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UPDATE for August 3rd, 2023

Comparing Final Yields to Crop Ratings & A VegDRI Map

There are so many theories on what the yield will be this season. Many traders think that the current USDA estimate needs to be revised lower from the current 177.5. When you consider the 55% GD/EX corn rating this week is the lowest seen at the end of July in more than a decade it raises a lot of questions. The end of July GD/EX crop rating in 2019 was 58% and by the end of August that GD/EX rating had fallen 1 more additional percentage point to 57%. The average yield that year was 167.5 bushels per acre. If we assume the current USDA harvested acres remains at 86.3 million then we need to have yield under 173.9 bushels per acre to drop production below 15.0 billion bushels and reduce ending stocks below the 2.0-billion-bushel mark. If the new-crop average were to drop to 170 bushels per acre nearly 650 million bushels could be subtracted from the current production estimate which would put ending stocks closer to 1.6 billion.

This season’s potential is a wildcard. Until the combines get out there we will continue to see sizable yield differences in yield estimates. Compare previous year’s outcomes to yesterday’s StoneX results. StoneX is projecting a final yield of 177.0 bushels an acre based on a recent yield survey. That estimate along with current USDA estimates paints a whole different picture for total production and ultimately for price. Friday, August 11th the next USDA report will be announced and this month we will get an updated yield forecast based from farmer surveys. Most analysts believe there will be a reduction in the yield, how big it will be is the million-dollar question.

VegDRI is one of the more recent tools available to help monitor the health of the vegetation based upon sophisticated satellite-based imagery as well as on-ground descriptions of land cover, land use, soil characteristics, and the ecological setting. The fine details VegDRI technology produces allows for continuous geographic coverage which offers real-time data. And right now, that shows crops in the majority of the Central U.S. are under some degree of stress. The term VegDRI stands for Vegetation Drought Response Index and exists due to the collaborated efforts of the U.S. Geological Survey (USGS), USDA’s Risk Management Agency (RMA) and NASA. VegDRI was first used in 2006 but only covered 7 states in the northern Great Plains but since then coverage has increased and now covers the entire lower 48 states.

The fine detail of the VegDRI technology allows for continuous geographic coverage which offers real-time data and right now that data shows crops in the majority of the Central U.S. are under some degree of stress. The map shown was produced on July 30th and as you can see there is a lot of dryness out there.

The U.S. soybean crop GD/EX rating is also the worst in a decade and currently sits at just 52%. At the same time the current USDA soybean yield estimate is at a record setting high of 52 bushels per acre. Looking back at data from the end of July 2019, the GD/EX rating for soybeans was 54% and by the end of August it had climbed up to 55% and that year the average U.S. yield was 47.4 bushels per acre. In 2015 the final soybean yield was 48 bushels per acre following the GD/EX rating from the end of July of 62%... ten percentage points higher than right now. Over the last 10 years only 4 had final yields over 50 bushels per acre.

Reuters is reporting today of further Russian attacks at a Ukrainian port along the Danube River in an attempt to prevent any further grain shipments. Buildings were destroyed at the port; a Naval ship repair yard was also part of the targeted attack. Commercial ship tracking data shows that dozens of international ships dropped anchor near the mouth of the Danube River instead of advancing as scheduled to load up. This attack is said to have damaged almost 44,000 tons of grain destined for Africa, China and Israel.

Russian officials are again interested in talks to resume the Black Sea grain agreement. During a phone call Wednesday between the President of Turkey, Recep Erdogan and Vladimir Putin the two discussed the possible reinstatement of the grain deal. Putin plans to visit Turkey soon.

This weekend shows some promise for much needed rainfall. With Sunday looking like the day to watch for thunderstorms and the threat of severe weather through the late afternoon and evening. The set up involves deep moisture with significant water vapor (PWAT) available for precipitation.

The following map shows the K Index which is a tool used to help predict the likelihood of the development of strong storms. Current readings are high indicating the threat should exist but there is a lot of time between now and Sunday.

Following the cold front that will pass through the region Sunday evening a NW flow will increase and bring a cooling trend for the week. The Climate Prediction Center map shows a high probability for below normal temps from August 10th through the 16th.

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