UPDATE for April 21st 2023
No Significant Warm-Up in Sight & EPA Ethanol Outlook
U.S. planting progress has been slow and a cold forecast lasting into early May for many of the northern production states is worrisome. Last week brought well- normal temperatures and dry weather to much of the Midwest. Many farmers took advantage of that opportunity and began planting despite warnings from agronomists and seed companies. This could definitely make the acreage debate more interesting.
Early this week the USDA held a “data users” meeting. One of the issues discussed was this year’s corn yield estimate of 181.5 bushels per acre. This annual projection can be controversial over what may be considered “normal yields” due to current trends. The last 4 growing seasons the initial trend determined by the Department of Agriculture was set too high and actual yields were lower than expected. In the 5 years prior to that, actual yields surpassed the initial Department of Agriculture estimate.
The current estimate of 181.5 has critics asking why, because it is well above the record of 176.7 bushels per acre set in 2021. It also can “falsely inflate the printed ending stock estimates until survey data is first collected in August.” The USDA clarified that a “trend” yield assumes both normal planting progress and summer weather and a yield above 181.5 could be expected with normal planting progress followed by above-average summer weather. Reuters reporter Karen Braun explained, “if all U.S. states this year achieve their highest corn yield since 2014, which would capture most major states’ all-time highs, the national yield computes to 187.2 bushels per acre. If each state threw their third-highest yield of the last nine years, the result is 179.9.
(Interview conducted 4/15) Jerry Gulke see’s current weather delays as an opportunity for prices to rally. (Although this has not been the case this week) “This is the time of year when you can’t afford a week’s delay going forward because this is not March 1 or March 15.”
This past week’s corn planting progress data showed an increase of 5% bringing the total to 8%, slightly above the 5-year average. This coming Monday’s report will likely show very little progress in many key growing states this week, the following Monday is May 1st.
Released April 17, 2023, by the National Agricultural Statistics Service
(NASS), Agricultural Statistics Board, United States Department of
Corn Planted - Selected States
[These 18 States planted 92% of the 2022 corn acreage]
: Week ending :
State : April 16, : April 9, : April 16, : 2018-2022
: 2022 : 2023 : 2023 : Average
Colorado ........: - - 1 2
Illinois ........: - 1 10 3
Indiana .........: - - 3 2
Iowa ............: - - 7 1
Kansas ..........: 11 6 17 10
Kentucky ........: 6 5 14 12
Michigan ........: - - - -
Minnesota .......: - - - 1
Missouri ........: 4 7 30 8
Nebraska ........: 2 - 2 1
North Carolina ..: 36 12 28 32
North Dakota ....: - - - 1
Ohio ............: - - - 1
Pennsylvania ....: 2 - - -
South Dakota ....: - - - -
Tennessee .......: 7 5 23 16
Texas ...........: 64 61 65 61
Wisconsin .......: - - 1 -
18 States .......: 4 3 8 5
- Represents zero.
Gulke said, “I was looking at 80-degree weather in northern Illinois, but it was too wet to do anything.” Which is not that unusual as it is often late April before there is much planting progress that occurs on his Illinois farm. Gulke also farms in North Dakota and conversations he has had with producers in that area are predicting it will likely be mid-May before they will be able to make any significant planting progress. “The word I’m hearing from farmers up there is there’s going to be a lot of prevent plant in North Dakota especially in the Red River Valley area. They’ve still got snow on the ground in places, and if not, frost is not out yet.”
The USDA projected an increase of 3.75 million corn acres in North Dakota in the March 31st Prospective Plantings report, this is a 27% increase above 2022. There were a lot of prevent plant acres last year. “So, North Dakota is pretty key this year again because a swing of 1 million or 2 million acres one way or the other could really change things,” Gulke said.
He feels that the market may have found a price bottom. “At worse, we go sideways for a while. I think the lows are in for now, and we certainly have a line in the said that if we go below this week’s low then all bets are off. That would mean there’s something going on out there in the world that supersedes the supply and it’s more of a demand problem.”
EPA administrator, Michael Regan appeared before the House Ag Committee this week to discuss a variety of ag related topics. One of the issues discussed during the 4.5-hour long meeting included the use of year-around E-15. He said that so far he has not received enough evidence to issue an emergency waiver to allow for this yet but his office is taking comments from industry stakeholders and have been offered “a lot” of data that he believes will be “reflected in the final rule.” He also said, “Let me just say that in 2022 we set the highest volumes ever in EPA’s history. So, we’re proud of that and what we plan to do is continue that trajectory. As you know we proposed a rule and we’re in that proposal phase and there aren’t too many things that I can comment during this time of comment but what I can say is that 2023, 2024, and 2025 will continue that positive trajectory.”
One of the other key subjects discussed was the future of biofuels and the role he sees them playing in coming years. A week ago, the EPA announced tighter emission standards for new vehicles which raised concerns from corn producers and the U.S. biofuels industry. (D.GA) David Scott asked Regan what he would tell farmers and the biofuels industry the role biofuels will have going forward. He said, “Well, I think we see a significant role. It’s called walking and chewing gum at the same time. I think that when you look at the policies of the EPA, and the investments that we’re making in biofuels and advanced biofuels, just by the last RVO volumes we set and the ones we’re anticipating setting, and then the partnership that I have with Secretary Vilsack and Secretary Buttigieg as we look at the role of biofuels with aviation fuels, we see tremendous market for biofuels that is complimentary to the EV fuels future. And so, we think we can do both-we see a balance here. And in both cases, we’re trying to follow the markets, follow technology and follow the science as well.”
The on-again-off-again Black Sea grain export deal with Ukraine appears to be back on. Concerns mounted regarding future cargoes when the 60-day safe passage agreement failed to be renewed before the deadline. Prior to the Russian invasion, Ukraine had been one of the world’s leading exporters of agricultural products, a reliable and consistent supplier to countries around the globe.
The invasion has forced Ukraine to use land and river options to get a large percentage of their agricultural products into position for export. Meaning that neighboring countries that also produce these same products have become transit routes. This has led to cheaper Ukrainian grain becoming readily available in these neighboring countries, forcing farmers in those regions to compete against the lower prices, reducing the value of their own crop.
Following a joint complaint filed in March from Bulgaria, Hungary, Poland, Romania and Slovakia the European Commission has enacted “preventative measures” for wheat, maize, sunflower seeds and rape seed. This new action will only allow for grain from Ukraine that has already too been sold to other EU members or to the rest of the world to enter the 5 countries. This new policy runs through June. In addition, the EU is planning to compensate farmers from the 5 neighboring countries with a fund consisting of 100 million Euros (109.32 million U.S. Dollars).
The map above illustrates precipitation over the past 14-days. Fortunately, the 6-to-10 day and the 8-to-14-day outlooks that bring us up to May 4th shows below-normal precipitation for our area. Unfortunately, temps are expected to remain colder than normal. (Maps below)
The GFS model shows temperature departures from normal like this through the end of April.