Update for Oct 23, 2019
Update for October 23rd, 2019
The trade was surprised to see the USDA weekly crop condition GD/EX rating for corn raised by 1% from 55% to 56%. Now there are growing concerns that the USDA may not lower their estimated yield of 168.4 bushels per acre in the next report following the adjustments made to GD/EX ratings in several key corn production states:
Nebraska increased by 4% from last week
Ohio by 3%
Illinois and Indiana both saw a 2% improvement over last week
Iowa, Minnesota and Wisconsin each were adjusted 1% higher
The report also estimated that 86% of the U.S. corn crop has reached full maturity and 30% has been harvested. So far many yield reports have exceeded expectations but for the time being, extreme weather forecasts for the remainder of the harvest season may help support the bottom of the trading range which currently fluctuates between a low of $3.80 with high of $4.10 per bushel.
The weekly soybean condition report was left unchanged at 54% GD/EX from a week ago, 94% are dropping leaves and 46% of the U.S. soybean crop has been harvested, up 20%. The trade had also expected to see a decline in conditions this week but several key states received a higher rating than a week ago:
Nebraska improved by 3%
Indiana, Ohio and Michigan each improved by 2%
Illinois, Iowa and Kansas each improved by 1%
EPA administrator Andrew Wheeler is attempting to calm furious biofuel groups and others from the corn sector following their latest announcement on the RFS. Wheeler claims that biofuel groups will get their full allotment of ethanol blending next year and stated in an interview Monday, “I think a lot of people who had a knee jerk reaction, (the rule) wasn’t exactly what they were expecting. If they look at it and they read it carefully, they will see it will get us to the 15 billion gallons of ethanol that the president promised and that’s in the statute.” During a Cabinet meeting on Monday USDA Secretary Sonny Perdue told President Trump that the ag industry is just confused over the details of the new blending rule, “Once they fully understand what you’ve done here, they’ll be fine as they see it implemented.” Leaders from the ethanol industry have said they would like Secretary Perdue to detail exactly how the 15 billion gallon commitment will be attained. One industry proponent said, “Ever since Perdue said he did not like the word reallocation, I knew something was up”. Chuck Grassley, Senator from Iowa said he believes that the EPA will listen to and take into consideration public comments on the proposal to alter the calculation for biofuels blending requirements. Grassley stated that the EPA needs to prove to us that the 15 billion gallon quota will not be undermined by future SRE waivers like they have in the past.
Today U.S. Trade Representative Bob Lighthizer meets with House Democrats for the 5th time in 2 weeks to further discuss USMCA and work towards a deal that will allow for a vote in the House in the near future. Commerce Secretary Wilbur Ross stated in an interview Monday on the FOX Business Network, “There’s really no substance-reason not to go for USMCA. There are only political reasons. It’s just them not being willing, apparently, to give the president yet another victory. Remember there are only something like 20 congressional days between now and Christmas. So, they better get going pretty fast if they’re going to do it….We’re not focused on negative alternatives. Right now, we’re focused on trying to make clear, through the American public, to Nancy Pelosi, she should put it on the floor. If Democrats really don’t like it, let them vote it down. We believe there’s no question that if it gets to the floor, it will be voted very strongly, both in the House and in the Senate.” Yesterday Senate Finance Committee Chairman Charles Grassley from Iowa expressed concern that the agreement may not be approved by Congress yet this year. Grassley said that he was, “very worried for the first time, starting about now.”
Politico has reported that the USDA is debating whether to pay out the next installment of the trade relief payments (MFP) to farmers for 2019 now that a partial trade deal has been agreed to and China has promised to purchase massive amounts of ag products. USDA Deputy Secretary Stephen Censky said last week that he department is aiming to make a decision on the matter “in the very near future”. In recent weeks China has begun to buy greater quantities of U.S. soybeans, pork and other farm goods and promises to increase purchases to more than $40 billion per year. An international news agency, Agricensus, reported that China is planning to offer a tariff-free quota for up to 10 million metric tons of U.S. soybeans. According to the report Chinese government officials met with importers this week which is expected to lead to a purchase of an additional 150 cargoes of soybeans. All of these recent developments are making it difficult for the agency to justify the payout of the remainder of the allotted funds for this year’s aid program.
Forecasts for the foreseeable future show cold temps and above normal precipitation will continue hampering harvest progress for much of the Corn Belt. This map illustrates expected rainfall totals for the next 72 hours.
Maps shown below from the Climate Prediction Center are indicating temperatures are expected to fall 20 to 30 degrees below normal. The first map runs from Monday, October 28th through November 1st, the second map overlaps and starts on October 30th and runs through November 5th.
There are some hints from EURO weather models that a significant snowstorm may develop for portions of the upper Midwest around October 29th or 30th. It is very early and the GFS models do not indicate this system will develop, but the EURO map of expected precipitation is shown below.