Fundamentally Speaking

As we have noted in prior blogs, a combination of above average temperatures and below normal precipitation resulted in widespread drought conditions this past growing season across much of the main agricultural producing areas in the U.S.

As a consequence, a number of crops including corn, soybeans, wheat, cotton and sorghum will see below trend yields for 2022, limiting production and contributing to a still tight stocks situation resulting in prices still near historic highs even as we progress into the main harvest period.

The U.S. Drought Monitor Map information site publishes data on the percent of landmass in various stages of drought with D1-Moderate Drought, D2-Severe Drought, D3-Extreme Drought, and D4-Exceptional Drought.

The latest weekly report for September 20 shows that 34% of the U.S. corn area is in some form of drought (D1-D4) which is up 4% from last week and the highest percent since early March and 29% of the soybean area, up an even sharper 6% from last week and the highest percent in over a year.

This lends credence to thoughts that the U.S. row crops did not finish off well at all as drought expanded throughout the summer and is now at the highest percent of the season.

This chart shows the combined percent of that state in D1 to D4 drought around third week of September for 2022 and 2021 on the left-hand axis vs 2022 rank from period 2000 to 2022 on the right-hand axis for the top corn and soybean states.

Striking are those states that have far worse drought conditions than a year ago including Arkansas with 51% D1-D4 ratings vs just 2% a year ago; this is fifth highest percent since 2000.

Kansas has 81% in drought vs just 9% a year ago and NE with some form of drought covering 95% of the state vs 40% a year ago as both states have second highest amount of drought as of third week in September since 2000.

TX also had far more drought than a year ago as this state along with CO, NE, and KS all major winter wheat producing states which is of big concern with HRW seedings beginning for the 2023 season, yet 57% of U.S. winter wheat production areas are still seeing drought conditions.

Final point is three states that had serious drought a year ago which is MN, ND and SD all having combined percent of that state in D1 to D4 drought lower than a year ago but still seeing large drought this year especially in Dakotas as conditions have really dried out in that region of the country over the past two months.

This evidenced by the fact that a lot of both durum and spring wheat grown in that part of the country and the percent of the US durum area in D1-D4 drought has jumped from 39% to 84% and that of spring wheat from 18% to 49% in just one month.

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