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Publicly Available Research

WAEES conducts many studies and analyses each year. Most of theses studies are proprietary but occasionally there are studies which we are able to share publicly or that our clients ask us to share. Some of these current research study results are included below.


October 11, 2023


Issue 18 October 11, 2023

In This Week’s Issue

  • Corn and soybean variable costs of production in 2023/24 are expected to be lower for both Argentina and Brazil
  • Condition ratings for US corn and soybean edged lower.
  • WAEES’s final corn and soybean yield estimates for the season slipped lower.

Argentina and Brazil Cost Production

With South American farmers in the planting stage of the growing season, we have included cost of production estimates for the 2023/24 crop year. The first set of graphs include Argentina’s corn and soybean variable cost of production. Most variable input cost categories are lower vs. 2022/23. Argentina’s crop budgets are based on data from earlier this summer for southeastern Cordoba for corn and southern Cordoba for soybeans. The Brazilian crop budgets are for Mato Grosso’s first crop soybeans and second crop corn based on cost estimates from early this year.

Source: Agricultural Margins

For corn, the grouped category (Commissions, Taxes, Cleaning and Drying) is down the most, declining $74/ha to $154/ha. Chemicals are down $14/ha to $65/ha and fertilizer is down $12/ha to $154/ha. There is little or no change to cultivation and freight at $64/ha and $367/ha, respectively. Seed and fungicide are $18/ha higher at $171/ha. Total corn variable costs for 2023/24 are estimated at $1067/ha, down $89 (-8%) from a year ago.

Similarly for soybeans, most variable input cost categories are expected to be lower in 2023/24. Chemicals are down $16/ha to $84/ha. Fertilizer is lower, dropping $8/ha to $45/ha. Freight costs are also lower, down $19/ha to $129/ha. Total variable costs are estimated down $52/ha (-8%) from a year ago to $567/ha.

Most of Brazil’s variable corn input cost categories are also expected to be lower in 2023/24. In percentage terms, fertilizer is down the most, dropping 30% from a year ago. Transportation along with processing and storage are also significantly lower, down 11% and 12%, respectively. More modest cuts are estimated for pesticides (-2%) and machinery (-5%). Total variable costs are projected down 15% at 3931 reals per hectare. Corn variable costs are projected to increase 7% in 2024/25.

Variable soybean costs are also expected to decline in 2023/24. Again, fertilizer is down the most, easing 17% from a year ago followed by machinery and processing and storage, down 6% and 4%, respectively. Seed, pesticides and transport costs are estimated to be higher. As a result, total variable soybean costs are down less than 5% compared to 2022/23. Input costs are expected to increase in 2024/25, currently forecast up 7% from 2023/24.

Corn and Soybean Yield Estimates Were Slightly Higher

Based on the latest corn condition rating, the model corn yield estimate is 173.8 bushels per acre, down 1.6 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and is in line with USDA’s September Crop Production Report estimate. This is also week 40 so the model’s weekly and week 40 (October 8) predicted yield are the same at 173.8 bushels per acre. USDA will release the October yield and production estimates on Thursday, October 12. The average trade estimate for yield is 173.6 bushels per acre with production at 15.102 billion bushels, down 32 million bushels from USDA’s September estimate.

The weekly soybean yield model parameter estimates using the October 8 condition ratings estimate the national soybean yield at 48.8 bushels per acre, down 0.4 bushels from a week ago. The yield estimate is below the long-term trend yield and below USDA’s September yield estimate at 50.1 bushels per acre and below 2022’s final yield at 49.5 bushels per acre. This is also the October 8 parameter estimate that we have monitored through the growing season also at 48.8 bushels per acre. The trade’s average yield estimate prior to USDA’s October 12, Crop Production report is 49.9 bushels per acre with production at 4.144 billion bushels, down only 2 million bushels from last month.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

During the past week, the most rainfall coverage and heaviest amounts were across the southern Plains. The precipitation will aid establishment of the hard red winter wheat crop. In the Corn Belt, rainfall amounts were light and confined to eastern Nebraska and western Iowa. Light rain also fell across portions of Central Illinois into northern Indiana and Michigan. Harvest delays were limited. Over the next week, heavier rainfall is expected across the northern half of the Corn Belt from northern Nebraska and South Dakota to Iowa and southern Minnesota to northern Illinois and southern Wisconsin. The extended forecast turns drier again so harvest delays should be limited.

The US corn condition rating edged down very slightly from a week ago. Nationally, the percent excellent fell 1% to 9% while percent good increased 1% to 44%. All other categories were unchanged at 29% fair, 12% poor and 6% very poor. Condition ratings declined for 6 of 18 reporting states led by sharp declines for Illinois and Nebraska. Illinois’ condition rating has been somewhat volatile over the summer and early fall. Condition ratings increased for 8 states with Michigan, South Dakota, Tennessee and Wisconsin up the most. The national corn condition index fell 1index point from a week ago to 338. The condition index rating is in line with a year ago at this time, but below the 20-year average at 356. US harvest progress increased 11 percentage points from a week ago to 34%, 3 percentage points ahead of the five-year average.

After improving last week, the national soybean condition rating eased again this week. The percent rated excellent fell 1% to 8% while the percent rated good held steady and 43%. The percent fair and poor were also unchanged for the week at 31% and 12%, respectively. The percent very poor increased 1% to 6%. Condition ratings fell for 8 of the 18 reporting states led by a steep decline for Illinois with more moderate declines for Missouri, Nebraska and North Dakota. Tennessee’s condition rating improved the most followed by Indiana, Kentucky and Michigan. Changes to the other states were small. The national soybean condition index rating fell 4 points from a week ago to 335 and compares to 347 a year ago and the 20-year average for this week at 356. Soybean harvest progress advanced 20 percentage points from a week ago to 43%, 6 percentage points head of the five-year average.

Cotton’s condition rating index improved from 268 a week to 275. Nationally, cotton harvest progress increased 7 percentage points to 25%, 1 point ahead of the five-year average. Rice harvest in now at 82% complete, slightly ahead of the five-year average of 79%. Winter wheat planting moved up 17 percentage points to 57% complete, in line with the five-year average.

If you have any questions about this report, please contact Martyn Foreman at [email protected]

October 3, 2023


Issue 17 October 3, 2023

In This Week’s Issue

  • Low Mississippi River water levels along with harvest has sparked a sharp increase in barge freight rates and a corresponding decline cash grain basis.
  • Condition ratings for corn and soybeans edged slightly higher.
  • Yield estimates for both US corn and soybeans were fractionally higher compared to a week ago.

Barge Rates and the Basis

Widespread dryness across the central US has led to low water levels all along the Mississippi River and its tributaries including the Illinois, Missouri and Ohio Rivers. Water levels along the upper, mid and lower Mississippi River are at low stage and are approaching record lows in the lower Mississippi River from the confluence of the Ohio River to Memphis and further south. Water level forecasts point to steady to slightly higher water levels over the next few days followed by a steady decline into mid-October with water levels reaching a new record low in Memphis on October 9.

A series of locks and dams north of St. Louis maintain a navigable barge channel, but south of St. Louis restrictions have been put in place on barge draft and tow-sizes. South bound loading drafts have been reduced by 32% (500-700 tons per barge) from St. Louis and barge loading reduced by 24% (400-600 tons per barge) from Cairo to the Gulf.

Barge rates follow a seasonal pattern with rates typically climbing as harvest ramps up and turning lower once harvest pressure subsides. Demand for barges is also affected by export demand. Stronger export demand translates in the strong barge rates and vice versa. Water levels usually aren’t an issue but low water combined with grain harvest can be explosive for barge rates. A year ago, barge rates spiked to due to low water and the impending harvest. Rates quickly eased from the mid-October peak as needed rainfall raised water levels and harvest pressure subsided. Barge rates are surging again this fall based on low river water levels and with the bulk of grain harvest still ahead.

Since August 1, barge rates from St. Louis to Cairo have increased 275% to $52.90 per ton and the Cairo to Memphis rate is up over 400% to $53.04 per ton. Normally, because Cairo to Memphis is further south on the Mississippi River, the barge rate is a few dollars per ton lower than the St. Louis to Cario rate, but given the historic low water in Memphis, the Cario to Memphis the rate has moved to a slight premium to St. Louis to Cairo.

The weather forecast doesn’t indicate any significant relief for river levels with the forecast calling for mostly below normal precipitation over at least the next two weeks at the same time corn and soybean harvest is rapidly advancing. Nationally, the corn and soybean harvest began the week at 23% complete for both crops.

Higher barge freight costs have translated into lower cash corn and soybean prices at river terminals with impacts rippling into the interior markets as well. The impact on cash prices is reflected in the cash basis (cash price minus the nearby futures price). Basis levels have fallen sharply. Below are corn and soybean basis charts for New Madrid, MO. New Madrid is located about half way between St. Louis and Memphis on the Mississippi River. The horizontal axis is in weeks with week 1 being the beginning of the calendar year and weeks in the mid to late 30s typically aligned with harvest. Basis follows a seasonal pattern with the basis usually its weakest at harvest followed by a post-harvest recovery. Basis for both corn and soybeans fell sharply a year ago in response to the steep increase in barge freight then rebounded as barge rates eased.

Currently the corn basis at New Madrid is approaching $1.00 per bushel under the December corn futures contract while the soybean basis is $1.20 under November futures. Both are below a year ago and far below the five-year average. Barge rates are likely headed higher although it’s not clear if they will reach last fall’s peak. Grain buyers appear to be anticipating further increases in barge rates and adjusting basis lower even though barge rates haven’t yet reached year ago levels.

Grain export commitments for the 2023/24 marketing year are starting off slow. Corn export commitments are down 10% compared to a year ago at 414 million bushels. Soybeans and wheat export commitments are also lower. Soybeans export commitments are down 34% from a year ago at 652 million bushels and wheat commitments are down 14% from a year ago to 337 million bushels. Overall, the Louisiana port area handles about 60% of total US grain exports. Lower export commitments may help hold barge rates in check, but the lack of precipitation and a fast harvest pace over the next few weeks will provide plenty of upward pressure on barge rates. Depending on how long the low water lasts, it could also impact up river shipments of farm inputs.

Corn and Soybean Yield Estimates Were Slightly Higher

Based on the latest corn condition rating, the model yield estimate is 175.4 bushels per acre, up 0.8 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and is slightly higher than USDA’s September Crop Production Report estimate at 173.8 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 174.4 bushels per acre, up 0.6 bushels from a week ago.

The weekly soybean yield model parameter estimates using the October 1 condition ratings estimate the national soybean yield at 49.2 bushels per acre, up 0.2 bushels from a week ago. The yield estimate is below the long-term trend yield and below USDA’s September Crop Production yield estimate at 50.1 bushels per acre. The yield is close to 2022’s final yield at 49.5 bushels per acre. The harvest week (October 8) parameter estimates also puts the yield at 49.2 bushels per acre, up 0.5 bushels from a week ago.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

Rainfall coverage last week extended from Minnesota to Wisconsin, Illinois, Indiana and Kentucky. The precipitation slowed, but didn’t halt harvest progress in these states and is expected to do little to boost yields. The weather forecast points to mostly warm and dry harvest conditions over the next two weeks.

The US corn condition rating edged up very slightly for the week. Nationally, the percent excellent increased 1 point to 10% while percent good fell 1 point. All other categories were unchanged at 29% fair, 12% poor and 6% very poor. Condition ratings improved for 11 of 18 reporting states led by solid increases for Illinois, Nebraska and North Dakota. Condition rates fell for 5 states with Michigan down the most. The national corn condition index increased 1 point1 from a week ago to 339. The condition index rating is now slightly above a year ago, but below the 20-year average for early October at 354. US harvest progress increased 8 percent from a week ago to 23%, 2 points ahead of the five-year average.

The national soybean condition rating broke several weeks of lower condition ratings. The percent rated good plus excellent increased 2 points from a week ago to 52%. The percent poor or very poor fell 1% to 17%. Condition ratings increased for 10 of the 18 reporting states led by strong increases for Illinois and North Dakota with modest increases for Missouri, Nebraska and Tennessee. Condition ratings fell for 5 states including Arkansas, Kansas, Michigan, North Carolina and South Dakota. The national soybean condition index rating increased 5 points from a week ago to 339 and compares to 342 a year ago and the 20-year average for this week at 354. Soybean harvest progress advanced 11 points from a week ago to 23%, 1 point ahead of the five-year average.

Cotton’s condition rating index fell 5 points from a week ago to 268. Nationally, cotton harvest progress increased 5 percentage points from a week ago to 18% and 1 point ahead of the five-year average. Rice harvest in now at 75% complete, slightly ahead of the five-year average of 69%.

If you have any questions about this report, please contact Martyn Foreman at [email protected]

September 26, 2023


Issue 16 September 26, 2023

In This Week’s Issue

  • Widespread dryness threatens Ukraine’s fall planted crops.
  • Ukraine continues to face Black Sea export challenges from Russian port attacks.
  • US corn and soybean condition ratings and yield estimates were mixed with the corn yield slightly higher and soybeans lower.

Increasing Dryness Threatens Ukraine’s Winter Wheat and Rapeseed Planting

Ukraine’s 2023/24 corn and wheat production is down sharply from prewar levels, but close to last season’s production totals. Earlier this month USDA pegged corn production at 28.0 MMT, up 1.0 MMT from a year ago, but down from 42.1 MMT in 2021/22. Wheat production is estimated at 22.5 MMT, up 1.0 MMT from a year ago, but down 10.5 MMT from two years ago. While area was down for both corn and wheat, yields were strong. The corn yield, at 7.0 mt/ha, is in line with the five-year average and the wheat yield, at 4.5 mt/ha, is a new record high. Rapeseed production is expected to be record large at 4.3 MMT. Production estimates don’t include conflict areas and areas occupied by Russian forces.

Weather during most of the 2023 growing season was generally favorable resulting in good yields although the current dryness began developing earlier in the summer. More recently, precipitation has been well below normal. As the precipitation map indicates, over the past

month precipitation has ranged from 25% to 75% of normal resulting in soil moisture deficits for much of Ukraine’s crop production regions. The dryness poses a threat to fall seeded crops including winter wheat and rapeseed. Nearly all of Ukraine’s wheat production is winter wheat. Rapeseed is also produced in many of same the regions with the heaviest concentration in western Ukraine. WAEES current estimate for Ukraine’s 2024/25 wheat area is 5.45 million hectares, up 575,000 hectares (12%) from this year. While this appears to be a rather modest increase relative to Ukraine’s historical wheat area, the current dryness may limit of even reverse the forecast increase. Farmers may opt to go ahead and plant wheat with hopes that rain will arrive later this fall. Without improved soil moisture, poor early development could lead to increased abandonment and lower harvested area. The current weather forecast points to a continued dry pattern for the next few weeks.

Rapeseed area is also forecast to increase from 1.3 million hectares this year to 1.43 million hectares (+10%) in 2024/25. Fall rapeseed planting and establishment also faces increased risk from the ongoing dryness. Note that southern Russia’s winter wheat growing region is also suffering from dryness.

Russia continues to attack Ukraine’s Black Sea ports. In the past few days, Russia has attacked Odesa as well as Danube River facilities including Izmail and Reni. Ukraine agricultural exports have dropped from about 6.0 MMT per month before the war to around 3.0 MMT per month while the Black Sea Grain Initiative (BSGI) was in place. More recently, without the BSGI, exports have been cut again with September exports so far down more than 50% from a year ago to 1.6 MMT.

Ukraine continues using the Danube River to export along with truck and rail exports through eastern Europe although not without concerns from neighboring countries. Ukraine is also attempting to establish another export outlet termed the “humanitarian corridor” where ships once loaded, track close to Romanian and Bulgarian Black Sea coasts to the Bosporus Strait and on to the Mediterranean. According to Reuters, the first two ships left Chornomorsk last week followed by another this week. Russia continues to attack the ports, but so far not the ships.

Corn and Soybean Yield Estimates Still Under Pressure

The corn condition rating increased slightly, resulting in higher model yield estimates. Based on the latest corn condition rating, the model yield estimate is 174.6 bushels per acre, up 0.9 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and is close to USDA’s September Crop Production Report estimate at 173.8 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 173.8 bushels per acre, up 1.8 bushels from a week ago and in line with USDA’s current yield estimate.

The weekly yield model parameter estimates using the September 24 condition ratings estimate the national soybean yield at 49.0 bushels per acre, down 0.6 bushels from a week ago. The yield estimate is below the long-term trend yield and below USDA’s September Crop Production yield estimate at 50.1 bushels per acre. The yield is close to 2022’s final yield at 49.5 bushels per acre. The harvest week (October 8) parameter estimates put the yield at 48.7 bushels per acre, down 0.3 bushels from a week ago.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

Rainfall coverage last week was mostly across the western Corn Belt. Weather forecasts over the next two weeks call for above normal temperatures with a slightly wetter bias for the western half of the Midwest. Dryness in the east will be favorable for corn and soybean harvest, but rain is needed ahead of soft red winter wheat seeding.

The US corn condition rating improved modestly. Nationally, the percent good plus excellent increased 2 points from a week ago to 53%. The percent rated poor or very poor fell 2 points to 18%. Condition ratings improved for 7 of 18 reporting states led by a sharp increase for Illinois along with marginal increases for Colorado, Iowa, Kansas, Missouri, South Dakota and Tennessee. Condition ratings fell for Indiana, Kentucky, Michigan, Minnesota, Nebraska North Dakota, Ohio, Pennsylvania and Wisconsin. The national corn condition index increased 6 points from a week ago to 338. The condition index rating is now slightly above a year ago, but below the 20-year average for late September at 353. US harvest progress increased 6 points from a week ago to 15%, 2 points ahead of the five-year average.

The national soybean condition rating fell for the sixth consecutive week. The percent rated good plus excellent fell 2 points to 50%. The percent poor or very poor held steady at 18%. Condition ratings fell for 12 of the 18 reporting states. Ratings were lower for Arkansas, Indiana, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Nebraska, North Dakota, Ohio, South Dakota and Tennessee. A sharp increase in the condition rating for Illinois limited the slide in the national rating. Ratings for Missouri, North Carolina and Wisconsin also improved. The national soybean condition index rating fell 2 points from a week ago to 334 and compares to 344 a year ago and the 20-year average for this week at 353. Soybean harvest progress advanced 7 points from a week ago to 12%, 1 point ahead of the five-year average.

Cotton’s condition rating index edged up 2 points from a week ago to 273. Nationally, cotton harvest progress increased 4 points from a week ago to 13% and is in line with the five-year average. USDA stopped reporting rice condition. Rice harvest in now at 66%, slightly ahead of the five-year average of 59%.

If you have any questions about this report, please contact Martyn Foreman at [email protected]

September 19, 2023


Issue 15 September 19, 2023

In This Week’s Issue

  • Global and US fertilizer prices down sharply from the 2022 peak.
  • US corn and soybean condition ratings and yield estimates continue to decline.
  • Corn harvest is ramping up.
  • Better chances for precipitation next week, but getting late to have much positive impact on yields.

Fertilizer Prices Trending Lower

Fertilizer prices began moving higher in 2021 as a number of factors converged to begin a steep increase in fertilizer prices over the next 18 months. On the supply side, hurricanes in the US Gulf of Mexico caused nitrogen and phosphate plants to shut down for several weeks. In Europe, soaring gas prices drove nitrogen production costs sharply higher resulting in poor margins and reduced production. Lingering Covid-19 supply chain issues and rising transportation costs also supported rising inflation.

Government policy moves added upward pressure to fertilizer prices. In November 2021, China halted exports of fertilizer. Russia established a fertilizer export quota. A number of other countries also imposed export restrictions.

At the same time that supply and trade were constrained, fertilizer demand was strong fueled by rising crop prices.

With the underlying factors outlined above already in place, the Russia-Ukraine war led to a host of additional issues regarding fertilizer supply and demand. Additional trade restrictions were imposed on or by key suppliers including Russia and Belarus. All these factors culminated in a spike in fertilizer prices into mid-2022.

Since the price peak last year, fertilizer prices have trended lower as production issues have eased and trade flows have adjusted somewhat. Sharply higher prices also curbed demand. According to the International Fertilizer Association (IFA), global fertilizer consumption fell by 7.5% from 2020 to 2022 with nitrogen down 5%, phosphate down 9% and potassium down 12%. Regions where consumption fell the most include East and South Asia. In percentage terms, consumption fell by more than 10% for Africa, West Asia and Western and Central Europe.

We plan to explore the global fertilizer supply and demand situation at a later date. The focus here is on the impact that lower fertilizer prices have on crop production costs. The U.S. fertilizer cost by crop is based on USDA-AMS, Illinois Production Cost data and assumptions regarding application rates. Using fertilizer prices as of as of September 7, 2023, corn fertilizer costs are estimated at $130 per acre, down $92 per acre from early September a year ago. Soybean fertilizer costs are estimated at $73.00 per acre, down from $119 a year ago. Cotton and wheat fertilizer costs are similarly lower with cotton down $75 per acre and wheat down $47 per acre to $114 per acre and $66 per acre, respectively. Fertilizer is one of the few costs of production inputs that is likely to be significantly lower next year.

Corn and Soybean Yield Estimates Still Under Pressure

The corn condition rating fell slightly again last week to the lowest level of the season. Based on the latest corn condition rating, the model yield estimate is 173.7 bushels per acre, down 1.1 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and is close to USDA’s September Crop Production Report estimate at 173.8 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 172.0 bushels per acre, down 1.4 bushels from a week ago.

The weekly yield model parameter estimates using the September 17 condition ratings estimate the national soybean yield at 49.6 bushels per acre, up 0.1 bushel from a week ago. The yield estimate is below the long-term trend yield and below USDA’s September Crop Production Report yield estimate at 50.1 bushels per acre. The yield is in line with 2022’s final yield at 49.5 bushels per acre. The harvest week (October 8) parameter estimates put the yield at 49.0 bushels per acre, steady from a week ago.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

Dryness persisted for most of the Midwest last week. Weekend showers for southeastern Iowa, western and northern Illinois alleviated near-term dryness in those regions. About half of the Corn Belt is suffering from moisture stress. The forecast turns wetter in the 6-10-day and 8-14-day forecasts, but probably too late to significantly increase yields.

The US corn condition rating edged lower again. Nationally, the percent good plus excellent fell 1 point from a week ago to 51%. The percent rated poor or very poor increased 2 points to 20%. Condition ratings declined for 8 of the 18 reporting states. Ratings fell sharply for Colorado, Illinois and Ohio, but more modestly for Indiana, Kansas, Missouri, Nebraska and North Dakota. Ratings improved slightly for Iowa, Kentucky, Michigan, Minnesota, Pennsylvania South Dakota and Tennessee. Ratings were unchanged from a week ago for North Carolina and Texas. The national corn condition index dropped 5 points from a week ago to 332. This is the lowest condition rating of the growing season and is 1 point below a year ago at this time. The 20-year average index for mid-September is 352. US harvest progress increased 4 points from a week ago to 9%, 2 points ahead of the five-year average.

The national soybean condition rating fell for the fifth consecutive week. The percent rated excellent fell 1 point to 8% and the percent rated good increased 1 point while the percent poor or very poor held steady at 18%. Condition ratings fell significantly for Illinois, North Dakota and Ohio. Ratings improved for Iowa, Michigan, Mississippi and South Dakota. The other reporting states were little changed. The national soybean condition index rating dropped 1 point from a week ago to 336 and compares to 344 a year ago and the 20-year average for this week at 352.

Cotton’s condition rating index fell 4 points from a week ago to 271. Only 2011 had a lower rating in mid-September at 261. Nationally, cotton harvest progress edged up 1 point from a week ago to 9% and compares to 10% on average. USDA stopped reporting rice condition with US harvest progress now at 57% which compares to the five-year average of 47%.

 

If you have any questions about this report, please contact Martyn Foreman at [email protected]

September 12, 2023


Issue 14 September 12, 2023

In This Week’s Issue

  • Global corn and soybean stocks edge higher while wheat stocks tighten.
  • Corn and soybean condition ratings declined again, resulting in lower yield estimates for both corn and soybeans.
  • Dryness is expected to continue for US Midwest over the next two weeks.

Mixed Outlook for Global Grain Stocks

Global 2023/24 corn ending stocks and percent ending stocks-to-use (excluding China) are forecast to increase from 2022/23, mostly on an increase in US production and stocks from a year ago. Argentina’s corn production is expected to increase 20 MMT from last season’s drought reduced level to 54.0 MMT, but a sharp increase in exports leaves Argentina’s ending stocks little changed from last season. The global percent stocks-to-use is forecast at 12.8%, in line with the 30-year average. The current estimate includes USDA’s September World Agricultural Supply and Demand Estimates (WASDE). USDA increased US 2023 corn production and 2023/24 ending stocks slightly on an upward revision in harvested acres, which more than offset a lower yield. Modest production cuts to the US crop are possible in the months ahead, but WAEES isn’t expecting sharp cuts from the current estimate. Whether global stocks increase further or tighten hinges largely on the size of Argentina’s corn production and Brazil’s second crop corn which won’t be determined until those crops approaches maturity in 2024.

Global soybean ending stocks and percent stocks-to-use are also forecast to increase in 2023/24. The stocks increase is expected to be driven by a large increase in South American production. While South American crops haven’t even been planted yet, the transition to El Niño is likely to boost precipitation and end the extended drought in Argentina and Southern Brazil. USDA’s September WASDE, pegged Argentina’s 2023/24 soybean crop at 48.0 MMT, up from only 25.0 MMT in 2022/23. Brazil’s soybean production climbs to a record 163.0 MMT, up 7.0 MMT from 2022/23. With the increase in production, ending stocks also build. Since South American production accounts for more than 50% of global soybean production (excluding China) we have included the stocks-to-use graph below which is based on Brazil and Argentina’s local marketing year (Feb-Jan). Ending stocks increase for both Argentina and Brazil. Even so, the increase in rather modest with the global percent stocks to use climbing from 10.4% in 2022/23 to 12.2% in 2023/24, only slightly above the 30-year average at 11.1%. Projected stocks are well below the recent peak in 2018/19 at 19.3%. While expectations for South American soybean production are high, the final outcome is several months away.

Global wheat ending stocks and the percent stocks-to-use are projected to tighten in 2023/24 to 19.6%, well below the 30-year average of 23.0%. Global production (excluding China) is down modestly from 2022/23. Increased production for the US, Argentina, and India isn’t expected to offset lower production for Australia, Canada and Russia. While the decline in the percent stocks-to-use isn’t dramatic compared to 2022/23, wheat stocks have been trending lower for the past several years and is now projected to fall to the lowest level since 2007/08, leaving supplies vulnerable if there are additional cuts to Southern Hemisphere wheat production or if weather threatens winter wheat planting in the northern hemisphere this fall.

Corn and Soybean Yield Estimates Continue to Fall

The corn condition rating fell slightly to the lowest level of the season and close to 2022’s condition rating at this point in the season. Based on the latest corn condition rating, the model yield estimate is 174.4 bushels per acre, down 1.0 bushel from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and is close to USDA’s September Crop Production Report estimate at 173.8 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 173.4 bushels per acre, down 0.4 bushels from a week ago, also close to USDA’s latest estimate.

174.8

The weekly yield model parameter estimates using the September 10 condition ratings estimate the national soybean yield at 49.5 bushels per acre, down 0.1 bushel from a week ago. The yield estimate has now fallen below the trend yield and below USDA’s September Crop Production Report yield estimate at 50.1 bushels per acre. The yield is now in line with 2022’s final yield at 49.5 bushels per acre. The harvest week (October 8) parameter estimates put the yield at 49.0 bushels per acre, down 0.3 bushel per acre from a week ago. The dry weather pattern is expected to continue for the next 1 to 2 weeks although weather impacts are diminishing this late in the growing season.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

It was another week of mostly dry conditions across the corn belt. The exception includes the Dakotas. The western and southern portions of the Plains winter wheat belt also received some needed rainfall. A similar weather pattern is expected for Midwest again this week, but heavier precipitation is forecast for the southern Plains. Over the next two weeks, dryness persists, but temperatures transition from normal and below normal to above normal for the Midwest. Weather impacts on corn and soybean yields are diminishing. Even so, the late-season dryness is expected to lower grain weight and trim yields. The warm and dry forecast will promote grain dry down and early harvest.

US corn condition rating edged lower again. Nationally for corn, the percent good plus excellent decreased 1 point from a week ago to 52%. The percent rated poor or very poor held steady at 18%. Condition ratings declined for 9 of the 18 reporting states. Ratings fell sharply for Colorado and Pennsylvania, but more modestly for Indiana, Iowa, Kansas, Kentucky, Nebraska, North Carolina, Ohio and Tennessee. Ratings were unchanged from a week ago for Illinois, North Dakota and Texas. The national corn condition index dropped 1 point from a week ago to 337. This is the lowest condition rating of the growing season and is 1 point above the index rating at this point a year ago. The 20-year average index for early September is 352. USDA report national harvest progress at 5% compared to 5% a year ago and the 5-year average of 4%. Texas is 62% harvested vs. 61% on average, Mississippi is 84% harvested compared to 67% on average and Arkansas is 68% harvested compared to 48% on average. Missouri is 9% harvested compared to 6% on average.

The national soybean condition rating fell slightly from a week ago. The percent good or excellent fell 1 point from a week ago to 52% while the percent poor or very poor increased 1 point to 18%. State level condition ratings declined for 11 of the 18 reporting states. Condition ratings fell sharply for Iowa, Kansas, Louisiana, and Wisconsin. Condition ratings improved for Arkansas, Illinois, Michigan, North Carolina, North Dakota and Ohio. The national soybean condition index rating dropped 3 points from a week ago to 337 and compares to 347 a year ago and the 20-year average for this week at 353.

Cotton’s condition rating index fell 1 point from a week ago to 275. The only lower rating historically at this point in the season is 2011’s condition rating at 263. Nationally, cotton harvest progress is 8% compared to 7% on average. Texas cotton harvest is 19% vs. 14% on average. The national rice condition index increased 5 points from a week ago to 383, slightly above the 20-year average of 379. Rice harvest is moving ahead rapidly at 45% nationally compared to 35% on average.

 

If you have any questions about this report, please contact Martyn Foreman at [email protected]

August 29, 2023


Issue 12 August 29, 2023

In This Week’s Issue

  • Egg prices are down sharply from the peak earlier this year. Feed costs may determine where egg prices are headed next.
  • Corn and soybean condition ratings declined last week resulting in lower yield estimates for both corn and soybeans.
  • Weather forecasts point to late- season heat and dryness for crops.

Egg Industry Recovering After Avian Flu

In January 2021, the average retail price of a dozen large grade A eggs in the U.S. was $1.46, essentially the same as in January 2020 and below prices seen throughout most of the 2011 – 2019 time period. Two years later, in January 2023, consumers paid $4.82 for a dozen large grade A eggs at the height of a huge egg price spike. Prices had been trending up since late 2020, but soared after a Highly Pathogenic Avian Influenza (HPAI) outbreak had a severe impact on the egg-laying flock. Reduced supplies of eggs drove grade A dozen prices to skyrocket. Consumers understand that reduced supplies can lead to increased prices, but may wonder what factors affect the supply and demand balance and why egg prices can shift so rapidly.

As with any commodity, egg prices shift in relation to the balance between the supply of eggs and the demand for eggs. Several factors have an impact on egg supply. The largest egg producers house egg-laying hens in large facilities that require electricity to control temperatures and operate equipment. Producers need fuel to operate machinery and for transportation. Labor and packaging costs are also significant. Perhaps the most important factor is feed prices, which make up more than 50% of the cost to produce eggs. On the demand side, consumers increase or decrease their purchases based on the price of eggs relative to other sources of protein. There are also seasonal effects on egg demand, with bumps in demand occurring around the Christmas and Easter holidays. Good supplies, however, tend to dampen the impacts of these demand bumps on prices. Grade A prices increased an average 1.2% per dozen per year between 1990 and 2020.

So, what occurred to drive prices up so rapidly during 2022? HPAI was first detected in wild birds in Canada in November 2021 and later detected in U.S. commercial flocks in Indiana in February 2022. It subsequently spread to commercial flocks in several states. Historically, the hot summer months have brought avian flu outbreaks under control, but unlike the 2014-2015 outbreak, the 2022 HPAI outbreak continued to spread during summer 2022. By the end of the year, 43.3 million egg-laying hens were lost. While the outbreak was the biggest culprit, other factors contributed to rapidly rising prices in 2022. The increases in corn and soybean prices after the start of the Russia-Ukraine war drove up the cost of egg-layer feed. Producers also faced higher fuel, electricity and labor costs in 2022. Inflation in food prices likely played a role as well. Significant price increases in other, more expensive protein sources likely pushed many consumers to continue purchasing eggs, keeping per capita consumption of eggs from falling as much as it may otherwise have done in the face of the egg price increase. Grade A dozen egg prices more than doubled during calendar year 2022 alone.

As alarming as the 2022 egg price run-up seemed, it is not the first example of a strong egg price movement. From mid-2007 to early 2008, an increase in the prices of egg feed inputs combined with relatively low egg-laying flock numbers to hamper production when compared with 2005 and 2006. Large grade A prices rose 61% from $1.37 per dozen in June 2007 to $2.20 in March 2008. The rate of increase in feed input prices eased in 2009, and the industry produced about 50 million dozen more eggs than in 2008 with the aid of only a minimal increase in the egg-laying flock. Per capita consumption also eased in the face of high prices in 2007 and 2008 and by July 2009, large grade A prices had fallen to $1.50 per dozen. The last major HPAI outbreak in U.S. poultry flocks began when HPAI was detected in December 2014. The outbreak continued through June 2015 and killed 43 million egg-layers. The resulting low egg supplies pushed the grade A retail price to a high of $2.97 per dozen in Sept 2015, up 45% compared to $2.03 per dozen in November 2014. Again, per capita consumption cooled as prices climbed. Fortunately, HPAI detections ceased after June 2015 and the industry was able to quickly expand the number of egg-layers.

At the end of 2015, there were 354 million layers on hand, only about 16 million less than at the end of 2014 despite the number of layers killed during the outbreak. The industry added another 23 million layers by the end of 2016. Feed prices also eased during this period. 2016 egg production was over 6% higher than in 2015, and prices fell to $1.38 per dozen by the end of the year.

What can be expected in terms of the egg sector’s continuing recovery from the 2022 HPAI outbreak? The USDA’s August 2023 Livestock, Dairy, and Poultry Outlook indicates the industry is succeeding in expanding the egg-laying flock, with the June 2023 flock at “317.6 million layers, 5.7 percent higher than last June.” As with prior price spikes, per capita consumption has cooled. 2022 per capita consumption was below the 2021 level and 2023 per capita consumption is not expected to exceed the 2021 level. As of July 2023, the retail price of a dozen large grade A eggs was still relatively high, historically speaking, at $2.09. The industry still has an incentive to replace the lost layers by expanding the flock as it has done in the past in response to high egg prices, but feed prices are still relatively high. These high feed prices limit reductions in egg prices. However, feed prices are projected to fall. New HPAI outbreaks and adverse world events pose risks and it takes time for lower input costs to translate to lower egg prices, but as feed prices fall, egg prices may continue to fall along with them.

Lower Corn and Soybean Yield Estimates

Corn’s condition rating declined after last week’s widespread heat and dryness. Based on the latest corn crop condition ratings, WAEES’s weekly model estimates the national corn yield at 176.5 bushels per acre, down 0.9 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and USDA’s August Crop Production Report estimate at 175.1 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 174.9 bushels per acre, down 2.4 bushels from a week ago. If the current weather forecast is realized, condition ratings are likely to be under further pressure over the next 1 to 2 weeks.

176.5

The weekly yield model parameter estimates using the August 27 condition ratings estimate the national soybean yield at 50.7 bushels per acre, down 0.6 bushels from a week ago. The yield estimate is in line with trend yield and close to USDA’s August Crop Production Report yield at 50.9 bushels per acre and compares to 49.5 bushels per acre a year ago. The harvest week (October 8) parameter estimates put the yield at 50.3 bushels per acre, down 0.2 bushels per acre from a week ago. Current weather forecasts calling for additional heat and dryness over the next 10-days to two weeks threatens to pressure the yield below the 50.0 bushel per acre mark.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

Most of the Corn Belt experienced heat and dryness last week. A band of precipitation fell from northern Kansas and southern Nebraska across northern Missouri to the southern half of Illinois. Ohio also received beneficial precipitation. The Midwest is mostly dry this week. After a few days of moderate temperatures, above normal temperatures return late this week. Very heavy rainfall is forecast for the southeastern US at midweek as hurricane Idalia moves through the region. About 25% of the Corn Belt is experiencing moisture stress with the focus still on Iowa, northern portions of Illinois and northern Indiana. Given the current weather forecast, the area under moisture stress is expected to expand to 50% to 60% by next week.

Not surprisingly, the US corn condition rating fell again this week. Nationally for corn, the percent good plus excellent decreased 2 points from a week ago to 56%. The percent rated poor or very poor increased 2 points to 17%. Condition ratings declined for 10 of the 18 reporting states. Ratings fell sharply for Iowa, Kansas, Michigan, Nebraska, Pennsylvania and Texas. Condition ratings improved modestly for Illinois, North Carolina, Ohio, Tennessee and Wisconsin. The national corn condition index eased 7 points from a week ago to 342. This is the lowest condition rating in eight weeks and compares 339 at this point a year ago and the 20-year average of 355. Corn harvest is advancing rapidly across the south. Louisiana is 97% harvested vs. 74% on average. Texas is 53% harvested vs. 50% on average and Mississippi is 44% harvested compared to 33% on average.

The national soybean condition rating also fell from a week ago but less than corn. The percent good or excellent edged down 1 point from a week ago to 58% while the percent poor or very poor increased 1 point to 14%. State level condition ratings declined for 10 of the 18 reporting states. Condition ratings fell sharply for Arkansas, Iowa, Michigan, Minnesota, Mississippi, Nebraska, South Dakota, Kansas, Louisianna, North Carolina and Tennessee. Condition ratings improved modestly for Illinois, Indiana, Missouri, North Dakota, Ohio, Tennessee and Wisconsin. The national soybean condition index rating decreased by 2 points from a week ago to 350 and compares to 351 a year ago and the 20-year average for this week at 355.

Cotton’s condition rating held steady from a week ago at 271. The current rating is in line with 2011’s historically low condition rating for late August. Texas cotton condition edged slightly higher from a week ago, but is still suffering with 67% of the crop rated poor or very poor. The national condition index for rice improved, climbing 7 points from a week ago to 385, slightly above of the 20-year average of 382.

 

 

If you have any questions about this report, please contact Martyn Foreman at [email protected]

August 22, 2023


Issue 11 August 22, 2023

In This Week’s Issue

  • Ukraine’s grain exports are of concern now that the Black Sea Grain Initiative has expired.
  • Changes in WAEES’s corn and soybean yield model estimates are mixed compared to a week ago.
  • Corn and soybean condition ratings declined last week and the weather forecast suggests further deterioration is likely.
  • Cotton’s condition rating fell to an historic low.

Black Sea Grain Export Status

The Black Sea Grain Initiative (BSGI) was established in order to facilitate food exports from Ukraine’s Black Sea ports. Ukrainian ports had been blocked by Russia since late February 2022 when the Russia/Ukraine war began. The BSGI was signed on July 22, 2022, and after a series of renewals, expired on July 17, 2023 when Russia refused to extend the agreement. During the year that it was in place, the BSGI facilitated the export of nearly 33 MMT of grain from Ukrainian Black Sea ports. Prospects for a new agreement don’t appear likely, at least for the near-term. In fact, export concerns have escalated as Russia began attacking Ukraine’s Black Sea ports. Odesa was initially targeted, but drone strikes have also hit Danube River ports of Izmail and Reni which became the major export route since the BSGI was terminated. Even if a new export agreement is reached, it’s not clear how much port capacity Ukraine has left, particularly for Odessa. Prior to the strikes, the Danube River ports had capacity to ship about 2.0 MMT of grain per month.

Even before Russia pulled out of the BGSI, Russia was purposely slowing Ukrainian exports through the inspection process. There were 180 ships a month leaving Ukrainian ports a year ago when the BSGI was initiated. Shipping fell to only 33 and 38 vessels in May and June 2023, respectively.

Road and rail export routes have more limited export capacity than the Black Sea or Danube River ports, but these export routes have been further constrained by a current agreement with five eastern European countries including Poland, Slovakia, Hungary, Romania and Bulgaria to limit Ukrainian grain exports to 600,000 metric tons per month by rail and 200,000 metric tons per month by truck. These totals are for transit through these countries. Domestic sales of Ukrainian grain are currently banned. The current sales ban started on May 2, 2023 and was originally set for just one month, but in June it was extended to September 15, 2023. Poland and other bordering countries want the current ban to be extended through at least the end of 2023. On July 19, 2023 ministers of Poland, Slovakia, Hungary, Romania and Bulgaria signed a joint declaration to the European Commission for an extension of the ban through the end of the year.

Recent reporting indicates that the European Commission is considering a plan to provide transit subsidies to the five countries as part of an agreement to extend the grain sales ban. The transit subsides under discussion could amount to about 30 euros per ton. Poland has also ask for $1.1 billion in aid so Warsaw can increase capacity to transit Ukrainian grain. The aid money would be used to expand rail and truck transport infrastructure.

Ukraine is also considering establishing a “humanitarian corridor” to replace the BSGI. The route follows the western Black Sea coastline near Romania and Bulgaria. So far one Hong Kong flagged container ship that was held in Odesa since the beginning of the war, left Odesa on August 16 following the route. According to Ukraine’s Minister of Infrastructure, Oleksandr Kubrakov, “The corridor will be primarily used to evacuate ships that were in Ukrainian ports at the time of full-scale invasion by the Russian Federation”. The new route could eventually be used for grain and oilseed exports. Ukraine is reportedly working with global insurers to cover grain shipments. Russia hasn’t commented whether it would honor the export corridor. While Ukraine works to secure alternative export routes, the impact on global markets could quickly escalate if ships are attacked by either side. Clearly, diminished Russian grain exports would have a large impact on global trade and markets.

We have included several graphs below regarding Ukraine’s grain and oilseed exports.

Source: USDA-PSD

The graph above shows aggregate wheat exports by destination while the Black Sea Grain Initiative (BSGI) was operating.

The graph above shows aggregate corn exports by destination while the Black Sea Grain Initiative (BSGI) was operating.

The graph above shows Ukraine’s monthly grain and oilseed exports by mode of transportation and breaks out the Odesa and Danube ports. Note that Danube River port exports exceeded Odesa port exports in May 2023 as Russia slowed export inspections through the BSGI. Ukraine is attempting to boost Danube exports as well as vehicle and railway exports through the EU.

The graph above shows how Ukraine’s export ramped up as the BSGI was implemented in August 2022 with corn and wheat the dominate export commodities.

Russia is by far the largest global wheat exporting country, accounting for over 20% of global wheat trade in 2022/23.

Corn and Soybean Yield Changes are Mixed This Week

Based on the latest corn crop condition ratings, WAEES’s weekly model estimates the national corn yield at 177.4 bushels per acre, up 0.2 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and USDA’s August Crop Production Report estimate at 175.1 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 177.3 bushels per acre, down 0.8 bushels from a week ago. Given the weather forecast for this week, condition ratings are expected to decline. USDA will release their next yield estimate on September 12 and it will include field sample data from the ten-objective yield states.

The weekly yield model parameter estimates using the August 20 condition ratings estimate the national soybean yield at 51.3 bushels per acre, up 0.2 bushel from last week. The yield estimate is in line with trend yield and close to USDA’s August Crop Production Report yield at 50.9 bushels per acre and compares to 49.5 bushels per acre a year ago. The harvest week (October 8) parameter estimates put the yield at 50.5 bushels per acre, down 0.2 bushels per acre from a week ago. Similar to corn, this week’s heat and dryness will pressure condition ratings and could have a significant impact on the final yield.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

The heaviest precipitation over the past week fell across the northern Midwest including Wisconsin and Michigan. Most of Missouri, southern Illinois and eastern Kentucky and Tennessee also received beneficial precipitation. The eastern Corn Belt received lighter amounts. The forecast this week is for mostly dry conditions accompanied by a few days of high temperatures. Temperatures are expected to moderate next week, but the forecast remains relatively dry for the next ten days or so. If this forecast materializes, moisture stress could increase from 10% to 15% of the Corn Belt currently to 25% or more by the end of the ten-day period with Iowa and Illinois at the center of the dryness.

The US corn condition rating fell slightly last week. Nationally for corn, the percent good plus excellent decreased 1 point from a week ago 58%. The percent rated poor or very poor increased 2 points to 15%. Condition ratings declined for 13 of the 18 reporting states. Ratings fell the most for Colorado, Illinois, Kansas, North Dakota, South Dakota, Tennessee and Texas. Condition ratings improved significantly for Michigan and North Carolina. The national corn condition index eased 4 points from a week ago to 349 and compares to the 20-year average of 358.

The national soybean condition rating also fell from a week ago. The percent good or excellent held steady at 59% while the percent poor or very poor increased 1 point to 13%. State level condition ratings declined for 11 of the 18 reporting states. Condition ratings fell significantly for Illinois, Kansas, Louisianna, North Carolina and Tennessee. Condition ratings improved for Arkansas, Michigan, Missouri, and Wisconsin. The national soybean condition index rating decreased by 3 points from a week ago to 352, slightly below the 20-year average for this week at 356.

Cotton’s condition rating fell to a new seasonal low at 271. This is now the lowest condition rating at this point in the growing season on record since 1986. Cotton condition ratings in Texas continue to deteriorate with 71% of the crop rated poor or very poor. The national condition index for rice edged 2 points higher to 378, only slightly below the 20-year average of 382.

If you have any questions about this report, please contact Martyn Foreman at [email protected]

August 15, 2023


Issue 10 August 15, 2023

In This Week’s Issue

  • Corn and soybean condition ratings improved significantly.
  • WAEES’s corn yield model estimate is up from a week ago, but still below trend.
  • WAEES’s soybean yield model estimate is increased from a week ago and is now in line with the long-term trend.
  • Cotton’s condition rating is near an historic low.
  • Heat and dryness return for much of the US next week.

Corn and Soybean Yield Estimates Increase on Improving Condition Ratings

Based on the latest corn crop condition ratings, WAEES’s weekly model estimates the national corn yield at 177.2 bushels per acre, up 0.9 bushels from a week ago. The current estimate compares to 173.3 bushels per acre a year ago and USDA’s August Crop Production Report estimate at 175.1 bushels per acre. Using week 40 parameters (harvest around October 8), the model’s predicted yield is 178.2 bushels per acre, up 1.3 bushels from a week ago. The model’s performance continues to improve with August condition ratings. USDA will release their next yield estimate on September 12 and it will include field sample data from the ten-objective yield states.

The weekly yield model parameter estimates using the August 13 condition ratings estimate the national soybean yield at 51.1 bushels per acre, up 1.1 bushel from last week. The yield estimate is now in line with trend yield and close to USDA’s August Crop Production Report yield at 50.9 bushels per acre. The harvest week (October 8) parameter estimates put the yield at 50.7 bushels per acre, a 1.0 bushel per acre increase from a week ago. The soybean yield models performance continues to improve into early September and should provide guidance regarding USDA’s possible yield revisions with the September Crop Production report.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

Most of the Corn Belt received beneficial precipitation over the past week, reducing the area suffering moisture stress to about 10% of the Corn Belt. The next week is expected to be relatively dry with mostly moderate temperatures. Heat and dryness return in the 6–10-day forecast. Weather models vary, but they generally expect temperatures to moderate along with improving moisture in late August and early September.

The US corn condition rating improved for the second consecutive week. Moderating temperatures and beneficial precipitation across much of the Corn Belt boosted crop ratings. Improving condition ratings at this point in the growing season has added significance because condition ratings tend to seasonally decline during August. Nationally for corn, the percent good plus excellent increased 2 points from a week ago 59%. The percent rated poor or very poor fell 1 point to 13%. Condition ratings improved for 12 of the 18 reporting states. Colorado, Illinois, Indiana, Kentucky, Missouri, North Dakota, South Dakota and Wisconsin improved the most. Condition ratings fell significantly for North Carolina and Texas. Other states were mixed with only modest changes from a week ago. The national corn condition index rose 4 points from a week ago to 353 and is beginning to close in on the 20-year average of 360.

The national soybean condition rating also improved from a week ago. The percent good or excellent increased 5 points to 59% while the percent poor or very poor fell 2 points to 12%. Most state level condition ratings showed significant improvement with ratings increasing for 16 of the 19 reporting states. Condition ratings for Illinois increased sharply again with the index climbing 20 points to 370. Illinois’ condition index has jumped 45 points over the past two weeks. Index ratings for Iowa, Michigan, Missouri, South Dakota and Tennessee also increased significantly with state index ratings climbing by 10 points or more from last week. Ratings fell for Arkansas, Louisianna and North Carolina. The national soybean condition index rating increased 10 points from a week ago to 355 and is now only slightly below the 20-year average for this week at 358.

Cotton’s condition rating fell to a new seasonal low at 280. This is the second lowest rating at this point in the growing season since 1986, only 2011 was lower. Cotton condition ratings in Texas are plunging with two-thirds of the crop now rated poor or very poor. The national condition index for rice fell 7 points to 376. While this is the lowest national rating for rice since July 2, its only slightly below the 20-year average at 382.

If you have any questions about this report, please contact Martyn Foreman at [email protected]

August 8, 2023


Issue 9 August 8, 2023

In This Week’s Issue

  • Due to rising domestic prices, India announced additional rice export restrictions
  • WAEES’s corn yield model estimate is up from a week ago, but below trend.
  • WAEES’s soybean yield model estimate is fractionally higher from a week ago but below the long-term trend.
  • Rain and moderating temperatures have alleviated crop stress for corn and soybeans, but heat and dryness across the southern US continues to pressure cotton’s condition rating.

India Announces Rice Export Ban

On July 20, 2023, the government of India announced a rice export ban. While there was some initial uncertainty over what varieties of rice that were included, further clarification by the government indicates the export ban includes Indica white rice (long-grain white rice), while exports of parboiled and basmati rice are not affected. The recent export restrictions follow an ongoing ban on broken rice exports from September 2022. At that same time, the Indian government also announced a 20% export duty on exports of long grain white rice, paddy and husked rice. The export duty was subsequently eased for some countries including: Nepal, Indonesia, Gambia, Senegal, Bhutan and Mali. Interestingly, despite the earlier partial export ban and export duty, India’s rice exports in 2022/23 are expected to increase from the previous year to a record high 22.5 MMT.

The Indian government clearly stated that the export restrictions are being implemented in order to curb rising domestic rice prices. They cited a number of factors that are contributing the price gains, including the strong pace of Indian exports, the geo-political situation and possible negative impacts from El Niño in key rice producing and consuming countries. Exports of banned rice may still be possible, but trade of Indica white rice will be based on Government-to-Government negotiations only.

Why are India’s export restrictions important? Since 2011, India has become the world’s largest global rice exporter. Over the past three years, India’s global export share has averaged 40% of global trade with exports mainly to Asian and African countries. With the steep increase in exports in recent years, India’s exports dwarf other export competitors.

The graph below is a breakdown of India’s exports by type. India’s exports have sharply increased in recent years with broken, Indica parboiled and Indica white rice types driving the increase. The current export ban applies to broken and Indica white rice exports which account for 10 MMT of India’s total rice exports in 2021/22 at 22.1 MMT. In terms of global trade, India’s export ban represents about 18% of global trade.

The graph above shows the destination of the banned Indica white rice exports. Nearly all the export destinations are to Asian and African countries. Exports to African countries have increased sharply over the past two years.

Drivers of possible near term price volatility

India’s export restriction on Indica white rice has added upward pressure on international rice prices. Since rice is a main staple, particularly in Asia, demand could add to upward pressure on price.

About 90% of global rice production is produced in Asia and 85% of global consumption is consumed in Asia. Only about 10 percent of global production is traded. The relatively modest global rice trade could add to price volatility

Logistical challenges from switching from India to other sources which are highly concentrated on a few top exporters (Thailand, Vietnam, Pakistan and United States). In addition, there is seasonal tightening of rice availability in major suppliers, particularly in Asia where new crop rice is being planted for the harvest in September/October. Being a foodgrain, rice types are not as substitutable as other grains. Rice prices may also depend on other food grain supplies, particularly wheat, which has been tightening. How other exporting countries respond could also contribute to near-term price strength. So far other counties have not implemented export restrictions.

Longer-term price risks

How India responds to either increase or relax the export ban in the future likely depends on a number of factors. With the return of the El Niño phenomenon, bringing warmer weather in the latter part of 2023, there are concerns that winter plantings could suffer, with over 40 percent of India’s rice area being rainfed.

So far, the monsoon season has been somewhat erratic. Starting in June India experienced below normal rainfall. Rainfall improved in late-June and July, but has tapered off again in early August. Depending on how the monsoon evolves across India’s rice belts, production could fall by 5 MMT or more. On the other-hand, with favorable weather, India’s production could increase from USDA’s current 134.0 MMT production estimate and possibly challenge last season’s record production at 136.0 MMT. India’s stock-to-use ratio for rice and wheat in 2022/23 are relatively on-par with the last five-year average at 31 and 13 percent, respectively. Politically, there is a general election in April-May 2024 so the government is likely to continue to focus on rising food prices. Globally, rice ending stocks excluding China have begun to tighten, but are still above the long-term average at 16.7%.

Corn and Soybean Yield Estimates Edge Higher

Using the latest corn crop condition ratings, WAEES’s current weekly model pegs the national corn yield at 176.3 bushels per acre, up 2.0 bushels from a week ago, 3.0 bushels higher than a year ago, but still below USDA’s July WASDE yield at 177.5 bushels per acre. Using week 40 parameters (harvest around October 8), the model forecasts the yield at 176.8 bushels per acre, up 1.4 bushels from a week ago. The model’s performance continues to improve with August condition ratings. USDA will release their next yield estimate on Friday, August 11. USDA will include farmer surveys, but won’t include their field samples from the ten objective yield states until the September 12, Crop Production Report. The trade’s average pre-release yield estimate for USDA’s report is 175.5 bushels per acre for a total corn crop of 15.130 billion bushels.

Using the August 6 condition ratings, the weekly yield model parameter estimates, estimate the national soybean yield at 50.0 bushels per acre, up 0.1 bushel from last week. The yield estimate is 1.0 bushel per below the trend yield and 2.0 bushels below USDA’s July WASDE yield. The harvest week (October 8) parameter estimates put the yield at 49.7 bushels per acre. This is a 0.3 bushel per acre increase from a week ago. As we discussed with corn, USDA will release the next Crop Production report on Friday August 11. The average pre-release trade estimate for USDA’s report is 51.2 bushels per acre with total production at 4.234 billion bushels.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

About 50% of the Corn Belt received precipitation of 0.5 to 3.5 inches last week with some locally heavier amounts. The rainfall reduced the area suffering from moisture stress to 10% to 15% of the Corn Belt. The remaining dryness is concentrated mostly in northern North Dakota, northeastern Iowa, southwestern Minnesota along with some portions of southern Wisconsin and northern Illinois. Temperatures also continue to moderate. The heaviest precipitation over the next week is expected in the southeastern Corn Belt with lighter amounts in other areas. The 6-10 day forecast points to normal to below normal temperatures and normal to above normal precipitation for most of the Corn Belt. The current weather pattern is generally favorable for corn and soybean crops.

The US corn condition rating improved last week as temperatures moderated and beneficial precipitation arrived. Nationally for corn, the percent good plus excellent increased 2 points from a week ago 57%. The percent rated poor or very poor fell 1 point to 14%. Condition ratings improved for most states. Illinois, Missouri, Nebraska, North Dakota, Pennsylvania and South Dakota improved the most. Condition ratings fell significantly for Kansas, Minnesota and Tennessee. The national corn condition index rose 4 points from a week ago to 349, but remains below the 20-year average of 361.

Soybean’s condition rating also improved from a week ago. The percent good or excellent increased 2 points to 54% while the percent poor or very poor fell 1 point to 14%. While overall ratings increased, the state level ratings were mixed. Condition ratings for Illinois increased sharply with the sate index climbing 25 points to 350. Arkansas, Missouri, Nebraska, Ohio, South Dakota and Wisconsin also saw significant improvement. Ratings fell for Kansas, Louisianna, Michigan, Minnesota, Mississippi, North Carolina and Tennessee. The national soybean condition index rating increased 5 points from a week ago to 345, but is still below the 20-year average for this week at 358. The uptick in crop ratings for both corn and soybeans is significant because ratings tend to seasonally decline at this point in the summer.

Cotton’s condition rating fell to another seasonal low at 300 and is significantly below the five-year average at 329. Cotton condition ratings in Texas are under pressure with 55% of the crop now rated poor or very poor. The national condition index for rice eased edged up 3 points to 383, near the five-year average of 384.

 

If you have any questions about this report, please contact Martyn Foreman at [email protected]

August 1, 2023


Issue 8 August 1, 2023

In This Week’s Issue

  • WAEES’s corn yield model estimate is down from a week ago and well below trend.
  • WAEES’s soybean yield model estimate is down from a week ago and below the long-term trend.
  • Last week’s heat and dryness resulted in lower US crop condition ratings for corn, soybeans, cotton and rice.
  • Weather forecasts point to more moderate temperatures and normal to above normal precipitation for the US Corn Belt during August.

Corn and Soybean Yield Estimates Decline

Based on US condition ratings for corn as of July 30, 2023, the WAEES model estimates the national corn yield at 174.3 bushels per acre, down 2.1 bushels from a week ago. The current yield estimate is slightly higher than 2022’s 173.3 bushels per acre, but well below USDA’s July WASDE yield at 177.5 bushels per acre. Using week 40 parameters (harvest around October 8), the model forecasts the yield at 175.4 bushels per acre, down 1.8 bushels from a week ago. As we have noted, the model’s performance continues to improve with August condition ratings. Model estimates should be helpful in determining how yield estimates are changing week-to-week as the corn crop completes pollination and moves through the grain filling stage of the growing season during August.

Using the July 30 condition ratings, the weekly yield model parameter estimates, the national soybean yield is estimated at 49.9 bushels per acre, down slightly from last week, 1.1 bushels per below the trend yield and below USDA’s July WASDE yield at 52.0 bushels per acre. The harvest week (week 40) parameters estimates put the yield at 49.3 bushels per acre, also slightly lower than a week ago. Assuming that the current condition ratings hold steady over the next month (August 27), the weekly model estimates the national soybean yield at 50.1 bushels per acre, fractionally higher than the current estimate. As the graph below shows, the soybean crop condition model’s performance improves significantly by late August.

Corn and Soybean 2023 Crop Condition Ratings

Crop Condition Commentary

The heaviest rainfall last week fell from eastern Minnesota across Wisconsin and northern Illinois to Indiana and Ohio. A narrow band of precipitation also fell from eastern Nebraska across northern Missouri to southern Illinois. The southern and Northern Plains saw little or only light precipitation. Currently, about 20% of the Corn Belt is under moisture stress. Temperatures moderate this week with better chances for rain in the northwestern Corn Belt. The extended forecast through August (maps below) calls for normal temperatures and normal to above normal precipitation for much of the Midwest. Heat and dryness are confined mostly to the southern US. If realized, the forecast is generally favorable for corn and soybean crops.

The US corn condition rating declined last week along with the widespread heat. Nationally for corn, the percent good plus excellent fell 2 points from a week ago to 55%. The percent rated poor or very poor increased 2 points to 15%. There were large changes in condition ratings at the state level both higher and lower. Lower ratings were tied to states that experienced the most heat and dryness. The eastern Corn Belt had less heat and better precipitation. Sates that improved the most include: Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania, Tennessee and Wisconsin. Ratings fell sharply for Iowa, Kansas, Minnesota, Missouri, Nebraska, the Dakotas and Texas. The national corn condition index fell 6 points from a week ago to 345. While the condition index is far above levels experienced during the extreme drought years of 1988 and 2012, its well below the 20-year average of 363.

Soybean’s condition rating was also lower. The percent good or excellent fell 2 points to 52% while the percent poor or very poor increased 1 point to 15%. Similar to corn, the weekly condition rating changes were associated with last week’s weather pattern. Areas that were warmer and drier saw ratings fall, while ratings improved in states that has less heat and timely precipitation (mostly in the east). Condition ratings improved significantly for Indiana, Kentucky, Tennessee and Wisconsin. Ratings fell for Arkansas, Iowa, Kansas, Louisiana, Minnesota, Mississippi, North Dakota and South Dakota. The national soybean condition index rating fell 4 points from a week ago to 340 and remains well below the 20-year average for this week at 359.

Cotton’s condition rating fell to a seasonal low at 303 and is now significantly below the five-year average at 335. Cotton condition ratings in Texas are under pressure once again with 50% of the crop rated poor or very poor. The national condition index for rice eased 10 points to 380 from a season high last week.

If you have any questions about this report, please contact Martyn Foreman at [email protected]