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Time to Lift Soybean Hedges for Profits
Unlike this week, little precip fell across the Corn Belt last week. But, still yield models for corn and soybeans were about steady in spite of the lack of rain, with the USDA Crop Progress Report showing corn conditions down just 1% G/E ratings and soybeans steady.
Weather includes the this week's forecast that calls for the best rain in the Corn Belt in weeks, with 60% coverage of .25 to 1 inch, locally 2- to 3-inch rains that will alleviate some crop stress in areas where it falls. However, more rain is needed to keep the high yield potential in crops. There is some rain in portions of South Dakota, Iowa, Illinois, Indiana, and Michigan today that will greatly aid the areas that get rain. More rain is forecast to develop over the central Corn Belt today, including parts of Montana, South Dakota, and western Iowa as well as parts of Illinois, Indiana, and Michigan. The central Corn Belt will be favored in the coming rainfall this week, with parts of Iowa and Missouri getting 2- to 3-inch rain amounts in the coming week.
Pro Ag is choosing to remove soybean hedges by taking some huge profits right now and standing on the sidelines for now. We are near the year's lows, and now yield potential is being sapped out of the grains due to lack of rain in July and August. So we will take our soybean profits and stand on the sidelines for now, waiting for the time when rains will take yield potential higher again, or the ensuing harvest begins. Make sure you're willing to put these hedges back on if you take them off, as it's likely that harvest lows will be below current levels. Since we are near the year's lows for soybeans and yield potential has declined or remained almost steady for two weeks, it's time to remove hedges for selective hedgers.
Pro Ag remains on the bearish side of the ledger for corn, as the Pro Ag yield models remain high for corn (still 170 bu/acre this week) as well as HRS wheat.
Crop development is ahead of normal nationally, although the northern states of North Dakota, Minnesota, Michigan, and Wisconsin still lag normal development slightly. Corn silking is at 90% vs. 88% normally, and dough stage is 36% vs. 29% normally at this time. Soybeans are 85% blooming vs. 83% normally, and are 57% setting pods vs. 48% normally at this time. Other crops showed a slight decline in cotton conditions of 1% to 53% G/E, with sorghum also declining 1% to 59% G/E. Rice conditions were steady at 71% rated G/E, as was HRS wheat at 70% rated G/E. Oat conditions declined 1% to 63% rated G/E, with barley conditions also down 1% to 66% rated G/E. Pasture and range conditions declined 2% to 50% rated G/E.
Crop development shows that winter wheat is 90% harvested vs. 85% normally, and HRS wheat 97% headed vs. 97% normally, with oat harvest 56% complete vs. 49% normally. Overall, we still have an above-average crop of corn, soybeans, and HRS wheat coming this summer, but the conditions no longer suggest an improvement in crop conditions or yield potential due to the recent dryness in crops (especially corn and soybeans).
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