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Turning to the growing season

Planting continues to drag on, with the only corn planting now for silage while soybean planting continues. This was a fairly good week for soybean planting, with about half of remaining soybeans put into the ground this week advancing to 85% complete from 71% last week. We now only lag the normal pace by 6% (91% normally planted).  So we continue to catch up to the normal pace. That 6% we are behind amounts to about 4.6 million acres of soybeans; we are behind the average pace of planting on June 16, so it's likely we will lose some yield potential on these acres.  

However, it also means we are now turning our focus toward crop conditions, not planting progress, as we move into the growing season for the grains. Corn crop conditions improved 1% this week to 64% G/E, up from 63% last week and above last year's 63% rating. The Pro Ag yield model for corn ROSE this week 0.5 bushel per acre to 153.5 bushels per acre, reversing the declines and giving hope that this year will indeed be different than last year's devastatingly small crop.  While below 'trend' of 158 (Pro Ag trend yield) and USDA's 156.5 bushels-per-acre projection, the direction of improvement is important because we now have good moisture conditions across the U.S. It is likely that with warming temps, conditions will continue to improve.  

Soybean conditions also were strong at 64% G/E in the first week of ratings, well above last year's 56% rating. The Pro Ag yield model for soybeans is only slightly below average trend yields of 43.62 at 43.2 bushels per acre, still above USDA's projected 44.5 bushels per acre but respectable for the first rating of the year. What really matters now is the direction of that yield model. Recall that last year we had sharply declining conditions from here on out to finish with a devastatingly poor crop of only 39.6 bushels per acre. But with moisture everywhere, that is unlikely to continue with below-average crops. Instead, Pro Ag anticipates conditions of crops to improve with warming conditions, and that will spell a whole lot different price outlook than one year ago.  

Other crop conditions are showing improvement, with cotton at 42% G/E, the same as last week but down from 53% G/E last year. Sorghum conditions are better than last year at 53% G/E vs. only 47% last year. Sorghum is 84% planted, ahead of normal pace of 82% planted at this time. Sunflowers are only 55% planted, well behind normal pace of 77% due to lateness in North Dakota. Rice crop conditions are 68% G/E, up from 62% last week.  

Winter wheat conditions were steady at 31% rated G/E, well below last year's 54%. That puts the Pro Ag yield model for winter wheat at 44.38 bushels per acre, well below USDA's projected 46.1 bushels per acre and down .33 bushel per acre from last week, another sharp decline. However, the rains this week in Oklahoma, Texas, and Kansas (75% coverage of .5" to 1.5", locally 2" to 3") should improve that next week.  

HRS wheat planting is now 92% complete, up 5% from last week with North Dakota advancing to 86% complete, up from 77% last week.  We are slowly getting the crop planted, but there is likely to be .5 to 1 million acres of PP in this crop, as well. HRS wheat conditions improved sharply (6%) to 68% G/E, now behind last year's 76%, but the direction of crop improvements is important to recognize.  

Essentially, we have a late-planted crop that is quickly improving across the U.S. So despite the late planting progress, Pro Ag remains bearish as supplies in 2013 will much exceed supply even with planting problems. Specs and hedgers can now sell corn, soybeans, and CBOT wheat again, putting on hedges for 2013, 2014, 2015, or 2016 crops. Downside price targets are $4.50 Dec corn, $9-$9.50 November soybeans (down from $10 due to improving planting conditions and acreage shifts from corn), and $6 Chicago July wheat.  

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