Update for September 29th, 2022
USDA Worksheet and Historical Price Action Following September 30th Reports
Harvest 2022 has started out with nearly perfect weather across a vast majority of the Midwest and Plains states. Harvest progress, ongoing concerns of a global recession, demand uncertainty, 20-year highs in the U.S. Dollar, weakening ethanol bids, the decline in the demand for beef, and simply the time of year are all headwinds facing exporters. The war in Ukraine will continue to influence prices and remains a big unknown but the initial shock and fear have begun to wear off.
Soybeans face many of the same hurdle’s corn does. The extremely strong Dollar has caused Chinese buyers to become hesitant to purchase U.S. soybeans. In addition, some areas in need of rainfall in SAM have seen some precipitation and planting has begun which has the market talking of much higher production totals for Brazil as well as Argentina.
This week the Buenos Aires Grain Exchange released crop estimates for new crop corn and soybeans. Current projections from the Argentine agency show an expected 2023 soybean crop of 48 MMT vs last year’s 43.3 MMT and corn production at 50 MMT vs 52 MMT. One analyst from the exchange said, “After almost six seasons, the soybean crop might increase in terms of planted area”. He also noted that if dry conditions persist some of the intended corn acres will likely be changed to soybeans. If current 2023 projections turn out to be accurate the Argentine corn crop would be the 6th largest on record but the soybean crop would remain far below the record of 61 MMT harvested in 2015.
It comes as no surprise that grain exports out of Ukraine are down significantly from a year ago as tensions in the Black Sea continue. The nation’s ag ministry estimates a drop of 41.5% vs the same time last year (marketing year begins July 1st). Production totals for this season’s crop are down substantially from previous years. Current government estimates call for this season’s harvest at 50-52 MMT a nearly 40% drop from the 86 MMT harvested in 2021.
In late 2020 Mexico’s president issued a decree to phase out imports of all GMO corn by 2024. Recently, U.S. Ag Secretary Tom Vilsack visited with Mexican officials regarding their potential ban of GMO corn. Vilsack said, “I recognize the importance of 2023 in terms of getting clarity about exactly where we are…We do need to press the issue, and will this year and take whatever steps are necessary and appropriate to raise this issue a notch or two as we get closer to 2024.” During his conversation with Mexico’s president, he explained that any disruption of U.S. corn imports would hurt Mexican customers. He said, “I’ve educated him on the importance of understanding the role of biotechnology, the role of production, and the connection to his livestock industry.” Some Mexican officials have agreed to the use of GMO corn in livestock feed but so far there has been no official documentation of this change.
Tomorrow, September 30th the USDA will release the Quarterly Grain Stocks and Small Grains summary reports. The charts show the historic price action following this annual report since 1990.
The USDA worksheet for tomorrow’s report:
Expected precipitation totals through next Thursday.
Confidence is quite high that temperatures will run above-normal the 2nd week of October. The Climate Prediction Center outlook is also in agreement with the above-average temps extending across most of the U.S. October 6th through the 12th.