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Update for August 23rd, 2022

Pro Farmer Crop Tour Day 1 Results & China in the Grips of a Drought

The U.S. Dollar remains strong which is producing a headwind for export demand. But increasing weather concerns surrounding the Chinese crop, findings from the Pro Farmer Crop Tour and another decline in the U.S. GD/EX corn ratings this week are offering some price support this morning. Last week the GD/EX rating for corn was 57% this week it dropped to 55%, the trade had expected that the cooler temps and recent rains would have stabilized the crop condition but that is not the case.

The Pro Farmer Crop Tour is taking place this week and their findings always draw a lot of attention and rightfully so. At the conclusion of the Tour last year Pro Farmer estimated the average U.S. corn crop yield at 177.0 bushels per acre and total production of 15.116 billion bushels. Once the USDA announced final results for the 2021 harvest the final U.S. corn average came in at 177.0 bushels per acre and total production of 15.115 billion bushels!

Monday the west leg of the Pro Farmer Tour kicked off in S.E. South Dakota. A week ago, a farmer from the region told Chip Flory, host of AgriTalk and leader of the western leg of the Tour, that recent rains in southeastern S.D. had greened up the crops but “If guys are driving down the road and think they’re going to have 150-bushel corn crop here, they need to take the 1 off.” Monday afternoon Flory said, “I thought he was exaggerating the situation, but now I’ve seen he’s not. This corn has experienced a lot of bad days.”

Last year the state of South Dakota corn crop averaged about 140 bushels per acre and soybeans averaged 41 bushels per acre. After today’s findings Flory says that he is less optimistic about the states corn yields but is hopeful soybeans could still add some yield before harvest. Flory referenced a field his daughter was in, “She called me on her phone from within a field and said, “Hey, come out here and help me find some ears. We found 9 ears in 60 foot of row, and there should have been at least 85 to 90 ears or so. These fields had poor pollination and soils are dry.”

Tour scouts further north in the state report somewhat better crops but not by very much. Flory said, “The crop is better when you head west of Sioux Falls and stay within 8 to 10 miles of Interstate 90. But it’s doggone tough out here.”

Results from Monday vs current USDA August estimates:

Shipments of grain continue to leave Black Sea ports along the Ukrainian coast thanks to the export deal brokered by the U.N. and Turkey earlier this month. Port authorities report that since the agreement was reached 24 ships carrying agriculture products have left Ukrainian sea ports. The largest group so far, a convoy of 5 grain ships, are scheduled to leave port together after they are loaded with more than 70,000 MMT of wheat, corn and sunseed oil at the Ukrainian port of Chornomorsk this week. (Reuters)

Key crop growing regions in China are reporting the hottest and driest summer since they began recording temps and rainfall 61 years ago. This has stressed crops and has drastically reduced water levels. Reservoir water levels are half of normal, the Yangtze River basin has received only 45% of normal precipitation amounts and according to the state broadcaster CCTV as many as 66 rivers that stretch across 34 counties in the SW region of Chongqing have dried up.

A week ago, factories in the Sichuan province were shut down to conserve power for homes as air conditioning demand has surged as temps have soared to 113 degrees Fahrenheit. Chinese Agriculture Minister Tang Renjian told the newspaper Global Times that the next 10 days are a “key period of damage resistance” for the rice crop in southern China. The autumn grain harvest which accounts for 75% of the nation’s total crop is in danger and authorities say that the country is preparing to take emergency steps to “ensure the autumn grain harvest” Tang said Friday they will “try to increase rain” by chemically seeding clouds to produce rainfall and will be treating crops with a “water retaining agent” to help limit evaporation. No details have been shared regarding where these measures will be tried. Dan Wang, chief economist of Hang Seng Bank China told CNBC that the heat could cause a severe impact to the Chinese economy. Not only are the crops deteriorating but the extreme temps have slowed production in the counties steel, chemical and fertilizer industries as well. (AP, CNBC)

For the 3rd winter in a row a La Niña weather pattern is expected to remain in control with a 70% chance of lasting for at least the next 4 months, maybe longer. Forecasts call for heavy rain and snowfall for northern and northwestern regions of the U.S. and much of Canada which could mean a slow start to the spring planting season due to wet soils and cool temps. The Southwestern U.S., Southern Plains and Southeast stay on the dry side which means drought-stricken areas will likely not receive much relief before next spring.

Some forecasts expect La Niña levels will begin to move towards neutral during the January to March time-frame. NOAA blogger Emily Becker explained that “It would be pretty rare for the event to terminate so early in the year. If La Niña does decay to neutral in January-March 2023, it would be only the 4th time in the 24 La Niña winters we have on record.”

It's a long-shot to expect that we will be out of the current weather pattern by spring. Another spring season with wetter conditions to the north and drier to the south is a definite possibility given current readings.

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