Western Midwest Heat/Dryness Vs. The ECB Moderation - The Big Question

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Market Analysis

The upcoming September 12 US Crop & Supply/Demand updates have the trade’s attention. This summer’s heat and dryness in the WCB vs the above-normal rainfall in the southern half of the ECB and the Mid-South has diverse expectations surfacing across the Central US. A late USDA announcement they would utilize 2022’s delayed FSA sign- up & prevent plant data from August in their crop area levels has added last-minute uncertainty about 2022’s US-harvested corn & bean acres. Last month’s Midwest Crop Tour revealed some significant yield impacts to the crops west of the Missouri River while the eastern Midwest’s late plant- ings curtailed their field yield results vs 2021. The USDA’s initial 10-state field data will primarily be population counts.

Given the weather and the tour field data, NE, SD, KS, and W & S IA corn yields could reduce the WCB yields by 6.6 bu. Tour results from the ECB suggest a 2.7 bu lower average yield vs August while the SW and SE dip slightly.

Overall, a 171 bu US average yield is expected while the trade’s wire service average is 172.5 bu, down 2.9 bu from last month’s USDA estimate. The trade is expecting a modest 152,000 smaller harvested acres and a 14.09 billion bu crop vs our crop size of 13.995 billion this month. These smaller supplies tighten the US 2023 ending stocks to 1.175 billion bu. with a modest decline in exports. Last month’s FSA acreage data suggests a possible 300,000 larger harvested area to us while the trade’s average estimate is for just a 77,000 increase. However, 2022’s below-normal rainfall west of the Mississippi River has us projecting just a 51.2 bu US trendline yield even with average pod numbers. This could produce a 50 million smaller crop at 4.48 billion bu. Slow exports this summer and larger S Am crops could reduce this US demand and keep new crop US stocks at 240 million, down 5 million bu.

With no US wheat crop updates, the Black Sea conflict, the US winter wheat seedings & the world’s wheat crops will be watched closely after dryness has curtailed Europe, the US winter wheat, and Argentina’s crops so far in 2022.

What’s Ahead:

The impact of the drought on the western Midwest’s crops on 2022’s overall US corn and soybean outputs and stocks has the trade’s attention. This report along with S America’s seeding progress and the Black Sea’s export output will be market factors as the US fall harvest begins to pick up speed. Hold new-crop soybean sales at 45%, corn at 33% & wheat at 25%.

More By This Author:

US ECB Corn & Bean Counts Couldn’t Cover WCB Heat/Dryness
Weather Remains A Big US Corn And Soybean Yield Factor
Weather May Nip Corn & Soy Yields, But Will Resurvey Show More Beans?

Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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