top of page

Update for 6/17/22

Storage Problems in Ukraine & Hot Temps Acreage projections are beginning to be released ahead of the June 30th USDA report. This week IHS Markit announced their estimate for 2022 U.S. crop acres. The consultancy expects around 90.965 million acres of corn (an increase of 455,000 acres from their earlier estimate). This projection is slightly higher than the current USDA forecast of 89.49 million acres. IHS has lowered their expected soybean acreage by 280,000 acres to 88.735 million which is slightly lower than the USDA estimate of 90.955 million acres.

Ukraine’s ag minister says that the war with Russia could potentially mean the loss of three wheat harvests from his nation. “Ukraine will fall out of the market for a long time…Now we are talking about three wheat harvests at the same time: we cannot take out last year’s crop, we cannot harvest and take out the current one, and we do not particularly want to sow the next one.” He added, “My personal opinion is that the fall in the area of winter wheat (for the 2023 harvest) in the territory under our control could be a significant percentage.” The Biden administration has proposed the building of temporary grain silos along the Ukraine border with Poland and Romania as a way to alleviate some of the storage issues. Biden said, “I’m working closely with our European partners to get 20 million tons of grain locked in Ukraine out and into the global market to help bring down food prices…It can’t get out through the Black Sea because it’ll get blown out of the water…So we’re going to build silos, temporary silos, on the borders of Ukraine including in Poland.” This proposed plan has many “obvious flaws” and is not expected to be able to completely relieve the problem of the “stuck” grain in Ukraine. This proposal is a very small band-aid on a huge wound, the only true solution to this would mean somehow reopening the ports along the Black Sea. During his visit to the United Nations this week U.S. Agriculture Secretary Tom Vilsack told reporters for Reuters that the proposed silos would help prevent Russia from stealing any additional grain from Ukrainian farmers and ensure that the country’s winter harvest is not lost as a result of the lack of storage. He said, “We know of circumstances and situations where that has occurred-Russians have taken grain from Ukrainian farmers. So, to the extent that we can get it out of the country, that is a plus that reduces the risk of loss.” Russia has denied the accusation but Maxar Technologies, a U.S. satellite imagery company, has clear evidence that for the past couple months Russian-flagged ships have been transporting Ukrainian grain to their ally Syria. Maxar Technologies Inc. is also able to use the satellite imagery along with vegetation-health indexes to study the effects the war is having on this season’s crop. In a report released earlier this week they have determined that the 2022 spring-crop area has dropped by 30% which could cut this season’s corn production by 50% and sunflower production by 40% from last year’s levels. Crops that were able to be planted appear to be in normal health at this time but shortages of some inputs like fertilizer will become more evident as the season continues. Ukraine is known as the “breadbasket” of Europe so disruptions in production and exports have major consequences for the world. (Bloomberg)

Nicholas Burns our U.S. ambassador to China has warned that he sees that U.S./China relations have dropped to their lowest level since 1972. Burns said, “We have seemingly unremitting competition between us” and sees that “profound divisions” exist between the two countries on economics, technology, security, human rights, as well as many other items. He says that in regards to economics and trade many Americans believe China isn’t “playing by the rules” Burns also noted that the Chinese “…are seeking to militarize many of the technologies and that presents a real challenge to us.” He also criticized China and their handling of Hong Kong saying that with their repressive policies, Beijing has basically “snuffed out” all remaining freedoms. We are left to question what affect the tense relationship will have on Chinese purchases of U.S. corn and soybean. Analysts feel that it is not likely to have a pronounced impact on our exports but these foreign relationships are certainly important and warrant attention.

The ridge of high-pressure sitting over the U.S. has already delivered a variety of extreme weather events: record-breaking heat across the South and Midwest including record night-time temperatures, flooding to Yellowstone National Park and damaging hail to crops in Kansas. USDA meteorologist Brad Rippey that almost every year the U.S. has a high-pressure ridge that develops, what varies is where the ridge is located and the intensity of the event. He said, “This year, 2022, it does appear that we have a rather intense ridge of high pressure. You’ve got years like 1988, 1995, or 2012, where that ridge intensifies, moves across the Midwest and causes huge implications for corn and soybeans. Other years like 2011, we’ve got a powerful ridge, but it stays parked over Texas or Oklahoma and New Mexico. Other years, we don’t have much of a ridge at all, it’s weaker, and it doesn’t really have major impacts on any major agricultural areas.” Rippey says that this year there were some early signs like the triple digit heat that arrived earlier than normal in Texas that signaled the ridge that would develop this year would be likely be severe. He explained, “We saw it become established over the desert southwest, it’s made a run across the Great Plains now more recently into the Midwest, the mid-South, and even the Southeast with early triple digit heat, that in fact is maybe a bit of a warning sign.”

Crop development in the Corn Belt is still in the early stages, pollination is weeks away but that isn’t the case in southern growing regions. “We’ve got a lot of corn silking across the south, that’s not going to have a big impact on the national number. But for these regional and state producers, it’s a big deal to see temperatures like 102 or 103 degrees when corn is silking, that is going to have an impact on that crop.” Rippey added, “One of the keys with these strong ridges of high pressure is that around the periphery of these systems around the west, the north and the east sides of these ridges, they do tend to be very active in terms of thunderstorm activity, it’s often referred to as a ring of fire.” Because it’s along the edge of the ridge where you find the most pronounced conditions like high winds, heavy rainfall and damaging hail. “In about a month from now, we’re going to be looking at where that high is parked. Is it going to affect production in the 2022 season? And all of that depends on how that strong ridge of high pressure plays out where it is parked in early to late July when all that corn will be moving through reproduction.”

Rainfall will be mostly absent across the U.S. Plains and Corn Belt for the next week as a high-pressure ridge builds this weekend. Traders often refer to the high-pressure ridge as the “Dome of Doom” because it generally means bad news of crop potential. The ridge will be centered over the mid-Mississippi Valley, situating the Ring of Fire to the north which will bring above-normal rainfall to the Upper Midwest while areas further south will remain dry. The EURO Model 15-day rainfall departures from normal are concerning. The first map shows rainfall deviations from normal. The second map shows the actual rainfall deficits expected during the period.

The EURO long-range meteogram indicates some very toasty temps are on the way with a 7 day stretch of 90 + degree temps

48 views0 comments

Recent Posts

See All
bottom of page