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Update for June 30th, 2022


USDA Acreage & Quarterly Grain Stocks Worksheet and Weather Outlooks Today’s Acreage and Quarterly Stocks reports were considered mostly neutral to corn. U.S. corn acreage fell within the trade range but was 400,000 acres higher than the March estimate. U.S. corn stocks nearly matched the trade estimate but bushels on hand are higher than this time a year ago. Soybean acres came in 2.1 million acres below trade estimates and 2.6 million lower than the March report. This season’s soybean acres are lower than expected but still 1.1 million acres more than 2021. Stocks were 5 million bushels higher than the trade had anticipated and 202 million bushels more than at this same point in 2021. These estimates will make the soybean market very sensitive to weather outlooks. With 2.6 million fewer acres planted than the March report anticipated we could be looking at a decrease of 134 million bushels of soybeans this year. The USDA is scheduled to release the next Supply and Demand report on July 12th, these new adjustments have set the stage for a very interesting report. (Agriculture.com)

Reuters reports that the European Union’s goal to move 20 million tons of grain out of Ukraine by the end of July is “not feasible”. The Polish agriculture minister Henryk Kowalczyk said this week that there has been little progress in plans from the EU and U.S. to improve logistical problems. Poland shares a long land border with Ukraine, and plans have been to send needed equipment like mobile grain loaders and containers to this shared border. This equipment is essential if there is any hope of reaching the 20-million-bushel goal which is needed in order to make room for the current year’s crop and to avoid food shortages in Africa. Kowalczyk has accused Brussels of not giving Poland the needed resources and said, “At this point, the EU target is becoming not realistic. Had we started moving forward in mid-May, it would have been very difficult, but we could have been closer.”


AgriTalk visited with Dan Basse, president of AgSource Co. regarding the situation in Ukraine. He said that some of their clients that live and farm in Ukraine are “taking measures” to prevent the Russian army from harvesting and confiscating their crops from them. He said, “Some of our clients in the Ukraine have been actually damaging their combines, so the Russians can’t combine the wheat. It's a war zone. It’s messy. It’s a shame and our hearts bleed for the Ukrainians who are being harmed.”


We’ve heard about the destruction by the Russian army of Ukrainian ports and refineries as well as countless attacks on infrastructure and communities. There are 7 major export terminals out of Ukraine and at least 3 to 4 of them have sustained such extensive damage that it will take months of repair to return them to working condition. The damage to the refineries that has occurred is so extensive that even if farmers decided to harvest the crop many would not be able to access diesel fuel to run the equipment. “If you were to place a diesel order today in the wheat areas, which is really central and western Ukraine, you would find that it’s probably 4 to 6 weeks to get delivery of it.” The decision to delay the wheat harvest that should be starting soon, puts the mature crop at risk as the quality and viability of the wheat may be harmed. Additionally, some of the wheat acres will likely not be harvested at all.


Currently the USDA is projecting Russia will export 40 MMT of wheat this year which will cover any shortfall from Ukraine. But Basse says that, “A lot of people I talked to in Europe have that number closer to 30 MMT which would leave the world short 10 MMT of wheat. As Russia begins its harvest, we’ll start to understand that it is not going to have a big export campaign. I’m afraid it’s a pipe dream, if you will, I just don’t think logistics will allow it.”

The loss of a crop that cannot be sold has huge financial implications for the farmers. “Financing is running out. I will tell you that as I talk to my friends and clients, we will have farmers that go bankrupt. And then of course, as that happens, we will really have issues with the next wheat crop and the next corn crop. So, I am actually more concerned about 2023 production that I am about 2022.”


There is no end to this war in sight. Basse warns that Putin will continue to inflict as much “pain and harm and psychological damage on Ukrainians as possible.” “Ukrainians are such a proud people, as long as we keep sending them weapons, they will fight to the last man standing. That is how angry and riled up they are. So that’s why when we talk about the war going on, as long as the West keeps sending weapons, the war will go on.”


There has been a lot of adjustments made in the short and long-term weather outlooks. A hot and dry ridge is setting up across the Plains. The placement of this heat dome just to our west has lined up the “ring of fire” right over the northern Corn Belt meaning we are in the bulls-eye for storms that form and ride along the ridge to the southwest. The weather pattern referred to by many as the “ring of fire” simply indicates where vigorous storms are most likely to occur as this ring is the area that surrounds the area of the steamy heat. It’s quite possible these areas may see the formation of MCS or Mesoscale Convective Systems which typically reach peak strength during the overnight hours when the low-level jet is at its strongest. Area’s that are affected can expect to see strong to severe storms with the possibility of heavy rainfall. The first GFS map below shows the area of high heat positioned just to our west.

Both GFS and EURO models are in agreement that significant rains are likely to return to the Corn Belt by Sunday into Monday. The areas impacted are expected to receive substantial rainfall amounts that will accumulate through July 9th. The longer-term GFS model that runs through July 15th calls for at least 2 inches of rainfall across almost the entire Corn Belt. (shown in the third map below)

The newest 6-to-10 and 8-to-14-day models shown below also support this forecast as well.


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