Update for July 29th, 2022
Worsening Crop Conditions and Heat is on the Way
The corn and soybean markets have been reacting this week to the latest weather outlooks that call for hot and dry conditions through at least August 13th. Crop ratings fell sharply this week and are likely to continue that trend. This will certainly influence USDA yield estimates that will be updated once again in the August 12th report, in the meantime we’ll see how much yield the private groups take off from previous numbers as those estimates are revised. Weather related market rallies in the corn sector don’t occur very often in August and September but it has happened before and certainly could again if the forecast holds true. Soybeans are in the midst of a full-blown crop scare event that could last through mid-August.
The weekly USDA drought update was released yesterday. The percentage of U.S. crops experiencing drought:
Corn now sits at 29% vs 23% June 28th
Soybeans now have 26% involved vs 15% June 28th
Ukraine’s new 2022/23 export year began July 1st. Through the 26th grain exports were down 47% compared to the same point last year. Hopes were built up last week as Russia, Ukraine, Turkey and the U.N. signed an agreement that would allow for the safe passage of ships from Ukrainian ports to world-wide destinations. But the day after signing this deal Russian missiles hit the major port of Odessa. Two missiles hit infrastructure at the port, two others were shot down. According to international grain traders the attack damaged a railcar discharging point and a warehouse used for loading grain. A spokesman from the Ukrainian foreign-ministry accuses Vladimir Putin of “spitting in the face” of all of the negotiators and nations involved in the many weeks of meetings. Ukraine’s ambassador to Turkey that was present at the signing said, “It’s obvious that the agreement with Russia is not even worth the paper it was signed on…Russia is a terrorist state”.
Although the attack breaks the conditions of the deal Ukrainian officials say, “It doesn’t mean that all agreements are crossed out, because everyone understood that any agreement has high risks. Today’s shelling clearly illustrated all those risks that existed did not disappear- they still exist.”
The Biden administration has approved another delivery of weapons to Ukraine worth $270 million. The CIA estimates that 15,000 Russian soldiers have been killed so far. Ukrainian president Zelensky told the Wall Street Journal that he would not approve any ceasefire that would allow Russia to remain in control of any territory it has taken.
Scientists at the University of Illinois has discovered a “somewhat terrifying skill possessed by some of agricultures most troublesome weed species”. In fact, there are some strains of waterhemp that have a resistance to chemicals that have never been applied to crops before.
Researchers have found how multiple-resistant waterhemp actually detoxify the chemicals that should kill it by using syncarpic acid-3 (SA3). Corn dies when exposed to SA3’s so the fact that the waterhemp can detoxify SA3’s has alarmed the industry and has raised fears that even yet-to-be herbicides in the future may not be effective.
Current weather models agree that a large portion of key U.S. corn and soybean acres will sit within the “dome of doom” during the first 2 weeks of August. A ridge of high pressure is forecast to develop forming the dome that will lock in extremely high temps across the entire Midwest while locking out precipitation
In addition to the high heat expected to arrive next week, oppressive humidity is also returning making it feel similar to last Saturday. The extended outlooks are included in the maps below.