A Look at Agriculture in Drought

Dow Jones writer Kirk Maltais reported yesterday that, “The weather forecast for the U.S. Corn Belt continues to be the main focus of grain traders in the latter half of the week.

“‘Precipitation patterns are extremely slow to shift while temperatures are now above-normal through the rest of the month; this (holiday) weekend is setting up as a crucial one with rains on the way for the Midwest, but coverage unclear as much of the corn belt could use a drink,’ said Matt Zeller of StoneX in a note.”

Maltais explained that, “Drought conditions are quickly spreading through crop-growing fields, said the USDA. In its latest weekly data, the agency estimates that 57% of the U.S. corn crop is experiencing drought, and 51% of soybeans are dealing with drought conditions.

“For both, that’s up 12% from last week, a sharp surge amid increasingly severe drought conditions in the Midwest and Plains. The spread of drought comes after the NOAA confirmed last week that El Nino is officially in force, with odds supporting the growing strength of the system.”

The Dow Jones article added that, “Most row crops in the U.S. have been planted, and are in the early stages of their growth. This makes the surge in farmland affected by drought even more of an important topic for farmers – who in some areas are facing a ‘make-or-break’ situation for their nascent crops. ‘We are currently ok but crunch time is here,’ said Brent Judisch, a farmer in Cedar Falls, Iowa.”

And today, Reuters writer Rajendra Jadhav reported that, “U.S. soybean futures extended gains on Friday to hit their highest level in nearly six weeks on yield concerns after forecasts signalled more dry weather in portions of the Midwest crop belt.

“U.S. corn and wheat futures also extended Thursday’s rally on the yield concerns.”

“A stretch of dry weather following planting season has stressed crops across the U.S. Midwest, raising concerns that the forecasted record corn and soybean harvest will fall below expectations,” the Reuters article said.

Jadhav noted that, “Traders were also monitoring headlines from war-torn Ukraine and the Black Sea grain export region.

“The Kremlin said it saw no positive prospects when it came to renewing the Black Sea grain deal given that parts of the accord affecting Russia remained unfulfilled.

Elsewhere, Dow Jones writer Yusuf Khan reported yesterday that, “Worries over dry weather in Spain and northern Europe are helping to peg back expectations of grain output in Europe this year, after last year’s corn harvest was ravaged by drought in France.”

In a closer look at grain exports, Dow Jones writer Kirk Maltais reported yesterday that, “Export sales of U.S. wheat fell below the predictions of analysts this week, according to government data.

“In its latest weekly export sales report, the Department of Agriculture reports that 165,000 metric tons of wheat were sold for the week ended June 8. Mexico and Vietnam were the leading buyers, at 47,600 tons and 42,000 tons, respectively. Only sales for the 2023/24 marketing year were reported.

“This total falls below the 200,000 tons to 450,000 tons forecast by analysts surveyed by The Wall Street Journal. Sales of corn and soybeans, meanwhile, fell within analyst predictions – at 294,400 tons and 526,900 tons, respectively, across the 2022/23 and 2023/24 marketing years.”

And Washington Post writers David L. Stern and Samantha Schmidt reported in today’s paper that, “Ukrainian fighters have retaken approximately 40 square miles of territory from Russian occupying forces, officials here said Thursday, and Kyiv’s long-anticipated counteroffensive was advancing ‘gradually but surely.'”

And Financial Times writers Joe Leahy, Thomas Hale and Andy Lin reported today that, “Five months after China’s president Xi Jinping declared victory over the pandemic and relaxed stringent social controls, new data this week revealed that the country’s economy was far from returning to full health.”