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Update for February 17th 2023

Global Headlines and More Chances for Snow and Ice

Sometimes it seems as though the news from around the world makes more noise in the U.S. grain markets than our own local headlines…

• Mexico announced earlier this week that they are approving GMO corn for feed use but still plan to ban its use for human consumption. The new decree from the Mexican government removed the January 2024 deadline but only for GMO corn used in animal feed and for industrial uses.

• Current Brazilian soybean production forecasts are too high right now according to several analysts. Agroconsult said Tuesday they are lowering their production estimate by 400,000 down to 153 MMT siting severe drought conditions in the state of Rio Grande do Sul. To put in to perspective Andre Debastiani, coordinator of Agroconsult’s crop tour said that last year’s soy production was reduced by 10 MT also a result of dry conditions. (Reuters) Many in the trade believe the USDA will need to make further cuts in their SAM production estimates in coming months.

• Brazil is now facing an enormous shortage in grain storage capacity considering current production estimates. Right now, producers in Brazil are projected to harvest over 300 MMT of grain in the 2022/2023 season. According to Paulo Bertolini a representative from Abimaq (a machinery makers industry group) this volume will outpace storage by 117 MMT. The group estimates that Brazil will need to invest $2.9 billion every year just to avoid the situation from worsening. (Reuters)

Ag Rural, a well-respected private firm, earlier estimated the Brazilian soybean crop at 152.9 MMT but has decreased their projection to 150.9 MMT. (The USDA currently has the crop estimated at 153 MMT harvested from 107 million acres) This latest forecast is still breaks the 2021 record of 139.5 MMT, an increase of 8%.

• China is now seriously considering planting 1% of the countries new-crop acres this year to GMO corn varieties. Some analysts believe this could take China from being a large net importer of corn into a net exporter over time.

• Ukraine production and exports remain a wild-card. Farmers across the war-torn country face so many obstacles. Exports are down nearly 30 MMT from the previous season and the ability to ship grain out of Ukrainian ports remains in the unpredictable hands of Russia and the safe passage agreement. Just this week Ukraine has asked the U.N. and Turkey to pressure Russia to stop hampering grain shipments and to stop using food as a weapon. On Tuesday military officials alerted shipping and coastal communities near the major port of Odessa that there is a high risk of naval mines drifting closer to the shoreline and washing ashore. The Soviet-made mines have been firmly anchored in the Black Sea but a storm caused them to come loose and float with the current. A spokesperson from the Odessa military administration explained, “There is a high probability of naval mines breaking off their anchors and washing up on the shore, as well as drifting along the coast. Since March last year, Russia has continued to use anti-ship mines on anchors as an unguided weapon against Ukraine.” (Reuters)

The next hurdle farmers in Ukraine will be faced with is the shortage of fertilizer which could sharply reduce production. Ukraine agriculture ministry has not issued a 2023 harvest outlook but the economy ministry expects a decrease from the 51 MMT produced in 2022 to 49.5 MMT. Farmers are not as optimistic though. They forecast a smaller 35 MMT to 40 MMT in 2023 comprised in part by 12-15 MMT of wheat and 15-17 MMT of corn.

• The Buenos Aires Grain Exchange maintains a “downward bias” regarding the Argentine soy crop. The already weak crop has a crop rating of Poor to Very Poor on over 50% the countries soy acres and new forecasts now indicate the possibility of an early frost as well as “cold and dry polar winds” in the coming days. This is completely unexpected in February as this is generally one of the warmest months of the year with temps that usually range from 68 to 80 degrees. The EURO model shown here shows the expected lows for tomorrow, February 18th which is expected to be the coldest day for the next week. While there certainly is some risk, this map doesn’t show any temps below 40 degrees in corn and soybean areas.

Here at home the debate centers around demand and new crop acres. Demand for ethanol, feed and exports has not been robust and there is some concern that the current elevated prices are to blame. Corn prices have bounced around in a mostly sideways pattern for some time now and any breaks to the upside or lower will likely occur once more is known about actual SAM production totals and our U.S. new crop acres get planted.

Next week the USDA will hold their annual Agriculture Outlook Forum. The trade is anticipating a corn acres estimate around 90 to 92 million acres and soybean acres around 88 million.

Cold air and wind chill values below zero have returned to a large portion of the area. Warmer air is forecast over the weekend, rebounding temps into the 30’s where snow is present and if you’re in an area with no snow cover temps could reach into the 40’s and possibly 50 by Sunday. The warmth will hang around into Monday until a clipper moves across the area bringing with it an active weather pattern.

The forecast for next week gets very complex thanks to the massive trough that develops over the western U.S. This set up undoubtedly means the Upper Midwest will be affected. Tuesday the next impulse will arrive bringing freezing rain or light snow, especially to areas north of Hwy 20 along with a prolonged period of wind.

The trough of this size is going to carry a large amount of moisture northward. The water vapor content as shown below is 3 to 4 times higher than typical mid-February values.

The first map below shows the actual values the second shows the percentage of normal.

** Just a quick FYI…Reuters reported yesterday that the EPA has changed the window for the use of the weedkiller Dicamba. The previous deadline for the states of Iowa, Illinois and Indiana is being moved up from June 20th to June 12th and South Dakota’s deadline is moving from June 30th to June 20th. Whereas, Nebraska objected to the June 12th date and will be allowed to keep their June 30th deadline, the director of the department of agriculture in Nebraska said, “ At this late date, Nebraska producers have already made their 2023 planting decisions and have likely purchased seed and pesticide products to implement their plans.”

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