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Update for June 23rd, 2022

Russian War Crimes & The Summer Weather Outlooks Crop prices have been under a great deal of pressure this week. Extended forecasts turned cooler taking some of the risk out of the immediate outlook but the long-range outlook for the rest of the summer looks quite different. The weekly USDA Crop Progress and Conditions report also contributed to the downward trend.

U.S. corn planting has been completed and 95% of the crop has emerged. The latest estimates include a 2% drop in the GD/EX rating this week off from last week, bringing it into line with the trade estimate of 70%. The complete corn crop condition estimate was as follows:

• Very poor: 1%

• Poor: 5%

• Fair: 24%

• Good: 57%

• Excellent: 13%

States with GD/EX rating totals of 65% or less include MN, OH, NC, TX, CO. and KS. Iowa is leading the pack between top production states with 83% of the state found to be in the GD/EX categories.

The U.S. soybean crop is 94% planted and 83% has emerged which are both on par with the 5-year average. The soybean crop condition rating was as follows:

• Very poor: 1%

• Poor: 5%

• Fair: 26%

• Good: 58%

• Excellent: 10%

States with GD/EX soybean ratings of 65% or less were ND, KS, MN, MO, MI, OH and NC.

Corn and soybean export inspections for the week ending June 16 were within trade expectations but down from the previous week and lower than their respective 10-week averages. The top destinations for corn shipments were China and Mexico. U.S. soybean exports were mostly headed to Egypt, Mexico and China. The marketing year ends on August 31 for corn and soybeans. Currently corn is below the USDA forecasted target while soybeans are ahead of the pace needed to achieve their USDA target. In comparison corn exports out of Brazil’s southern port of Paranagua increased during the first 5 months of this year by 161% up to 1.546 MMT. A large percentage of this increase is driven by grain buyers that are looking for an alternative source from the usual supply imported from Ukraine. (Reuters)

At least two North American owned grain terminals located in the Ukrainian port of Mykolaiv were attacked during a Russian missile strike on Wednesday. Kyiv and Western governments all agree that this is a campaign to degrade Ukraine’s capacity to export food. These strikes damaged a facility owned by the Canadian agribusiness company Viterra and the facility owned by U.S. grain trader Bunge Ltd. The attacks are believed to be in response to a fiery drone attack on a major Russian oil and gas refinery located just across the border from Ukraine. This targeted attack on facilities used for the exporting of food supplies is not a first for the Russian military. In fact, this week was the second time a facility owned by Bunge Ltd. has been attacked. Other grain terminals as well as a large sunflower-oil processing plant have also come under attack. A member of Ukraine’s negotiating team, Rustem Umerov told The Wall Street Journal that ports still controlled by Ukraine “are constantly being bombarded”. This is occurring even as Russia says they are considering a United Nations backed deal to export the grain that is currently blocked in Ukrainian ports.

A military delegation from Turkey has traveled to Russia this week to discuss the exporting of Ukrainian grain. The delegation is planning to present a plan that would create a “safe sea corridor” in the Black Sea that would allow shipments of Ukrainian grain to be moved out of the region, safely. The plan involves the creation of 3 safe shipping corridors from the port of Odessa that would allow for exports of both Ukraine and Russian food products. Estimates are that 30 to 35 MMT of grain could be shipped from the port over a 6-to-8-month period. In addition to the military delegation that is meeting now with Russian officials, sources have told Reuters that a four-way meeting between Turkey, Ukraine, Russia and the United Nations is also planned to occur in Turkey sometime within the next several weeks. While there is some optimism regarding these talks the reality remains that Putin may have “good intentions” regarding food/trade/etc. but until Russia stops blaming Western sanctions and takes responsibility for the lack of exports, the hope of any lasting breakthrough is wishful thinking.

Over the weekend The Wall Street Journal ran an article explaining the storage issues that Ukrainian farmers are facing as the wheat harvest is expected to begin soon. The U.S. has offered to build “temporary silos” just across the Polish border and the EU has offered their facilities to store some of the crop and have sent large grain storage bags for Ukrainian farmers to utilize immediately. The first shipments of these storage units are expected to arrive soon. Ukrainian President Zelenskyy says that Africa is “a hostage” of Russia’s war and said that the invasion “has sparked grain and fertilizer shortages that put millions at risk of hunger” which has prompted one EU official to call Russia’s blockade of Ukrainian grain “a war crime”.

The GFS models shown in the 2 maps below illustrate just how quickly the outlook can change. The first map was generated yesterday and the second map was new today, notice the significant change in the expected precipitation totals.

Seasonal Temperature and Precipitation Outlook maps for 3-month period of July, August, September are included below. It appears as though a return of hotter than normal temps accompanied by below normal precipitation is still on the horizon.

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