Latest on Russia-Ukraine conflict. Ukraine announced a high-profile prisoner swap early Thursday that was the culmination of months of efforts to free many of the Ukrainian fighters who defended a steel plant in Mariupol during a long Russian siege. In exchange, Ukraine gave up a prominent ally of Russian President Vladimir Putin...pro-Russian opposition leader Viktor Medvedchuk, who is Ukrainian...and 55 other prisoners.
Putin has doubled down on his war against Ukraine, ordering a partial mobilization of reservists and warning that his country is willing to use its nuclear arsenal if Russian territory is attacked.
Putin’s definition of what is and isn’t Russian territory is about to change to include large swaths of Ukraine. He used a televised speech yesterday to declare his support for stage-managed referendums that Russian-installed officials are planning to carry out later this week in the Donetsk, Luhansk, Kherson and Zaporizhzhia regions, which would open the way for Russia to illegally annex the areas.
Putin’s speech followed weeks of battlefield defeats that have seen the Ukrainian army drive Russian forces completely out of the eastern Kharkiv region.
In a speech at the United Nations later in the day, Ukrainian President Volodymyr Zelensky said he would “rule out” making concessions in exchange for Putin stopping his invasion. Zelensky said the only peace terms Ukraine would agree to would see Russian forces driven out of all Ukrainian territory, Moscow forced to pay Kyiv compensation and Ukraine’s security guaranteed by the international community.
Seasonal drought outlook unfavourable for US winter wheat. The latest seasonal drought outlook from the US Climate Prediction Center continues to paint a worrisome picture for the 2023 US winter wheat crop, as well as parts of the Midwest. As can be seen on the map below, drought is expected to persist or expand through the September-December period across much of the southern US Plains, including the No. 1 winter wheat production state of Kansas, where the planting of next year’s wheat crop is now underway. Meanwhile, the dryness that afflicted large portions of the western Corn Belt this summer also appears poised to continue.
The central and southern portions of the High Plains “remain entrenched in moderate to exceptional drought,” the outlook said, although it did add that recent weather systems did bring some localized relief to portions of Colorado, Wyoming and western South Dakota.
In general, however, drought conditions have worsened across parts of South Dakota, Nebraska and Kansas, with the most significant drought impacts existing across Nebraska and Kansas, the outlook said. As of Sunday, topsoil moisture in Kansas was rated 84 per cent short to very short, while Nebraska was rated 80 per cent short to very short. Iowa topsoil moisture was rated 42 per cent short to very short as of Sunday.
Exchange cuts Argentine corn, wheat crop forecasts amid drought. The Rosario Grain Exchange cut its Argentine wheat crop estimate by 1.2 million tonnes to 16.5 million tonnes as drought has trimmed yield potential. It now forecasts the country’s 2022-23 corn production at 56 million tonnes, down 2 million tonnes from the previous outlook as drought has delayed planting of the crop. The exchange raised its soybean crop forecast by 1 million tonnes to 48 million tonnes as it now expects 494,000 hectares originally intended for corn to be switched to soybeans.
Brazil's wheat crop estimate revised up. Brazilian wheat production should total 10.935 million tonnes in 2022 as four states are likely to increase output in what will be a record season for local farmers, according to agribusiness consultancy Safras & Mercado on Wednesday. The new estimate represents an increase from the 10.5 million tonnes previously expected.
India's summer-sown rice output expected to fall 2022-23. India's summer-sown rice output is expected to fall 6 per cent in the 2022-23 crop year, according to the Ministry of Agriculture & Farmers' Welfare forecast, as patchy monsoon rains in the country's east hit planting and crop yields. Farmers in India, the world's second-biggest rice producer, are likely to harvest 104.99 million tonnes of rice in the crop year that began in July 2022, down from 111.76 million tonnes a year earlier. The government had earlier set a target of 112 million tonnes for the current crop year's summer-sown rice output.
After uneven monsoon rains in eastern India raised concerns about output, the government of Prime Minister Narendra Modi earlier this month banned export sales of 100 per cent broken rice and slapped a 20 per cent export tax on brown and white rice. India accounted for 41 per cent of total global exports of the commodity in 2021, larger than the next four exporters combined.
However, India is considering allowing the overseas shipment of some rice cargoes stuck at ports. India's recent move to curb rice exports trapped around 1 million tonnes of grain at ports.
Malaysia's palm oil stocks could hit 3.5 year high as Indonesia boosts exports. Malaysia's palm oil stocks could rise to a 3.5 year high by the end of 2022 as exports are likely to take a hit from rival Indonesia waiving export levies to bring down stockpiles, a senior government official told Reuters. Indonesian producers are moving to lighten their stocks at cheaper prices after Jakarta recently extended its export tax waiver to Oct. 31 in a reversal of course from an export ban in May that had shut them out of global trade.
India's palm oil imports to jump on rising demand, lower prices. India's palm oil imports in 2022-23 could jump 9 per cent from a year earlier on a rise in domestic consumption and as competitive prices allow the tropical oil to regain its share in the world's biggest market, a Reuters survey showed. The higher buying could help top producer Indonesia in bringing down ballooning inventories and support benchmark Malaysian palm oil prices.
Palm oil imports in the new marketing year starting from Nov. 1 could rise to 8.4 million tonnes from 7.7 million tonnes this year, according to the average estimate of nine dealers and one industry official polled on the sidelines of the Globoil conference in Agra. "Consumption will improve in the new year as prices have corrected and demand has also been rising with opening up of the economy," B.V. Mehta, executive director of Solvent Extractors' Association of India, said. Indian demand weakened this year due to COVID lockdowns and record high edible oil prices, he said.
Putin mobilizes more troops for Ukraine war, threatens enemies. Russia last night announced the immediate call-up of as many as 300,000 military reservists, as the fighting in Ukraine reaches almost seven months and Russian troops lose ground on the battlefield. Russian President Vladimir Putin announced the move in a televised address to the nation. It is Russia’s first mobilization since the Second World War.
Putin also warned the West that he isn't bluffing over using all the means at his disposal to protect Russia's territory, an apparent reference to Russia’s nuclear arsenal. "If the territorial integrity of our country is threatened, we will use all available means to protect our people...this is not a bluff," he said.
British Defence Secretary Ben Wallace, in a statement, called Putin's mobilization announcement "an admission that his invasion is failing."
Putin also gave his explicit support to referendums that will be held in coming days in swathes of Ukraine controlled by Russian troops...the first step to formal annexation of about 15 per cent of Ukrainian territory. The West and Ukraine have condemned the referendum plan as an illegal sham and vowed never to accept its results. But by formally annexing Ukrainian territories, Putin would essentially be daring the NATO allies to risk a direct military confrontation with Russia, with Putin giving himself the potential pretext to use nuclear weapons from Russia’s arsenal.
Also Wednesday, Russian Defence Minister Sergei Shoigu said 5,937 Russian troops have been killed in Ukraine. Western estimates of Russian military losses stand at tens of thousands.
Putin may block renewal of Ukraine export deal. The deal that allowed Ukrainian grain exports through three Black Sea ports was for 120 days, after which it must be renewed. Ukrainian Foreign Minister Dmytro Kuleba predicted Russian President Vladimir Putin will probably try to block the renewal of the deal.
Ukraine’s wheat crop could fall 1 to 3 million tonnes due to less planted acreage. Ukraine’s 2023 wheat crop may decrease to 16 million tonnes to 18 million tonnes, down from 19 million tonnes this year due to an expected fall in the winter wheat sowing area, first deputy agriculture minister Taras Vysotskyi said on Tuesday. Ukrainian ag officials have said the area under winter wheat could fall by at least 20 per cent due to Russian occupation of some areas of the country as farmers prefer to sow oilseeds that have stable export demand. The area sown to winter wheat for 2023 could total around 8.4 million acres, 10.5 per cent less than the ag ministry expected in late August, a report of Barva Invest consultancy showed.
Consultant expects big increase in South American soybean, corn production. Crop consultant Dr. Michael Cordonnier initially projects South American soybean and corn production at the following levels:
- South American soybean production of 211.0 million tonnes, up 38.3 million tonnes (21.3 per cent).
- Brazil soybean production of 151.0 million tonnes, up 25 million tonnes (19.8 per cent).
- Argentina soybean production of 50 million tonnes, up 6 million tonnes (13.6 per cent).
- Paraguay soybean production of 10.5 million tonnes, up 6.3 million tonnes (150 per cent).
- South American corn production of 187.5 million tonnes, up 11.6 million tonnes (6.5 per cent).
- Brazil corn production of 125.5 million tonnes, up 9.5 million tonnes (8.2 per cent)
- Argentina corn production of 55.0 million tonnes, up 2.0 million tonnes (3.8 per cent)
- Paraguay corn production of 5.0 million tonnes, unchanged.
While the initial production outlook is strong, Cordonnier says with La Niña still present, it could impact South American crops for a third year in a row.
Consultant cuts US corn, soybean crop estimates. Crop consultant Dr. Michael Cordonnier lowered his US corn and soybean yield estimates given highly variable early corn yields and the hot, dry end to the growing season across areas of the Corn Belt. Cordonnier cut his corn yield by 1 bushel per acre to 169 bushels per acre, which lowered his production estimate to 13.60 billion bushels versus USDA at 13.944 billion bushels). He cut his soybean yield by 0.5 bushel per acre to 50.0 bushels per acre, which dropped his production estimate to 4.33 billion bushels (USDA at 4.633 billion bushels).
Indian rice shipments stuck at ports. At least 20 ships are waiting to load around 600,000 tonnes of rice at Indian ports as New Delhi's surprise export restrictions have trapped cargoes for nearly a fortnight, forcing sellers to pay demurrage charges, industry officials told Reuters. India banned exports of broken rice and imposed a 20 per cent duty on exports of various other types on Sept 8, as the world's biggest exporter of the grain tries to boost local supplies and calm prices after below-average monsoon rainfall curtailed planting. The surprise move trapped cargo that was moved to the ports or was in transit before the government made the announcement.
Apart from 600,000 tonnes rice that is waiting for the loading at berthed vessels, a further 400,000 tonnes of rice is stuck at port warehouses and container freight stations even though contracts are backed by letters of credit.
India exports rice to more than 150 countries and any reduction in shipments would increase upward pressure on food prices, which are already rising because of drought, heatwaves and Russia's invasion of Ukraine.
Taiwan signs letters of intent to buy nearly $3 billion of Iowa corn, soybeans. Members of a Taiwanese trade mission signed letters of intent to buy between 96 million and 107 million bushels of U.S. soybeans and 59 million bushels of US corn in 2023-24 at a ceremony in Iowa. Those purchases would be valued at around $2.6 billion.
Yara says to halt Belgian fertiliser unit in the coming days. Norway's Yara, one of the world's largest fertiliser makers, said it will halt output at its Belgian unit "in the next few days", as part of a wider European reduction plan linked to soaring gas prices. Fertilisers require large amounts of energy to be produced. The surge in gas prices has prompted several manufacturers, including Yara, to cut production. Yara said in August it intends to cut ammonia production by 65 per cent and ammonium nitrate (AN), used in agriculture as a fertiliser, by 35 per cent.
- Farmers’ grain deliveries pick up speed... The amount of grain in storage at Prairie elevators is growing quickly, following consecutive weeks of brisk producer deliveries across the West. According to the Grain Monitoring Program, managed by Edmonton-based Quorum Corp., producer deliveries to country elevators in Week 5 of the 2022-23 crop year exceeded 1.5 million tonnes. According to GMP, that pushed grain stocks in-store at country elevators up to 3.3 million tonnes or 61 per cent of working capacity, compared with 2.4 million tonnes or 43 per cent of working capacity a week earlier.
Quorum president Mark Hemmes said producer deliveries have been flowing into country elevators at a steady pace. The question that supply chain partners are asking now is: how well will the railways respond? “Last year, even though we had a crop that was 40 per cent smaller than normal, railway performance was not stellar,” Hemmes said. “But I’m cautiously optimistic that things will get better. The issue this year is really going to be about crews. And they (the railways) are making earnest attempts to get their staffing levels back up to where they need to be.”
According to Hemmes, grain industry sources are expecting good crop volumes across most of Western Canada this year. Overall harvest volumes should be in line with the three-year average, marking a return to more normal rail service demand from commercial grain shippers. “Some of the grain companies are thinking the total grain supply is going to be north of 80 million tonnes,” Hemmes said.
Final rule on canola/rapeseed oil RFS pathways at OMB. The U.S. Environmental Protection Agency (EPA) sent the Office of Management and Budget (OMB) its final rule on Renewable Fuel Standard (RFS) pathways for certain biofuels produced from canola/rapeseed oil. It deals with the analysis of the lifecycle greenhouse gas (GHG) emissions associated with diesel, jet fuel, heating oil, naphtha and liquefied petroleum gas produced from canola/rapeseed oil via a hydrotreating process. There were 34 comments filed on EPA’s proposal that canola derived renewable diesel, jet fuel, heating oil, naphtha and liquified petroleum gas as meeting the lifecycle GHG emissions reduction threshold of 50 per cent required to qualify as advanced biofuels and biomass-based diesel under the RFS.
Bunge to sell oilseed processing business in Russia. Ag commodities trader Bunge said it has agreed to sell its oilseed processing business in Russia to Karen Vanetsyan, the controlling shareholder of Exoil Group. The sale includes the sunflower processing plant in Voronezh. Bunge and its rivals ADM, Cargill and Louis Dreyfus...part of the so-called ABCD quartet of global grains traders...had begun scaling back their Russian operations in March, following the country's invasion of Ukraine. The company has been scaling back its Russian grain trading activities in recent years, including the sale of its Rostov grain export terminal last year.
Avian influenza spreading across Western Canada. There has been an increasing number of cases of avian influenza across Western Canada. According to the Canadian Food Inspection Agency (CFIA), as of September 14, there are 19 infected premises in Alberta, 9 in BC, 8 in Saskatchewan, and 3 in Manitoba. Nearly 1.5 million birds have been impacted in those four provinces over the course of the outbreak. Ontario currently has 8 infected premises.
More cases are expected to pop up in the coming weeks, according to Lisa Bishop-Spencer, director of brand and communications for Chicken Farmers of Canada. “It's something that we've had in the past but we've never had it in multiple provinces. So we're now dealing with a situation this year where we have a highly pathogenic virus. The virus is coming into the farm in its highly pathogenic form, whereas it used to come in a low pathogenic form and then it will mutate to high pathogenic...This is the first time that we've dealt with this issue. It's highly pathogenic among wild birds themselves. Usually those migratory birds, the geese and the fowl, that migrate, usually carry that virus in its low pathogenic form but it's actually killing those birds as well. We're dealing with something entirely new. It's a new experience for everyone and it's very stressful for farmers."
Hottest August on record for North America and Europe. Last month brought severe drought, wildfires and sweltering-hot temperatures to many parts of the world, including North America and Europe...two areas that saw their hottest-ever Augusts on record, according to a new US National Oceanic and Atmospheric Administration (NOAA) report. Overall, NOAA said, record-warm temperatures encompassed a whopping 8.2 per cent of the world’s surface last month. Both Europe and China saw their warmest-ever summers, while North America had its second-warmest summer. Globally, this year ranked as the sixth-hottest August ever recorded since 1880, when it first began collecting such data.
U.S. rail strike averted for now. U.S. railroads and unions reached a tentative agreement last week that included a 24 per cent wage increase over five years (2020-2024), including 14.1 per cent effective immediately, as well as five annual $1,000 payments. Union members must now ratify the deal. Even if union votes fail, the deal includes language removing for several weeks the potential of a work stoppage. The deal, if approved, could raise shipping costs as railroads try to recoup their added labor costs. But it could also improve service, which has suffered from capacity and labor shortages.
Ukrainian grain shipments continuing. Through Saturday, a total of 165 ships with 3.7 million tonnes of agricultural products on board had left Ukrainian ports since Aug. 1 under the grain export deal, the country’s infrastructure ministry said. Another 10 ships carrying 169,300 MT of grain departed Ukrainian ports on Sunday.
Ukraine expects a 2022 grain crop of 50 to 52 million tonnes, unchanged from its previous estimate and down from 86 million tonnes last year, the country’s ag ministry said on Monday. The ministry expects grain exports to total between 5.4 and 5.5 million tonnes this month, up from 4.5 million tonnes in August.
Firm raises Russian wheat crop forecast. Russian ag consultancy IKAR raised its forecast for Russia’s 2022 wheat crop by 2 million tonnes to 99 million tonnes. IKAR says Russia will have 47.5 million tonnes of wheat available for export in 2022-23.
Gentle start to fall forecast for most of Canada. If the Weather Network’s official autumn forecast is accurate, an open fall is in the cards for many Canadian farmers this year. Released this week, the forecast suggests a “gentle start” to the fall season for most of Canada, with extended periods of pleasant weather deep into October. However, things are likely to change after that, with periods of more typical late-fall weather in November, which will include snow for many parts of the country.
Along with relatively warmer temperatures, the early fall is also expected to bring drier-than normal weather to much of Manitoba and Saskatchewan...bad news for those areas still struggling with the remnants of the 2021 drought. However, more normal fall weather is expected to begin in late October and November, with overall precipitation for the season forecast to end up near normal.
The forecast for Alberta is much the same, featuring a warm, dry start and then more typical fall weather later, along with mostly normal precipitation amounts.
Russia ready to export free fertilizer. Russian President Vladimir Putin said Europe had only “partially” removed sanctions that Moscow says block its ability to sell and send fertilizers around the world. He said Russia was ready to provide more than 300,000 tonnes of Russian fertilizers stuck in European ports to the developing world for free. He also said Russia was increasing grain exports, without providing any specifics.
Russian wheat export tax declines again. Russia’s wheat export tax for Sept. 21-27 will be 2,668.3 rubles (US $44.45) per tonne based on an indicative price of $311.90. That’s down from a rate of 2,962.9 rubles per tonne the previous week and the sixth straight weekly decline.
Coceral cuts EU wheat, corn production forecasts. European grain trade association Coceral cut its 2022 EU wheat production forecast by 2.5 million tonnes to 143 million tonnes, which would be down 400,000 MT from last year. The group slashed its forecast for EU corn production by 14.1 million tonnes to 66 million tonnes previously due to hot, dry weather in key growing countries.
Argentina wheat farmers abandon some lots due to drought. Argentine wheat farmers are starting to abandon some lots of wheat due to prolonged drought, the Buenos Aires grains exchange warned, a worry for the grains producing South American nation as growers grapple with a lack of rain. The exchange estimates 2022/23 wheat planting area at 15.1 million acres, though said in a report that some "farmers have begun to give up harvestable area" of wheat due to the dry spell. Wheat planting was completed months ago with harvesting expected to start in late October and November.
Argentina's main farming zones are facing the driest conditions in around 30 years, agricultural and weather experts told Reuters, raising fears about a new "great drought" and also stalling planting of corn. The vast Pampas plains of Argentina are hitting the start of the corn planting season after almost no rainfall in some four months. Forecasts predict more dry weather ahead with scarce showers. The country is the world's top exporter of processed soyoil and meal, the No. 3 for corn and a key exporter of wheat.
NOPA August crush falls short of expectations. Members of the US National Oilseed Processors Association (NOPA) processed 165.5 million bushels of U.S. soybeans in August, which was just shy of the 166.1 million bushels analysts on average expected. The crush pace slowed 2.8 per cent from July, but was up 4.2 per cent from August 2021. NOPA implies the full August crush at 175.4 million bushels. If that is confirmed, it would push the 2021-22 total to 2.204 billion bushels, just 1 million bushels shy of USDA’s forecast. US soyoil stocks at the end of August totaled 1.565 billion pounds, 93 million pounds lower than the average pre-report trade estimate.
Dozens of grain ships remain stuck at Ukrainian ports. Around 82 ships remain stuck around Ukrainian ports despite the opening of a United Nations-backed sea corridor to ship grains, according to shipping industry officials. The agreement only involved dry bulk ships around three Ukrainian ports with dozens of other vessels including oil tankers not able to access the corridor and awaiting approval to leave while waterways remain controlled by Russia and other ports are blocked by Ukraine. The head of the International Chamber of Shipping (ICS) had discussions with UN shipping agency the International Maritime Organization to speed up matters on getting other ships moving but noted “it’s not easy and a complicated matter.”
U.S. railroads reach tentative deal with workers. Major US railroads and unions representing 115,000 of their workers reached a tentative agreement giving them better pay and improved working conditions, U.S. President Joe Biden said in a statement this morning. Biden administration officials on Wednesday night hosted labour contract talks to avert a potential rail shutdown that could disrupt cargo shipments and impede grain, fertilizer and fuel supplies.
The U.S. Department of Labor, in a separate statement early Thursday, said the tentative agreement followed “20 consecutive hours” of negotiations. Without offering details, it said the deal “balances the needs of workers, businesses and our nation’s economy.” A disruption to rail service “would have had catastrophic impacts on industries, travelers and families across the country,” the DOL added.
Details of the tentative agreement have not been shared, and could still be voted down by members who need to ratify the deal to settle the matter. Earlier this week, two unions rejected proposed tentative agreements brokered by labor leaders, indicating broader anger among union members about the deal proposed by Biden’s board.
UN chief, Putin discuss grain, fertilizer exports. United Nations Secretary-General Antonio Guterres said he spoke with Russian President Vladimir Putin on Wednesday about the Black Sea grain export deal and other issues, including current obstacles to exports of food and fertilizers from Russia. Guterres said it was “absolutely essential” that obstacles to the export of Russian fertilizer were overcome.
Europe slashes fertilizer production. Carnage in Europe’s nitrogen fertilizer market is exacerbating the run-up in North American prices but that could change in a heartbeat. “Buckle up for the ride,” said Josh Linville, analyst with StoneX. “I hate to say it, but I think volatility is here to stay for the foreseeable future.”
The European Union’s nitrogen fertilizer output is being slashed by an estimated 400,000 to 500,000 tonnes per month, according to an Argus Media analysis. It started with shutdowns in Poland, but has since spread across the region as companies such as Achema, Yara and Borealis shutter their plants. The curtailment includes urea, ammonium nitrate, calcium ammonium nitrate and urea ammonium nitrate (UAN) plants. “By a conservative estimate, Europe will soon be operating less than half of its installed capacity to produce these products...unprecedented even for the seasonally low demand period over summer,” stated the company in its recent Argus Insight: Fertilizers report.
European-wide urea production is operating at one-quarter of normal capacity. Only 2 million tonnes of the region’s 8 million tonnes of production capacity are expected to remain operational. Linville thinks the situation is even more dire. He believes the EU is operating at 20 per cent of its overall production capacity. “We’ve lost Europe. We’ve lost an entire region,” he said. That means the EU will be a fierce competitor for available supplies in the export market, which will be reflected in prices.
Prices have already climbed substantially over the summer. The average price for urea on a barge in New Orleans has risen to US $711 per short ton, up from $470 in the middle of June. Linville thinks there could be even more upside if the EU curtailments continue.
The key driver of Europe’s nitrogen fertilizer woes is Russia’s shutdown of the Nord Stream 1 natural gas pipeline. Natural gas is the most commonly used feedstock to make ammonia and urea.
The flipside of it is Europe can change in an instant. If the pipeline to Europe starts flowing again, nitrogen fertilizer prices around the world would fall sharply and quickly. In the meantime, Europe is going to be scrambling to source nitrogen fertilizer products from around the world and it will likely get the volumes it needs.
The major urea reserve capacity is located in China, which has been suppressing exports since last year to avoid domestic price inflation. That policy shows no sign of changing.
Firm raises EU wheat crop forecast, but cuts export outlook. Strategie Grains raised its outlook for the 2022-23 EU wheat crop by 800,000 tonnes to 124.1 million tonnes, though that would still be 4.4 per cent lower than the previous year. However, it cut the EU wheat export outlook by 300,000 tonnes to 28.7 million tonnes. That would be virtually in line with 2021-22 shipments.
Kazakhstan lifts restrictions on wheat, flour exports. Kazakhstan’s ag ministry lifted restrictions on exports of wheat and flour as of Sept. 14. Exporters are now freely allowed to sell wheat and flour onto the world market. Previous quotas were originally expected to run through Sept. 30.
Deepening China/Russia ties. Chinese President Xi Jinping and Russian President Vladimir Putin are set to meet today in Samarkand, Uzbekistan, in their first face-to-face meeting since Russia invaded Ukraine Feb. 24. The Kremlin said the two leaders are expected to discuss Taiwan and the war in Ukraine.
Prairie drought concerns rebound in August. Echoes of last season’s devastating drought returned across portions of Western Canada last month, as rainfall dried up and the mercury climbed. The latest monthly update of the Canadian Drought Monitor showed 52 per cent of Prairie farmland was being impacted by abnormally dry or drought conditions as of the end of August, up 10 points from July and above 39 per cent in June and 44 per cent at the end of May.
Central Alberta and western Saskatchewan received less than 40 per cent of normal monthly precipitation, with large portions of both provinces receiving less than 15 mm of precipitation all month. Temperatures across the region were also reported above normal, with the highest temperatures in Alberta, including some areas at more than 5 degrees C higher than normal.
The warm dry weather resulted in the expansion of abnormally dry and moderate drought conditions in the areas surrounding Edmonton, Calgary and Medicine Hat as well as further north in the Peace River Region. And while much of south and central Alberta received ample precipitation in June and July, both short- and longer-term moisture concerns remained, particularly south of Calgary and along the Rocky Mountains.
Meanwhile, Saskatchewan maintained an east-west divide of conditions in August, as western portions of the province remained dry while eastern parts continued to receive adequate moisture. Southwestern Saskatchewan received less than 20 mm of precipitation in August, less than half of what is typically expected.
Given both shorter and longer-term moisture deficits as well as heat impacts, a pocket of severe drought was expanded from Saskatoon towards Leader, Swift Current and Gravelbourg in the southwest. Nearby moderate drought and abnormally dry conditions also increased across much of this corner of the province. Additionally, abnormally dry and moderate drought conditions remained across northern parts of the province as moisture deficits between 25 per cent to 75 per cent below normal were reported in the last three months.
Short-term impacts from hot, dry conditions in August impacted western Manitoba as well, including the communities of Melita and Swan River where premature crop ripening, reduced yields, and increased grasshopper populations were reported. As a result of these impacts and a lack of short-term moisture, two small pockets of abnormally dry conditions developed, the monitor said.
UN proposes deal to transport Russian ammonia through Ukraine. A deal proposed by the United Nations (UN), which was first reported by the Financial Times, would allow ammonia to be exported from Russia through Ukraine and then onto global markets. Under the proposal, ammonia gas owned by Russian fertilizer producer Uralchem would be brought via pipeline to the Russia-Ukraine border. There it would be purchased by US-headquartered commodities trader Trammo, who would then own the ammonia as it travels across Ukraine, paying Ukraine pumping fees and transit fees, and sell it onto world markets from Ukraine’s Black Sea, according to the proposal.
The ammonia deal could give Russia more reason to stick with the agreement allowing Ukraine to export its grain supplies from Black Sea ports. A Western diplomat told Reuters, “By having a key Russian company export through the same Black Sea corridors that the Ukrainian grain is going through stabilizes the arrangement and could lead to a longer term extension of the agreement.
The diplomat said Ukraine had asked for other exports to be facilitated through their ports. A pipeline, which transports ammonia from Russia’s Volga region to the Ukrainian Black Sea port of Odesa, was built about 40 years ago and is designed to pump up to 2.5 million tonnes of ammonia per year.
JPMorgan: Soft landing more likely than recession. A soft landing is becoming a more likely scenario for the global economy than a recession, which should help boost risky assets, according to strategists at JPMorgan Chase. The avoidance of a global recession, along with moderating inflation and wage pressures among other factors, should continue to provide tailwinds for risky assets, the bank’s global strategy team added in a note Monday.
Within equities, the firm favors cyclical stocks, which it said should benefit from the gradual easing of inflation. They also like small-cap stocks and remain bullish on China and emerging-market stocks.
“The data appear to be increasingly supportive of a soft landing (rather than global recession), given moderating inflation and wage pressures, rebounding growth indicators, and stabilizing consumer confidence,” they said.
Consultant lowers US corn, soybean production forecasts. Noted crop consultant Dr. Michael Cordonnier made no changes to his US corn or soybean yield forecasts, which remained at 170 bushels per acre and 50.5 bushels per acre, respectively. For corn, he lopped another 300,000 acres off USDA’s harvested acreage estimate, which lowered his production forecast to 13.68 billion bu. For soybeans, Cordonnier is using USDA’s harvested acreage figure for now, which trimmed his production forecast to 4.37 billion bu.
Ukraine may cut winter grain acreage by at least 30 per cent. Ukrainian farmers are likely to cut the winter grain planted area by at least 30 per cent because of a jump in prices for seeds and fuel, combined with a low selling prices of their grain, the Ukrainian Agrarian Council (UAC) said on Monday. “The main reasons that suggest farmers will reduce planted areas are the high cost of fertilizers, problems with the sale of grain, as well as too low purchase prices for agricultural products,” UAC said.
Russia’s war with Ukraine hurting its own ag sector. Signs have surfaced that Russia’s invasion of Ukraine, which has been damaging to global food security, is hurting its own farm sector. Some of Russia’s top grain exporters are losing their market share and shipments have been down to start this new marketing season. Sanctions haven’t targeted trade in food and fertilizers specifically, but some buyers, insurers and shippers are nonetheless wary of doing business with Russian firms.
Bloomberg notes there are questions over Russia’s ability to sustain agricultural production amid sanctions on critical imports of farm inputs. According to a confidential internal report obtained by Bloomberg News, fully 99 per cent of poultry production and 30 per cent of Holstein dairy cattle output depends on imports, while seeds for staples like sugarbeets and potatoes are mostly brought in from outside the country, as are fish feeds and amino acids.
French corn crop ratings fall for ninth week in a row. French corn crop conditions declined for a ninth consecutive week last week, data from farm office FranceAgriMer showed on Friday, in a further sign of damage from a hot, dry summer in the European Union's biggest producer. An estimated 43 per cent of French corn crops were in good or excellent condition by Sept. 5th, down from 45 per cent the previous week, the data showed. Corn is among the crops most exposed to France's worst drought on record, which has been exacerbated by successive heatwaves that have also fanned wildfires. The crop's condition has declined rapidly. This week's 43 per cent good/excellent rating compares with 89 per cent a year earlier and is now about half the 84 per cent on July 4.
India's rice export curbs trap 1 million tonnes at ports as buyers refuse to pay duty. Rice loading has stopped at Indian ports and nearly 1 million tonnes of grain are trapped there as buyers refuse to pay the government's new 20 per cent export levy on top of the agreed contract price. India banned exports of broken rice and imposed a 20 per cent duty on exports of various other types on Thursday as the world's biggest exporter of the grain tries to boost local supplies and calm prices after below-average monsoon rainfall curtailed planting. "The duty became effective from midnight, but buyers are not ready to pay the duty," said B.V. Krishna Rao, president of the All India Rice Exporters Association (AIREA). "We have stopped loading vessels." India normally ships around 2 million tonnes of rice every month. New Delhi banned wheat exports earlier this year.