Update for July 15th, 2022
USDA Report Highlights and Lots of Weather
The July USDA reports were released this week. Key numbers were within average trade estimates with the exception of Brazilian corn which came in higher than expected. But it’s important to note that while several estimates came in higher than earlier estimates none of them were large enough to compensate for production losses due to weather.
• 2022 production was raised by 45 million bushels because of the larger acreage estimate in the June 30th report.
• Yield estimates for the new crop were unchanged at 177 bpa
• Old crop corn carryout was increased from last month
• New crop corn carryout was also raised from the June estimate
It’s been an active week in the corn market this week, DEC22 corn has seen an $.81 cent trading range. Much of the volatility is being attributed to a * major sell-off by Funds in the commodity sector, * a 20-year high in the value of the U.S. Dollar * the drop in energy and metal prices which points to the possibility of a global recession.
• Old crop crush and new crop crush along with exports were all reduced
• 2022 production was lowered based on a smaller than expected acreage estimate in the June 30th report
• New crop soybean carryout was lowered from last month’s estimate
Weekly US exports were the lowest we have seen reported in several weeks and there still seems to be very little interest from the Chinese. In fact, we really haven't seen any sizable US purchases from the Chinese in about three months…Until this morning, here is the update on that story!
EXPORT SALE RETRACTION (FAS-ESR-068-22)
The daily export sale announced by FAS this morning is withdrawn based on updated information received from the exporter. FAS-ESR-068-22 had reported the sale of 133,000 metric tons of corn for delivery to China during the 2022/2023 marketing year.
Drought concerns continue. Sometimes when our neighborhoods receive rainfall it’s easy to forget that not everyone was as fortunate. The July 12th U.S. Drought Monitor shows that the number of corn and soybean acres experiencing some level of drought continues to increase.
CORN acres now have 30% affected by drought vs 17% on June 14th
SOYBEAN acres now have 25% affected vs 9% on June 14th
Talks regarding a safe corridor through the Black Sea for Ukrainian exports continue between Ukraine, Russia, Turkey and the U.N. and officials with Ukraine feel that a deal may be close. The framework of the plan is going well but there are still major stumbling blocks to overcome before it can become reality. Putin will have to sign off on any agreement but Russia still wants all sanctions from the West lifted and access to Ukrainian ships to search for weapons in return for their cooperation.
Next week the central and western portions of the U.S. Corn Belt are forecast to see above normal temperatures and below normal rainfall. Timing is far from ideal. Big yields need moisture. USDA meteorologist Brad Rippey has been watching the shifts in location and intensity of the ridge of high-pressure that has been present since June. He said, “As you remember, 50% of the U.S. corn was planted in a two-week period in May, and almost two-thirds were planted in a three-week period. So, a lot of that corn went in all at once, especially in the Midwest. ”Back in June Rippey warned that the timing and placement of the ridge during mid-to-late July will be key in regards to the impact on yields.
“The heat dome itself pulses, expanding and contracting which alters the position of the Ring of Fire. In other words, it comes and goes effecting different areas based on its position. The placement of the dome is expected to encompass the Plains and Western Corn Belt next week. The dome has been positioned over the Plains for more than a month and has delivered extremely high temps baking the Plains region. The dome is forecast to expand eastward which will shift the Ring of Fire to areas along the eastern edge of Iowa and into Illinois where above-normal precipitation is forecast for areas of the eastern Corn Belt for next week.
The Plains have been hot and dry for several weeks and that is not going to change any time soon. The following graph shows the expected average highs and lows for July 13th through July 25th for Dodge City, Kansas. This 13-day period is forecast to see an average day-time high of nearly 108 degrees!
Along with the cooler temps also comes precipitation. The next map illustrates the potential rainfall expected for July 12th through the 28th. Current outlooks show the potential for over 9 inches of rainfall for a portion of northern Indiana. While the total precipitation across Iowa is not expected to reach above 2 inches.
NOAA uses the methodology of analog years to aid in long-range forecasting. Analog is defined by NOAA as, “A historical instance of a given meteorological scenario or feature that is used for comparison with another scenario or feature. For example, a long-range forecaster predicting conditions for the upcoming winter may make comparisons to analog seasons in which meteorological factors were similar to those of the upcoming season.” DTN long-range forecast teams use this same methodology along with computer analysis for developing outlooks. The current DTN in-house analog year array shows some “concerning elements” for the crop weather expected for late-summer. The two maps below use shades of orange to indicate areas of above normal temperatures and below normal precipitation and the severity level of the event. The DTN outlook for August is for “warm and dry—in all primary U.S. row crop areas.”
The U.S. is not alone, Europe is also in the midst of another intense heatwave. Heat warnings have been issued for next week as extreme temps are forecast for the entire continent.