top of page

UPDATE for June 9th, 2023

WASDE Update,

The June WASDE report released this morning was mostly neutral as most analysts had expected. No adjustments were made to new-crop yield estimates which is not uncommon as typically those adjustments, as well as planted and harvested acre estimates, start to surface in the July report.

Corn export demand was lowered by 50 million bushels and imports were reduced by around 15 million bushels these changes amount to an overall change of 35 million more bushels added to ending stocks. Global corn production was increased by 3.8 million tons to 1.513.3 billion. Argentine corn production was lowered while Brazil’s production estimate was raised. One of the puzzling adjustments was made to Ukraine’s new crop estimate which was raised from 22 to 24.5 MMT. Difficult to figure out given recent developments, which I will cover later in the newsletter.

Very little was changed for soybeans in the report. The one adjustment made was a reduction of 15 million in old-crop exports which increased new-crop ending stocks from 335 to 350 million bushels. Rumors today are that the U.S. will be shipping soybeans to Europe to crush, they will keep the meal and the oil will be shipped back here for biodiesel. This would help resolve the problem with excess soybean meal here in the U.S. with the expanding soy crush.

USDA Crop Condition ratings saw some notable changes this week. One of the most significant changes was found in the Illinois corn crop. Rainfall across the state is way behind, resulting in a 19% decrease of GD/EX conditions down to 50% this is the lowest GD/EX rating in Illinois in over 2 decades. A rating this low in Illinois is especially significant because the state is the 2nd largest U.S. corn producing state. Iowa is the nation’s #1 corn producer and also saw the top weekly rating fall by 5% this week. Michigan’s GD/EX rating fell by 20% vs the previous week; Ohio was reduced by 17%; Indiana 10%; Wisconsin 10% and Missouri 9%. The Corn Conditions Weaken Sharply map that follows illustrates each state’s rating adjustment by color and also includes the GD/EX rating adjustment for each.

The next map produced by The Van Trump Report shows the change in crop condition by state vs the rating for this same time-frame a year ago.

The Russia/Ukraine war intensified this week with the destruction of the Kakhovka dam in Ukraine. The destruction is allowing flooding to cover tens of thousands hectors of agricultural land and will turn at least 500,000 hectors (the equivalent to over 1.2 million acres) into “deserts” as these areas will be left with no source for irrigation. 31 irrigation systems in this region supplied 1.4 million crop acres with a necessary water supply in 2021, prior to the invasion. This region alone produced close to 4 MMT of grain and oilseeds that season. In addition to the devastation to agriculture it has also left 100’s of thousands of people without normal access to drinking water.

Prior to this latest attack Ukraine’s ag output was projected to decline by 36% this season compared to 2021. Chuck Shelby of Risk Management Commodities says, “In the long run, I do believe, though, that the production out of Ukraine as this war intensifies during the summer is certainly not going to be what it was. And how much grain gets exported out of the country is going to continue to decline.” When the news regarding the attack first reached the market prices rallied but before the end of the day had retreated into negative territory. Chuck Shelby explains the situation this way, “It just seems that this war continues to go on, and the market makes a reaction but doesn’t know what to make of it. World buyers have not been showing up as we would like to see. In the long run, I do believe, though, that the production out of Ukraine as this war intensifies during the summer is certainly not going to be what it was. And how much grain gets exported out of the country is going to continue to decline.”

The new drought monitor was released and as expected shows the expansion of the dry conditions across the Midwest, even in areas that have received rainfall. Data from the Drought Mitigation Center indicates that massive sections of the U.S. Corn Belt are now experiencing a “flash drought”.

Putting it into perspective…as of today 85% of the Midwest is considered at least abnormally dry. Just 3 months ago that number was 19.6%, last week it sat at 66%. Moderate drought conditions now cover 32% of the Midwest vs 9.5% just 3 months ago. The chart below shows the progression over the past year.

A system moving in from the NW is forecast to make its way into the Midwest this weekend. Models do not fully agree on the exact track but they are similar in predicted rain totals which are expected to range from ½ inch up to an inch and more in some areas. The expected arrival is Saturday afternoon or evening into Sunday morning with redevelopment possible for some yet Monday. The EURO, GFS. NAM, National Blend and the Weather Prediction Center models are shown in the following maps.

26 views0 comments

Recent Posts

See All
bottom of page