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USDA Worksheet, AFS and Precipitation Outlook through March

Update for March 10th 2021

U.S. corn and soybean balance sheets saw no adjustments in the USDA data between the February ans March reports which disappointed the trade. Globally corn ending stock estimates were raised higher by 1.1 MMT’s. Soybean production in Argentina was lowered by 0.5 MMT but that was offset by Brazil’s production which was raised by 1.0 MMT. The increase in soybean acres and a lack of significant yield drag due to the early dry conditions have worked together to boost their production totals.

In January an ADM investor reported a commitment from China to purchase 200 million gallons of U.S. ethanol by the end of June. Now, after more than a month later we have 3 ships on their way to China carrying U.S. ethanol. This shipment, which is believed to be carrying 28 million gallons of ethanol, exceeds the total amount of U.S. ethanol imported by China in 2019 and 2020 combined. The U.S. Grains Council says that this isn’t the first shipment of U.S. ethanol to China this year, 44 million gallons shipped out between November 2020 and January 2021. Additional positive news for corn/ethanol came from a study done by the state of Nebraska. During a press conference on Monday, Nebraska governor Pete Ricketts announced the findings from a year-long study of E30 use in non-flex fuel vehicles belonging to the state of Nebraska. Data from the findings show there to be no obvious negative effects on vehicle performance or the cost per mile. The final analysis showed that if the state switches their 50 vehicles from E15 to E30 they would save about 2.5% and would also help increase ethanol consumption by 66,000 gallons per year while also reducing carbon dioxide emissions by 529 tons. (Source: Progressive Farmer)

The deadline for ARC and PLC enrollment deadline is quickly approaching. Producers have until March 15th, (next Monday) to sign up or make an election change to the program. Currently 1.4 million farms have enrolled or about 81% of the expected enrollment. During the 2019 crop year producers in the program received more than $5 billion in payments. If you aren’t enrolled you will not be eligible if an ARC or PLC payment is triggered during the 2021 crop year.

Weather in South America has not improved and now there is talk that the Mato Grosso region of Brazil may declare a state of emergency. Heavy rainfall and flooding are affecting nearly 7.5 million acres of cropland. Slowing harvest and also the planting of the Safrinha corn crop which is now estimated at 54% complete vs 80% by this time a year ago.

Crop scout Dr. Cordonnier is now raising concerns over weather conditions in both Brazil and Argentina. His concerns are that the wet weather and rising cases of Covid-19 in Brazil will affect transportation to and at the port over the coming weeks. Argentina is facing a different battle as the lack of rainfall this season has caused water levels to drop along the Parana River. A similar situation happened last year which forced ships to carry partial loads to the ocean port where they again had to stop for to be topped off before leaving the country. This may sway some countries to seek other options in order to receive quicker shipments.

We are beginning to hear more details regarding the second wave of African Swine Fever, these new variants are estimated to have already killed as many as 8 million pigs in China since the start of this new year. The first reported outbreak of the disease was in August 2018, over the following 12 months it spread to several countries worldwide and killed an estimated 25% of the world’s hog population. Simon Quilty, an independent meat analyst told ABC Rural, “China has just come out in recent days claiming that by the middle of this year they will be back to 100% recovery, which is impossible. Because in the last 6 to 8 weeks this second wave-due to some new strains of the virus-has killed somewhere between 7-8 million sows’” Quilty says that the price that the animals are selling for within the country is proof that the herd is clearly not rebuilt like the government wants us to believe. “Piglet prices in China are 4 times the value of what they were pre-African Swine Fever in 2017-2018. Hog prices are 2 to 3 times higher and sow prices are more than double. So, if the herd was back to the level they claim, we would not be seeing these significant prices-they would be back at pre-ASF levels…and then add to that this second wave of swine fever.” "This second wave will put China's [pig herd] rebuild many years behind and so ongoing high prices, I think, are here to stay for at least two to three years."….”Also I think we’ve seen this enormous jump in global corn and cereal prices-but with this recent collapse in the herd, the net effect is there will be an easing on demand. You just can’t take 7 to 8 million sows out of the system and not have an impact on cereal demand.”

Total rainfall year to date across the U.S. is the lowest in the past 9 years. Right now, the country is averaging 21% behind that of last year and is 13% below the overall average. Area’s of the Southeast, Kentucky and the Northwest are trending above average but with La Niña in place it’s likely that the dry pattern that has set up over the rest of the country will remain in control of the weather patterns.

There is some-above-normal precipitation forecast over the next 1-2 weeks for some of the driest areas of the western Corn Belt and Great Plains. The map below indicates that much of those areas are expected to see 2-4” of rainfall between now and March 25th.

This map is specifically for projected totals over the next 7 days.

NOAA’s overall trends for the next week for precipitation and temperatures.

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