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UPDATE for August 10th, 2023

Pre-Report Worksheets & Putting Some Heat on Russia

Crop ratings for both corn and soybean improved this week. Corn was 55% GD/EX last week and this week the rating was raised to 57% vs the average of 64%. U.S. soybeans were rated 52% GD/EX a week ago and that number was increased to 54% compared to the average of 63%. The following graphs illustrate how the GD/EX crop conditions compare to other years dating back to 2010.

Friday the USDA will deliver the August WASDE and Crop Production estimates. Traders are expecting an adjustment to new-crop yield but how big of reduction (if any) will we see.

CORN- The USDA started the season projecting a yield of 181.5 bushels per acre and have since moved that estimate down to 177.5. The trade is looking for the new estimate to come in between 173-177 bushels per acre. We’ve heard many times that 15 billion bushels in new crop production would be very burdensome especially considering the lack-luster demand. Any yield above 173.8 still pushes above the 15 billion-bushel threshold. For reference the most corn ever produced in the U.S. occurred in 2016 when 15.14 billion bushels were harvested. This year’s USDA yield estimate of 177.5 combined with the number of corn acres would equate to a new all-time of 15.320 billion bushels.

SOYBEANS- A lot of uncertainty surrounds the expected soybean yield and final total production estimates. Currently the USDA is projecting an average national soybean yield of 52 bushels per acre. The trade is expecting to see Friday’s estimate come in between 50 to 52 bushels.

Russia terminated the Black Sea safe passage agreement last month and since then Ukraine has started to fight back. In a video Tuesday, Ukraine’s president Volodymyr Zelenskiy stated they will mirror Russian attacks in the Black Sea and will continue to fight back against Russia to ensure their Black Sea passageways are not blocked to allow for the free movement of imports and exports. His statement comes shortly after Ukraine successfully damaged a Russian warship near a major Russian port and struck a Russian tanker both with the use of drones carrying explosives. (Reuters)

Russia now is faced with a lack of ships and a shortage of interested buyers of Russian wheat due to both the financial and security risks they will face. Russia no longer has the assistance of Global Commodity Houses that help to facilitate the sale of grain, Cargill, Louis Dreyfus and Viterra stopped their assistance on July 1st. On Friday Russia announced that JPMorgan has stopped processing grain payments to the Russian Agricultural Bank. One of the demands Moscow requires for the Black Sea deal to restart is the reconnection of the Russian Agricultural Bank to the SWIFT international payments system. The EU cut off this access in June of last year, but JPMorgan was working around that demand and had been processing some of the payments. The Russian foreign Ministry said Friday that this assistance has also ended.

The Storm Prediction Center has issued a severe weather outlook for Friday afternoon and evening. The primary concern with these thunderstorms will be damaging winds and heavy downpours but timing will be a critical factor in determining the severity. Weather models are not in agreement on the development, some show little or nothing while others are more aggressive. At the very least the opportunity for scattered showers and thunderstorms exists Friday as the front moves across the area.

Saturday and most of Sunday look very pleasant with temps forecasted in the low to mid 80’s and dew points in the 50’s in most areas. By Sunday evening/night a fast-moving NW flow will send another short wave into the Midwest. This will bring with it a strong threat of showers and storms as moisture increases ahead of the system pushing dew points up into the 60’s by Sunday evening.

Recently the pattern has been for the south to be wet and the north to remain dry. The baroclinic boundary location has sent most of the rainfall near and south of I-80. Looking ahead at the expected rainfall departures from normal through August 25th the GFS shows this trend will continue. The following map shows deficits of nearly 2 inches in the north while the area south of I-80 show a surplus of an inch and more in some locations.

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