Drought conditions continuing to have an impact
By Colin McNaughton
Farms.com Risk Management Intern
This week there are 5 key reports to watch that could have significant impacts on commodity markets the week of August 13th, 2023. This Farms.com column tracks key events in commodity marketing impacting the agriculture industry! The series of article shares issues to watch the following week, issues that may have an impact on commodity prices in the coming weeks.
1. The weekly USDA crop progress report will be released on Monday, August 14th. The recent report showed slight improvements in both U.S. corn and soybeans as both dropped 1% in poor to very poor ratings, now at 14% for both. Subsoil short-very short moisture levels also fell by 1% throughout the U.S. to 48%. This was led by a significant decrease in the VS-S conditions in Illinois, dropping 14%, from 47% down to 33%. The second week outlook is adding more dryness and heat, which will make it difficult to see continued momentum in the upcoming reports.
2. Next week's reports will include the USDA grains inspected for export on Monday, August 14th, EIA ethanol data on Wednesday, August 16th, and the USDA weekly export sales on Thursday, August 17th. After a solid report last week, this week’s grains inspected for export numbers were far below last weeks numbers, as well as the numbers for this time last year. Corn inspections came in at 376 tmt, much lower than last week's 538 tmt and last years 555 tmt.
Wheat inspections, which have been strong when compared to corn and soybeans so far this year, came in at 275 tmt, 47% of last week's number and just 43% of last year. Soybeans were not even in the same ball par as last year's numbers, as inspections came in at 281 tmt this week, just 32% of inspections at this same time last year. A rebound is necessary next week if we are to close the gap between the current and prior year.
3. The U.S. drought monitor map will be updated on Thursday, August 17th. The recent update showed little change in the U.S. as a whole, as the only change greater than 1% was in D1 conditions, which increased by 2.38% up to 30.46%. The significant changes came in the “i” states, as Illinois saw a 30% reduction in the D1 drought area, and an 11% reduction in D2, down to 27% and 2% respectively. Indiana saw a 13% reduction in D1 conditions and 23% was removed from any level of drought. Iowa still remains at 100% affected by drought, this marking 5 straight weeks with no relief from drought.
MN and WS also remain dry but local crops tours are suggesting big crops as timely rains and genetics could surprise to the topside in yields with July precipitation in U.S. corn belt at 3.84 inches, the 49th wettest, if we get a good finish to the growing season.
4. The July U.S. CPI inflation was reported at 3.2%, 0.2% higher than June, putting the downward trend on pause as the prior 12 months saw decreases in inflation. The trend towards higher U.S. interest rates may not be over yet.
For Canadian readers, Statistics Canada will be releasing the July Consumer Price Index on Tuesday, August 15th. The June CPI data showed inflation was 2.8%, the first time that inflation in Canada started with a 2 since March 2021.
5. The monthly USDA Cattle on Feed report will be released next week on Friday, August 18th. The July report showed cattle and calves on feed for the slaughter market for feedlots of 1000 or more head totalled 11.2 million, 2% below the prior year. The number for June was 11.6 million, which was 3% below June 2022. These numbers typically take a dip in august, so seeing a number higher than 11.2 million is unlikely.
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