USDA Report Worksheet and Thoughts Regarding A Recent Ag Trade Mission to China - Tuesday, 08 August 2017

The crop ratings report this week for corn showed a further decline of 1% bringing the total to 60% Good to Excellent. Harvest has begun with Texas reporting 31% complete and Louisiana is 30% harvested which is ahead of the average pace for this point of the season. Corn in Colorado and Illinois posted the biggest losses this week: Colorado fell by -8% to 58% GD/EX vs 82% a year ago and Illinois lost -5% bringing them to 58% GD/EX vs 83% just last year. Some of the other notable states from this week’s crop conditions report:

  • Indiana improved this week by +3% to 52% GD/EX vs 73% last year
  • North Dakota increased by +1% to 40% GD/EX vs 80% a year ago
  • Iowa saw further declines, now at 64% falling -1% in GD/EX vs 83% last year
  • Minnesota fell by 1% to 80% vs 85% GD/EX last year

 

 

 

 

The nation’s soybeans showed a 1% improvement to 60% Good to Excellent. Blooming was rated at 90% vs the 5-year average of 88% and 65% are setting pods vs the 5 year average of 62%, all of these advances can be attributed to cool temps found across the Corn Belt. Notable states with changes in the Good to Excellent category ratings:

  • Indiana improved by +3% to 54% Good to Excellent vs 74% last year
  • Ohio also improved by +3% to 53% GD/EX vs 52% last year
  • South Dakota saw a +3% improvement to 32% GD/EX vs 57% a year ago
  • Minnesota improved by +1% to 74% GD/EX vs 80% last year
  • Illinois saw a decrease in GD/EX of -2% to 64% vs 79% a year ago
  • Nebraska fell by -2% to 58% GD/EX vs 77% last year
  • Iowa conditions dropped by -1% to 59% GD/EX vs 82% in 2016

 

 

 

 

Thursday the USDA will announce the Supply and Demand report. The latest yield estimate will also be announced in the report and general indications have traders looking for a 4-5 bushel reduction in the corn yield from 170.7 down to 165-166 bushels per acre. A .5 bushel reduction in the soybean yield from the July report is also expected. The record number of acres planted in the U.S. and current levels of ending stocks are likely to impede an aggressive move higher in prices unless the agency shocks the trade with yield estimates considerably lower than the trade anticipates. A sustained rally will likely require a more powerful weather story to develop yet here in the U.S. or later in the year in South America.

 

August Supply and Demand Worksheet

 

U.S Grain Stocks 2016/17

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

Corn

???

2.363

2.315 - 2.436

2.370

Soybeans

???

0.399

0.285 - 0.430

0.410

U.S Grain Stocks 2017/18

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

Corn

???

1.940

1.642 - 2.324

2.325

Soybeans

???

0.433

0.346 - 0.572

0.460

Wheat

???

0.901

0.806 - 0.948

0.938

World Stocks 2016/17

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

Corn

???

227.2

224.5 - 229.5

227.5

Soybeans

???

94.4

93.5 - 95.8

94.8

World Stocks 2017/18

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

Corn

???

193.4

183.0 - 200.5

200.8

Soybeans

???

92.3

89.0 - 96.5

93.5

Wheat

???

256.8

245.0 - 263.1

260.6

U.S. Production 2017/18

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

Corn Production

???

13.807

13.529 - 14.070

14.255

Corn Yield

???

165.9

162.6 - 169.0

170.7

Soybean Production

???

4.203

4.122 - 4.346

4.260

Soybean Yield

???

47.4

46.5 - 49.0

48.0

U.S. Wheat Production

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

All Wheat

???

1.717

1.628 - 1.784

1.760

All Winter

???

1.278

1.258 - 1.293

1.279

Hard Red Winter

???

0.757

0.737 - 0.775

0.758

Soft Red Winter

???

0.306

0.300 - 0.311

0.306

White Winter

???

0.216

0.205 - 0.224

0.216

South American Production

 

Aug. Est.

Avg. Trade Est.

Trade Range

USDA July

Brazil Corn

???

97.9

97.0 - 102.0

97.0

Brazil Soybeans

???

113.8

113.0 - 114.5

114.0

Argentina Corn

???

41.0

40.0 - 44.0

41.0

Argentina Soybeans

???

57.8

 

57.0 - 58.0

57.8

 

An article from the Spokesman on August 2nd reported on the 10-day agriculture trade mission to China by Iowa Governor Kim Reynolds, Iowa Ag Secretary Bill Northey and others which began July 19th.   They report that our already large customer, China, is looking to increase imports from the U.S. in an effort to reduce the current trade deficit between the countries. A 2016 U.S. Census Department report shows that China shipped $463 billion worth of goods to the U.S. while only importing $116 billion of U.S. goods, creating a deficit of $347 billion. Chinese middle-class citizens are now demanding better food options for improved diets and the strong relationship between our former governor, Terry Branstad the now U.S. ambassador to China and the Chinese President Xi Jinping works in our favor. Gov. Reynolds reported, “They really see agriculture as being a bed-rock of the trade relationship.  And I can’t underscore the relationship between Iowa and China enough.” “It’s really a game changer for us.  We are reaping the benefits of the relationship between Ambassador Branstad and President XI.  The Chinese really know how important Iowa is in feeding their people.” Northey said that the Chinese see agricultural products as a good way to ease the political pressure over the current trade deficit. “We picked up a sense that agriculture can be one of the areas where they want to increase trade,” Northey said.  Craig Hill of the Iowa Farm Bureau Federation was also a member on the trade mission and explained that ag and industrial practices in China have created serious environmental problems.  These poor practices have reduced the productivity of the soil in many regions of the country.  Hill stated, “We can’t overestimate the magnitude of this market.  And with Iowa being a powerhouse of Agricultural production, we have a real opportunity to fill a need here.”  According to Reynolds, this is the first time that all of Iowa’s major farm organizations have traveled together on a trade mission to China.  “Some of the commodity groups have developed markets in China, some are seeing new opportunities here, and some are facing barriers that we need to resolve.  By traveling together we could really show the unity we have in Iowa agriculture.”

 

A continuation of the below normal temperatures is expected to continue for the forseeable future.  The National Weather Service forecast for 6 to 10 days also shows below normal temps from the Rockies to the Appalachians.  Much of the country is expected to receive above normal precipitation with an area of below normal expected to persist in Montana, North Dakota and northern portions of South Dakota and Minnesota.

CROP PROGRESS

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