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Update for February 24, 2023

USDA Ag Forum & Spring Weather Outlook

USDA’s Ag Outlook forum concludes today. What we know from yesterday is the USDA is projecting 91.0 million new crop corn acres in 2023. 91 million acres in 2023 compares to 88.6 million in 2022, 93.3 million in 2021 and 90.7 million in 2020. The all-time record corn yield average occurred in 2021 with a national average yield of 176.7, in 2020 the average was 171.4 bushels per acre but regardless the agency opted to use a baseline forecast of 181.5 bushels per acre. Hard to believe the overall average could grow by such a staggering amount. Export demand is expected to increase by 325 million bushels while imports are forecast to fall by 25 million bushels and corn used for Ethanol was unchanged. Even with the 600-million-bushel increase in demand the 2023-24 ending stocks balance was raised to 1.887 billion bushels vs 1.267 billion for old crop due to the increases made to acres and average yield estimates for the up coming crop.

In the soybean sector the USDA is looking for 87.5 million planted U.S. acres this year vs 87.45 million in 2022 vs 87.2 million in 2021. The estimated yield also came in higher at 52 bushels per acre vs the average trade guess of 51.6 vs 49.5 bushels in 2022, 51.0 bushels in 2020 and the all-time record of 51.7 in 2021.

Crop expectations in Argentina continue to decline due in large part to the worst drought the country has experienced in 60 years followed by early frost damage to vulnerable crops in some areas. Weather outlooks over the next 10 days show some key crop growing areas receiving no precipitation while other areas could see 1 to 2 inches. The Argentine crop estimates have had several reductions made since the start of the season. There are some groups that now see the possibility that the Argentine soybean crop could fall by nearly 40% from early expectations.

Brazilian crop conditions are vastly different than those found in Argentina. Except for southern regions in Brazil key growing regions remain soaked. Wet conditions have resulted in harvest delays of the nation’s soybean crop which in turn is delaying the planting of the 2nd crop corn.

According to the agribusiness consultancy AgRural, more than 50% of Brazil’s 2nd crop corn in the Brazilian states of Parana and Mato Grosso do Sul will be planted after the ideal climate window. This later planting date will leave the crop vulnerable to frosts. During the 2020/2021 season these same states suffered major losses when the late planted crop was hit with yield cutting frost. Of course, this is very premature to really consider and planting delays in these regions could be offset by Mato Grosso where 2nd crop corn planting is ahead of last year’s pace.

The extension of the Black Sea grain deal that is set to expire in March remains uncertain which has raised the concerns of some traders who are unwilling to sell Ukraine grain until an agreement is reached. The Wall Street Journal reports that during the month of January only 3 MMT of grain were shipped out of Ukraine a decrease from the 3.7 MMT shipped in December. On February 20th data indicates that shipments for the month had fallen to only 1.5 MMT. A seasonal decline is considered normal in January but these reductions are greater than usual. Some of this may also be a result of the ongoing delays in cargo inspections caused by Russia that has led to a large backlog of ships.

The World Trade Organization said yesterday that they feel overall global trade has “held up well”. Chief Economist Ralph Ossa with the WTO presented his analysis of the impact on global trade caused by the war and said, “We have not seen the worst predictions foreseen at the onset of the war.”. According to WTO data, Ukraine exports fell by 30% last year in terms of value but during the same time Russian export values increased by 15.6% due to the higher costs of fuel, fertilizers and cereals even though the total volume may have been less. (Reuters)

Weather extremes have become regular events but unusually warm temps this weekend could break over 100 records. The powerful winter storm that swept across the northern U.S. from coast-to-coast has caused a massive divide in temperatures that will set new records. An area of high pressure settled across the southeastern U.S. which aided in the development of the storm system that brought heavy snow, ice and blizzard conditions to the north while also opening the door for unseasonably warm temps to spread across the SE and mid-Atlantic.

This is responsible for the increase in temperatures that may break over 100 long-standing records through the weekend. Orlando, FL has only reached 90 degrees 3 times since 1892: Feb 15, 1935: Feb 24, 1962: and Feb 25, 1962 but forecasts call for 90+ this weekend. Oklahoma, also in the warm sector of air, is under a tornado threat this weekend which if materializes would be the first February tornado in more than a decade. Warm temps to the south and cold to the north…parts of Montana and North Dakota could find temps Saturday morning that feel like 35 degrees below zero.

The triple dip La Niña is ending, and precipitation chances are increasing.

The National Weather Service forecasts an above-normal risk of flooding along the Mississippi River depending on the how quickly the snowpack melts any additional snowfall (interestingly this outlook was released prior to the latest snowstorm) and spring rainfall amounts.

It's amazing to think back to last fall when river traffic was nearly impossible in some areas due to extremely low water levels and now there are flooding concerns.

Looking at the March outlook there is an increased probability for a much more energetic weather pattern than normal. Blocking over the northern latitudes will allow cold air into the mid-section of the country. This boundary will serve as the guide for the active storm track. The EURO map below illustrates the jet stream pattern expected by March 10th.

The second map below shows the southwest trough that will act like a conveyor belt to pump moisture into storms moving along it’s eastern edge up to the Midwest.

The EURO weeklies map shows the expected well-above normal precipitation totals through April 10th.

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