Weather is the driver
Weather remains the dominate driver for corn and soybean futures new crop contracts. Weather forecast during the months of July and August are next to impossible to forecast much beyond 3 to 5 days. The futures trade has adjusted to present levels based on high heat through at least Monday in the west and Tuesday in the east cornbelt and the potential for 70-80% coverage of .25 to 1.50 inch rains for the cornbelt beginning late next Tuesday.
The 6 to 10 day forecast suggests that moisture is working its way into the west Corn Belt, up from the Gulf of Mexico. There is no large area of extreme heat in either of the two separate forecast.
And Why Weather Matters: The five year ave for corn reproduction for Monday has been 84%, and percent dough at 23%. Last Monday % silk was 78% and percent dough at 13%. We anticipate less risk for the silk but increasing risk for the dough stage. It will be key for systematic rainfall through kernel fill as the crop moves forward. The trend has been for these weak ridges in the west to buckle and provide relief for at least 85% of the major cornbelt with the west relying on irrigation to help the crop from slipping too far backward.
Soybeans Gaining Center Stage: Both corn and soybeans are of great attention to the global trade, but it is the soybeans actually in front of corn when it comes to the importance as pods bloom and then set pods. For Monday, the five-year ave for soybeans blooming has been 82%, as of last Monday 76%. The percent setting pods five year ave 44% with last Monday's rating at 32%. It is this last number which is of key importance. It is necessary for beans to receive moisture in the form of falling precip or from soil reserves to help swell pods once set. According to the most recent 5 foot soil profile maps, from western Iowa into southern MN, ND, SD and NE are abnormally to excessively dry. Points east better off.
Crop Conditions: From here to just before harvest the five-yr ave crop conditions, the good to excellent category for corn drops on ave 7% from this week to just before harvest. Present conditions suggest a crop which could find corn conditions closer to 52% good to excellent just as harvest begins. Dating back to 2000 there have been three distinctive groupings for corn conditions just before harvest; 2002 and 2003 had good to excellent ratings of 42 and 44, 2001 and 2005 had ratings of 56 and 52% while 2000 and 2004 had rating of 64 and 69%.
Select 2001 and 2005: Because five-yr ave projections suggest crop ratings could drop an ave of 7% and place conditions at 52%, lets see just where USDA had Aug yield vs the Sept yield. In 2001 the Aug yield was 133.9 and by Sept had adjusted yield down to 133.5 bu per acre. In 2005 Aug yield was 139.2 and adjusted yield upward to 143.2. In 2001 crop conditions had dropped 4% from just in front of the Aug WASDE to the Sept WASDE, while in 2005, conditions were left unchanged at 52%. Given present weather outlooks for a more typical summer weather pattern, conditions may be content to hold very near unchanged. And yet there is recent evidence even with unchanged conditions, the yield per acre could experience growth of 4 bu per acre for a 2.8% increase. Use the same 2.8% increase on USDA's present 149 bpa and yield could climb to 153.12 bpa and place production at 11.042 billion bu and projected end stocks of 1.344 bil bu vs USDA present 1.077 bil bu.