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UPDATE for August 25th, 2023

Yield Estimates by State & More Russian Drones Bomb Danube River Ports

USDA crop condition ratings this week were expected to improve slightly from the previous week’s ratings. Instead, overall corn GD/EX ratings were lowered from last week’s rating of 59% GD/EX down to 58% vs 55% last year. The corn crop in Colorado deteriorated by 15% on the week, Kansas down 5%, South Dakota down 4%, Missouri, North Dakota and Tennessee were each down 3%, Ohio and Texas fell 2% and Indiana and Kentucky were each lowered by 1%. Some very minor crop improvement was found in Iowa +2%, North Carolina +2% and Minnesota +1%. SAM long-term forecast outlooks are becoming increasingly important as planting season approaches. There is growing concern that some areas are too dry and are greatly in need of rainfall before planting begins.

The hot and dry weather has unfortunate timing for soybean yields across a large section of the U.S. Currently the key soybean production region located in northern Mato Grosso is also being monitored due to the presence of very dry conditions as planting season is not far off. This week’s USDA soybean crop condition GD/EX rating remained steady at 59% vs 57% last year. Current ratings in top U.S. soybean producing states of Illinois, Iowa and Minnesota are already below last year’s ratings for this stage which will make next week’s ratings quite interesting, following this week of record setting heat. Will the damage from high temps and limited rainfall finally be enough to push the yield estimate under 50 bushels per acre?

Whether you agree with or believe in the results they find, the annual Pro Farmer crop tour was conducted this week and state by state results are shown. The historical difference in the PF tour state-by-state estimated corn yields vs the final USDA yield and the appropriate adjustments for each are shown in the chart below.

Russia has attacked Ukrainian grain facilities along the Danube River port of Izmail again this week. Wednesday officials reported an overnight drone attack that further reduced the export capacity of the port by 15% and destroyed 13,000 metric tons of grain that had been destined for Egypt and Romania. Since the collapse of the Black Sea grain deal the Danube River has become the primary route used for grain exports and has made it the main target for drone attacks, which have destroyed a total of 270,000 tons of grain just since the grain deal ended last month.

Insurance providers have notified shipping companies operating in Russia’s ports along the Black Sea that additional fees called “war risk premiums” will be added to the typical fee. These war risk premiums were a common added expense for tankers last year after the war began but were dropped during the Black Sea shipping deal. Since this deal fell apart military activities have escalated in the region increasing risks to insurers. Even though Russian Black Sea ports have not been attacked the war risk premium is increasing from around 1% the value of the cargo to 1.20-1.25%. Traders explained that this increase means every trip with a Suezmax tanker will cost an additional $200,000 and even more if the Russian oil is destined for India. This additional risk premium will raise the cost of the total premium to almost $1 million. At the peak of the risk premium charges during the early months of the war Russian companies were paying as much as $20 million per tanker in shipping and freight costs which is over 1/3 the value of the entire shipment. (Reuters)

Mexico’s economic minister, Raquel Buenrostro told Reuters that no further changes will be made to the GM corn decree before the matter goes in front of the dispute settlement panel. In February Mexico modified the countries ban on GM corn to allow for its use in animal feed and non-edible consumer products. The new decree though maintains the ban on GM corn for human consumption specifically in the making of flour for tortillas. The U.S. and Mexico have held formal meetings in an effort to resolve the issue of the use of Genetically Modified corn in food products, but those meetings have failed to produce a resolution. Because of the impasse the U.S. has requested a dispute panel review the matter and make a binding ruling on the subject.

Heavy rains have been damaging crops in China’s northeastern region where 45% of the countries corn crop and 60% of the nation’s soybean crop are produced. As a result, some fields have become flooded and are being drained but the soil remains excessively wet which is inhibiting the development of the crop, but the 10-day outlook appears more favorable.

This weekend will finally bring some relief from the unseasonably hot temperatures but highs in the mid to upper 80’s will return by the end of next week.

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