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Forecast has some farmers worried; numbers just what the market expected

Jeff Caldwell 07/12/2010 @ 11:00pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

Varying weather forecasts have farmers wondering whether Tuesdays' USDA Crop Progress numbers are the start of a downward trend or just a seasonal dip in conditions.

Tuesday's weekly report from USDA -- delayed a day by the Independence Day holiday earlier this week -- shows both corn and soybean conditions dipped slightly from the previous week. At 71% and 66% good to excellent respectively, the corn and soybean crops both slipped, but the corn number is just 2% lower than a week ago, and the soybean number's just 1% below last week.

Much of the slight decline can be blamed on excess moisture, some farmers say. But, a look into the forecast beyond the next week is causing others to worry that the opposite problem -- one some weather-watchers have foreshadowed for months -- will become the biggest crop threat through the end of this month.

"Starting about the 14th of July, temps are showing a high of 95-97 degrees. Will all the corn be pollinated and made by then?" asks Agriculture.com Marketing Talk member needaspray in a recent forum, adding that, on his farm in the Bootheel of Missouri, big rains are needed and dry conditions have been "absolutely hell" in the last month.

It's too much moisture that's been the biggest weather feature in areas like eastern Iowa, where Marketing Talk member Jim Meade / Iowa City says even if temperatures skyrocket in the next 10 days, the corn in his area ought to fare okay.

"No worry about too dry for most of Iowa, as we are awfully wet. The high temps aren't forecast for around here and pollination is coming up," he says, adding there are more "uneven spots" in the fields in his area than normal, likely because of heavy rains earlier in the season. "I'd say we are going to pollinate in good shape in eastern Iowa."

While some longer-term forecasts call for a heat-up and drydown for the second half of July in much of the Corn Belt, that trend won't be in the cards for the next week to 10 days, says Charlie Notis of Freese-Notis Weather, Inc., in Des Moines, Iowa. Temperatures will rise, but not without stirring up some widespread rains.

"Rain chances will be on the increase in the eastern Corn Belt for later Thursday and Friday, and for the Delta right through Saturday. The Sunday/Monday timeframe of next week should be one that brings another threat of rain to much of the nation's midsection. Clearly it is not a 'dry' forecast for any part of the nation's midsection over the next 10 days; it's just a matter of getting the rain into the areas that need it the most," Notis said Tuesday. "It will stay hot in the eastern half or third of the Corn Belt through Thursday with highs in the lower to middle 90s, but will turn cooler for Friday and no other heat is forecast there for the rest of the 10-day forecast."


Market reaction

Shawn McCambridge, Prudential Bache Commodities LLC, says the trade will not be surprised with this week's corn rating. "I don't think so. Most traders were looking for a 1-2 point drop. Just looking at the scattered crop conditions across the Corn Belt are well known. Plus, it's a seasonal tendancy to see the conditions drift lower at this time of the year."

McCambridge adds, "There are some areas struggling. But, we are seeing some good ratings for this time of the year, especially going into the pollination period."

Looking down through the state breakdowns, McCambridge says there are some pretty decent drops. "Missouri and North Carolina have been dragging behind other states this year. Pennsylvania's crop rating is down sharply. Indiana could use some showers to boost its ratings," McCambridge says.

For soybeans, the ratings are pretty good for this time of the year. "But, we need to wait until we get closer to August. Until we get into that critical time period for that crop the ratings dont mean as much as they do for corn."

Meanwhile, Jason Ward, Northstar Commodity Investment Co., says this crop is now rated exactly the same as it was a year ago. "A year ago the corn yield was forecast in the July WASDE report to be 153.5 bushels/acre and the soybeans at 42.6 bushels/acre."

Ward adds, "Therefore, in this Friday's WASDE report you would not expect a yield increase for corn or soybeans, given ratings are the same versus a year ago."

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