2013. Weekly export inspections for corn only reached 5.4 million bushels, a decline of 85% from this same week a year ago. Soybean inspections of 3.8 million bushels this week was a gain from the previous week but is still 94% lower than this same week in 2020. Looking at overall export commitments, corn is currently the best we have ever seen while soybeans are struggling and down 31% vs a year ago. Damages caused by Hurricane Ida to nearly 12 export terminals along the Gulf are responsible for the slowdown in export shipments but repairs are underway. Cargill is the latest major grain trader to report a return to normal operations at one of their Gulf facilities. Earlier this week the Cargill export terminal in Westwego, Louisiana unloaded its first grain barge since Ida came ashore August 29th. Power was restored to the severely damaged Cargill terminal in Reserve, Louisiana but the extent of the damage is still being assessed.
Photo credit: KingMackerel
@wdsu @WWLTV Cargill grain elevator in Reserve
Cargill spokesperson April Nelson said that at this time the company expects to formulate “phased reopening plans” once repairs are underway. Exporters Louis Dreyfus Co and Archer-Daniels-Midland Co are back online and have been loading shipments for export for several days while Bunge Ltd reports one of their facilities remains closed at this time. Other terminals are restarting as power is restored but another storm, Hurricane Nicholas has made landfall along the Texas Gulf coast this week bringing the threat of more flooding and power outages as it moves over Louisiana, Mississippi and the Florida panhandle which will likely stall progress in repairs, further extending delays.
Ethanol production is up 1.5% this week over last and 1% higher than this same week a year ago but is 6.6% lower than this week in 2019. Ethanol stocks have fallen for 7 consecutive weeks and is now down to 20.0 million barrels, but the collapse in basis occuring in interior areas will likely accelerate production levels in the coming weeks.
Yesterday China was back in the market for U.S. soybeans. This follows reports on Wednesday that said some U.S. soybean cargoes scheduled for delivery to both China and an unknown destination had been canceled, which is seasonally unusual as typically most exports to China are sourced through the U.S. at this time of year. Much of this can be attributed to the ongoing issues at the Gulf but the USDA has now confirmed the sale of 132,000 mt of U.S. soybeans to China on Thursday, basically a re-order of what they canceled the previous day. Looking ahead though one U.S. soybean exporter told Reuters, “There are no offers at the gulf for October. The outages have pushed everything back and nobody wants to sell October and add to their pain.”
It’s difficult to know how to interpret our relationship with China and what their long-term trade intentions are with the U.S. This week reports were circulating that Chinese President Xi has turned down the request for a meeting from President Biden. This sort of news signals that the Chinese are clearly not ready to engage in any meaningful negotiations with this administration and is unsettling to markets and creates a great deal of uncertainty going forward since they are our largest demand story.
Globally the trade is beginning to pay more attention to the weather in South America again as farmers in Brazil begin planting their first (and smaller-notice maps below) corn crop and soybean planting ramps up. It’s important to remember that Brazil continues to remain mostly dry, including some large portions of key production areas. The developing La Niña weather patterns in SAM will gather more attention and be more important than ever as a repeat of dry conditions is very possible this season but this time the moisture reserves are not available for the crop to pull from.
Cooler temps are arriving across the Northern Plains and Western Corn Belt. Some of the weather models are forecasting temps in parts of North and South Dakota, Minnesota and Iowa will fall into the mid to low 30’s by the end of next week. The first map below shows the predicted temps for next Saturday, September 25th. The potential for frost exists in far northern regions, this is seasonal timing as the average first frost date for Fargo, ND ranges from September 21st through the 30th and October 1st through the 10th for Iowa.
Precipitation totals through September 26th from the GFS and EURO models are included below. The Central and Western Corn Belt are expected to receive light rainfall totals which should allow for harvest work to progress, many areas of the Eastern Corn Belt look to be wetter through the period.