Crops keep getting better
Prices have stabilized at near $6 corn and $13.50 soybeans (if 20c corn and 50c soybean trading ranges are 'stable'!). Can we hold these levels? Or are we due for a sharp price decline into harvest?
Monday's crop progress numbers reinforced Pro Ag's belief that weather has been ideal to finish off the crop season, with warm/dry conditions across the soggy central Corn Belt which is lagging behind normal progress (but slowly catching up?). In some sandy or dry areas this is putting some stress on certain crops, but this late in the season this stress might push crops along in development - and thus avoiding the biggest weather concern of all - frost! So far, weather forecasts have called for warmer than normal conditions for the next two weeks, which would eliminate a great deal of frost risk at this time as it would essentially avoid any really early frost. Once we get into 'normal' frost dates, the crop will be safe from any heavy damage from frost.
Soybean crop conditions dropped only 1% from the G/E category to 61% G/E, still the highest rated crop since 2004 and higher than 2005 (the last record large yield of 43.3 bu/acre). Pro Ag yield models currently suggest a new record large soybean crop at 43.7 bu/acre, up another .45 bu/acre from last week (another huge hike in yield potential). The soybean crop just keeps getting better, so soybean prices will need to retreat further from the most recent crop improvement last week. Pro Ag suspected that the ideal weather across the country was improving the crop last week, not dropping it as so many in the market had anticipated. Crop condition reports confirmed that suspicion, as once again the yield model has another significant rise last week. Pro Ag yield models have jumped from a low of 40.9 bu/acre on June 18 to 43.7 bu/acre yesterday, a huge hike of around 3 bu/acre or the equivalent of 200+ mb hike in production. USDA carryout will need to jump significantly in future reports as will their yield projections. Soybean prices are likely to run to new lows as we move towards harvest - especially if frost comes at average or later than average dates.
Corn crop conditions dropped 3% G/E to 64%, still well ahead of last year's 59%. Pro Ag yield models, however, changed very little at 158.8 bu/acre, down only 0.9 bu/acre from last week. Overall, corn conditions remain high and more importantly, maturity of the corn crop continues to 'catch up' to normal in northern Corn Belt states as warm/dry conditions continue to push the crop along. Pro Ag doubts that late season dryness will hurt the crop much if at all. Instead, it might just mean less drying costs for corn! In weather news, forecast temps remain above normal for the Corn Belt the next two weeks, with rain finishing off from Fay in the eastern US with 85% coverage of PA, KY, TN, NC, SC, and Virginia with 0.5-1.5" locally 2-3" amounts. Also important is rain forecast in southern MN and northern WI of 60% coverage of .25-1.5" rains that should help these dry areas finish off the crop. Overall, weather remains favorable to complete our record or near record large yielding corn and soybean crops. HRS wheat harvest is speeding to completion, with record large yields reported in MN and eastern Dakotas.