Update for July 22nd, 2022
Black Sea Export Agreement & A Hot Weekend with a Potential for Storms
Fears of a global recession are increasing which is likely a large contributing factor to the weakness we have seen in the grain markets. If a “bad-enough” global recession is realized the demand for grain could be drastically reduced. Many big banks in the U.S. are in agreement that there is a 50% chance we will soon be in a recession, many others feel the odds are much higher. The European Central Bank just raised its benchmark rate for the first time in 11 years and the Fed has announced that another interest rate hike is coming this month.
Pro Farmer has a system that gauges the health of the crop called the Pro Farmer Crop Condition Index. This system takes the USDA’s weekly crop condition ratings by state and plugs them into a program that rates the crop on a scale from 0 to 500 (500 being perfect). This week the Crop Condition Index (CCI) for corn fell by 1.8 points to 363.4 which is 5.1 points below the 5-year average for mid-July and is the lowest reading of the year. The soybean CCI rating for the week declined by 3.0 points to 353.4 which is 2.1 below the 5-year average and is also the lowest rating for the season thus far.
Spring planting was slightly slower than normal but history shows that a “crop scare” that helps to drive prices higher in late July is much less likely to occur than a “crop scare” that occurs in June or early July. Large areas of the western U.S. and Plains have seen extreme heat for several weeks and those temps have spread further east arriving across key regions of the Corn Belt during the vital stage of pollination. Forecast models have changed in the past couple of days and are now showing more opportunities for rainfall and cooler temps but in some areas the damage is already done and producers in these areas are going to find some serious yield loss at harvest. One interesting and remarkable fact: For each kernel of corn that is produced, one silk has been individually fertilized by one grain of pollen…gives some perspective to the importance of a healthy plant and the presence of ideal weather conditions at the precisely right time.
Researchers from the Institute of Agriculture and Natural Resources at the University of Nebraska have looked at the affects high heat has on corn. Some of their key findings:
• Heat over 95 degrees hampers the production of pollen and reduces its viability to a couple hours or less.
• Prolonged exposure to high heat can reduce the viability of the pollen that is shed as well as lessens the amount shed to fertilize the silks.
• Hybrid selection is crucial, some hybrids may be impacted more adversely than others when under the stress of high heat.
• When soil moisture is adequate a day or two of 95-98 degrees has little to no impact of yield. If the heat remains for 4 days there is typically around a 1% loss in yield. If the heat continues into day 5 then there tends to be an even higher yield loss. There is no exact formula for accurately predicting yield loss from heat and drought but what is known is that the crop stresses that occur do add up and take a toll on the final crop yield.
Reuters reported Thursday that after 2 months of negotiations officials from Ukraine, Russia, Turkey and U.N. Secretary-General Antonio Guterres plan to sign a deal today that will restart Ukrainian grain exports through the Black Sea. Exact details of the agreement are yet to be announced but The Kremlin said early this morning that its defense minister will sign today.
The war that began February 24th has stranded over 100 ships and nearly 20 million tonnes of grain in storage silos near the port of Odessa. Ukraine’s Deputy
Agriculture Minister Taras Vysotskiy told Ukrainian television Thursday that he believes exports could restart rather quickly since, “The majority of the infrastructure of ports of wider Odesa – there are three of them – remains, so it is a question of several weeks in the event there are proper security guarantees.” Many analysts are doubtful that even if an agreement is signed there will be no big increase in exports out of Ukraine in the short-term.
The upcoming segments document in detail the current circumstances found across Ukraine. A picture is worth a thousand words!
When you look at weather maps and listen to the news it’s easy to think that never in history have temps been so high or moisture been so hard to come by. But anyone that was around in 1935 would strongly disagree. It was this weekend in 1935 that the Dust Bowl heat wave reached its peak across the Midwest, Chicago, IL recorded a high temp of 109 degrees and Milwaukee, WI 104. The record high hottest temperature ever recorded in the U.S. was 134 degrees in Death Valley, California back on July 10, 1913. In North Dakota the city of Steele recorded a temperature of 121 degrees on July 6, 1936, this community is only 150 miles from the U.S./Canada border. Another city Missouri set a statewide record of 118 degrees on July 14, 1954. Beardsley, MN a city 250 miles south of the U.S./Canada border reached 115 degrees on July 29, 1917. There are many other record high temps dating back 80-100 years ago, crazy to realize this really isn’t new and unheard of in history.
La Niña remains the major contributing factor to the hot and dry summer season again this year. This weather pattern that has been in control for 2 years now is a result of the cooler than average waters located in the equatorial Pacific Ocean. Current models show that the current conditions will hang on into Fall but a major transition towards an El Niño starts to develop in early 2023. WeatherTrends 360 expects a strong El Niño pattern will be in place for late 2023 into 2024 which will bring extremely wet conditions to the Americas and the development of drought conditions for Asia including China.
The next 48 hours could be active across the central Midwest. Ridging is still set up over the southwestern U.S. where it has scorched the area for weeks. This weekend we are back into the Ring of Fire surrounding the hot air which means the perfect conditions will exist for the formation of thunderstorm complexes. The current weather models are having a really difficult time deciding exactly when and where the storms will set up but they agree we will see some very high temperatures and an increase in water vapor which means that any storms that do move through will have the fuel needed to produced heavy rainfall.
Late in the day Saturday CAPE will be very high. (CAPE is a term used when referring to the instability in the atmosphere) The following map shows readings of 4 to 5,000 j/kg which means big time energy will exist for the formation of thunderstorms. Northern Iowa, Southern MN and Wisconsin are currently in the bullseye. Be aware that storms will have the potential to quickly become severe. The Storm Prediction Center has issued an enhanced risk of severe weather down to Highway 20 and a slight risk covers the remainder of the area north of I-80.