Welcome to The Weekly Harvest, where we recap this week’s hot topics in the crop market. Here is the recap for this week:
1. U.S. Crop Progress Update
Corn is responsible for leading a downward trend after the U.S. market has turned negative over the last few weeks. The market perceives that corn could potentially gain acres and maintain yield. It’s too early to determine yield because the crop isn’t dead or fully grown, but there’s enough dryness in key growing areas to caution about potential outcomes.
The U.S. Department of Agriculture’s (USDA) weekly Crop Progress report through Sunday, May 23, 2021 showed advanced planting:
• Corn planting is at 90% (last year: 87%, five-year average: 80%).
• Soybean planting is up to 75% (last year: 63%, five-year average: 54%).
• Spring wheat is 94% planted (last year: 78%, five-year average: 85%).
• Winter wheat crop conditions were rated 47% good-to-excellent (last week: 48%, last year: 54%).
The moisture outlook also improved week-on-week, with topsoil moisture at 68% adequate-to-surplus (last week: 66%, last year: 86%) and subsoil moisture rated at 64% adequate-to-surplus (last week: 64%, last year: 87%).
Even the critically dry North Dakota reported a modest improvement with 66% of the state now short-to-very-short topsoil moisture (last week: 81%, last year: 13%) and 77% short-to-very-short subsoil moisture (last week: 81%, last year: 5%). North Dakota is still standing in stark contrast year-on-year. It’s dry and the crop needs more moisture to ensure a trend outcome. Rainfall over the weekend, while welcome, has not completely addressed the underlying drought concern. Yield-setting weather is yet to come.
2. China Stuns with New Crop Corn Purchases
China’s strong early-season demand for new crop corn further highlights its domestic feed shortage. Over the last two weeks, China has bought new crop U.S. corn at an unprecedented rate; last week’s bookings reached 5.64 MMT, which included the third-largest daily sale ever recorded to China at 1.7 MMT. Total new crop (2021/22) U.S. corn sales to China are now nearly 12 MMT – surpassing last year’s record. Last year, it took until late August 2020 to reach the current sales level seen this year in May.
The USDA is projecting annual (2021/22) Chinese corn imports at 26 MMT from all destinations, which is flat from the 2020/21 marketing year, meaning China has already secured 46% of its anticipated corn imports for the upcoming crop year.
3. Increased European Union Yield Outlook
The EU’s crop monitoring unit MARS increased its yield outlooks for winter crops. Increased yield potential in France and other southern countries outweighed cuts to yield potential in northern regions.
• Fall planted winter wheat yields are projected to increase by 3.6% compared to last year, and 3.9% above the five-year average.
• Barley yields are projected to be 0.3% above last year and 2.4% higher than the five-year average.
• The outlook for rapeseed increased slightly, going from 3.19 MT/hectare last month to 3.21 MT/hectare in this report.
Last year, a relatively short wheat crop in the EU was a catalyst for increased demand for Russia and other originations. A smaller wheat crop also increased feed usage of other grains within the EU. The EU will have a larger exportable surplus of wheat in 2021/22 relative to 2020/21. The euro remains strong, increasing the EU’s buying power while somewhat reducing the incentive to export.
4. China is at Risk of Flooding
Monsoon rainfall in China has the country bracing for floods. Chinese authorities warn that 71 rivers have already exceeded threat levels, including the Pearl and Yangtze Rivers. Monsoons will become more active in the weeks ahead, increasing the chances of overland flooding.
China experienced similar circumstances last year (the worst floods since 1998) when flooding covered a vast area of farmland and caused billions of dollars in economic losses. Flooding would hinder China’s summer crop development, which includes soybeans, corn, and rice.
Information contained herein is believed to be accurate but is not guaranteed by the parties providing it. Farm At Hand, FarmLink, and their information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.