Weather to cause $6 beans to be cheap???
Weather forecasts have been the story this year, with wild fluctuations in forecasts from week to week (and even day to day).
Overall, though, 2006 has so far been a major disaster in wheat production, and constantly on the verge of a developing disaster in corn/soybeans. This week brought more precip to the Corn Belt (75% coverage of .5-3â€) that once again delayed the major weather situation that could cause a major price rally in corn/beans.
However, today's weather forecast swings back to the hot/dry forecast, with additions of a few degrees of temperatures and took some moisture out of the next 10 days, and that should support a turnaround in the market. Temperatures are now forecast to be 3-12 degrees above normal across all of the HRS wheat and corn belts, causing drought stress in all areas that received little rain the past week. It also will stress corn pollinating and soybeans blooming across the Corn Belt, especially in the western corn belt where temps are forecast to be from 100-107 degrees in the hottest western areas. This will be a blast furnace, with temps forecast to stay that way for the next 5 days. Considering sometimes these temps linger for longer than forecast (like in 2003, when temps were forecast to be 90-100 for 5 days, and it lasted about 45 days!!!), this is a bullish forecast.
The market yesterday set back sharply due to the USDA report, typical reactions after bullish reports during bull markets. The report was bullish, with corn 06/07 ending stocks down 180 mb corn from trader expectations, -25 mb soybeans, and -7 mb wheat. This should provide a 10c boost to corn prices, +10/+20c boost to soybean prices, and +3c to wheat prices over the next few days. World numbers looks bearish wheat (+5 mmt carryout 06/07), bullish corn (-1 mmt) and very bullish soybeans (-4.5 mmt and now below 2005/06). But the market quickly turned to trading weather, with some additional rains popping up in HRS wheat country (.1-.5"rains and 50% coverage) and corn belt precip (.25-1"and 45% coverage) which pressured prices. However, the next 10 day forecast is moving back to warm/dry today, contradicting a 6-14 day forecast last night that cooled temps and added precip into the extended forecast.
Its weather, weather, weather, and today the forecast added heat and lowered precip in the extended forecast that will stress crops across the country, including corn and soybeans. With more bullish numbers in the USDA report yesterday than traders expected, that should support the market in the near term. Notably, Pro Ag July price models showed corn price models unchanged to lower (higher US production), soybeans up 32-64c, and wheat up 11c for an overall mixed type report. It was soybeans where this report was most bullish, a surprisingly large reduction especially in world ending stocks. Corn had an increase in US production due to larger acres, but larger use and smaller stocks. Still, since it is so early to estimate demand so using production numbers as more reliable, the corn price actually dropped in spite of the bullish report (to $2.30 from $2.33).