Corn pollinating in cooler than normal weather
The grains received a slew of news the past week, with the USDA planted acreage and stocks report and the primary growing season in the US.
The planted acreage report held few surprises, with a little less corn/soybean acres than expected and a little more wheat (HRS wheat mostly). So attention once again turned to the growing 2006 crop and weather, with the corn belt returning to cooler than normal weather in all regions except the HRS wheat country. So what did prices do this week?
HRS wheat prices rallied sharply, with big gains due to the declining crop. Pro Ag yield models dropped in all crops on Monday's condition report, with HRS wheat dropping by far the most of all crops. The Pro AG yield model implied over a 1 bu decline last week, with our yield model now suggesting yields 10% smaller than 'trend', or basically a disaster crop. Although eastern HRS wheat areas are holding up relatively well (an average crop???), the western HRS wheat belt may be a disaster area, with temps well above normal and very little if any rain.
Corn yields also dropped 2.5 bu last week, but with rain and cooler temps this week its likely all areas but the northwestern corn belt (ND, SD, IA, and MN) improved this week. That will leave it difficult for corn to rally, especially with cooler than normal temps and normal/above normal rainfall forecast for all but the northwestern corn belt the next 2 weeks. Its likely corn will produce an average crop in 2006, making it difficult for weather to cause higher corn prices. So it will be left to demand to improve corn prices.
Soybeans still have a few weeks before the critical time frame develops, but crops are ahead of normal about 2 weeks in 2006, so it's less likely that crop stress will occur in 2006 than any other year. Last week Pro Ag yield estimates showed a decline of about one-third of a bushel, but yield potential is still 41 bu, just slightly below trend but above USDA current projections.
The next 5 days should bring .5-1.5", locally 2-2.5" rains to 90% of KS, NE, MO, and CO that should greatly aid the growing row crops and improve the crop in this week's crop development. This accompanies rainfall over most of the rest of the central and southern Corn Belt, HRW Wheat Belt, and SE US this week and should allow the corn and soybean crops to improve in yield potential in next weeks crop conditions. The only area that will remain under stress is HRS wheat areas and the northwestern corn belt (IA, SD, ND, and MN) that will experience warmer and drier than normal conditions for the next 2 weeks that will cause additional stress to the crop.
It's becoming apparent that 2006 will go down as the year where we have devastating losses in wheat (10% below trend yields for both HRS and HRW wheat). But corn and soybeans so far appear to be average crops, with rainfall needed to turn these crops to above average yield potential.
Corn especially is moving beyond the stages where it can be adversely affected in southern states, with pollination likely to be over within a week or two. Northern Corn Belt areas will not have any risk of frost, as most of the country (other than the northeast) is well beyond the normal stage of development. Most of the Corn Belt is about 2 weeks ahead of normal development due to the excellent early spring growing conditions, so its likely that less stress than normal will occur at the end of the growing season. It's becoming more and more likely that corn and soybean crops will be average or slightly above average in 2006.