You are here

Has the Weather Worm Turned for Soybeans?

Last week we talked about the forecast change from warm/dry Corn Belt weather pattern to a cooler and wetter pattern. For the most part, that forecast has come to fruition in much of the Corn Belt, even in the Northwest, which has been suffering from droughty conditions in July. The best rains in a long time came to the Northwest last week, helping to alleviate some of the drought conditions and improve the crop conditions.  

In fact, probably more of the U.S. is too wet than too dry, which is hard for us in the Northwest to imagine since the Dakotas, Montana, Minnesota, Iowa, and Nebraska are all on the dry side. But about half of the southern U.S., and about half of the eastern Corn Belt have soil moisture rankings higher than the 70% percentile (in the wettest 30% of history). All of Wisconsin (and surrounding areas), all of Ohio and Pennsylvania, and about half of Illinois/Indiana/Michigan/Kentucky/Tennessee are in this category, so dry/warm weather is preferred there to help the crop grow and reach maturity. Also, in the Southwest, there are wet areas in southeast and western Kansas, eastern Oklahoma, western Arkansas, and northeastern Texas along with southern Colorado. The central and southern Delta is also wet and in need of warm/dry weather to improve the crop.  

As you can well imagine, since there is a dry area in the northwest, and wet areas in the eastern Corn Belt and southern U.S., then there are also areas in between that are ideal for soil moisture. Southern Nebraska, central and southern Minnesota, northeast Iowa, southern Illinois/Indiana, western Kentucky/Tennessee, central Kansas/Oklahoma, parts of Texas, southern Michigan, and northern Missouri along with areas in the southeast U.S. are all rated nearly ideal in soil moisture. This are the areas that have above-average crops, and we probably don’t hear much about them. But these are the regions that are keeping yield potential for corn and soybeans near the trend average nationwide. Yes, there are poor areas suffering from drought (Northwest) as well as excess moisture. But overall, we still have near-normal yield potential.  

Crop conditions out yesterday, 8/7, indicated a 1% improvement in soybean G/E ratings to 60%, and a 1% decline in corn ratings to 60% rated G/E. The Pro Ag yield models went up in both crops, but more aggressively in soybeans with a 0.26 hike in yield models to 46.74 bushels per acre, near the high of the year but still well below the USDA current projection of 48 bushels per acre. If we continue to improve to finish out the year, we might get back to that yield level, though. Improvements in soybean ratings occurred in Illinois (+2%), Indiana (+3%), Kansas (+2%), Mississippi (+3%), North Carolina (+6%), North Dakota +3%), Ohio (+4%), South Dakota (+3%), Minnesota (+1%), Wisconsin (+1%), and Tennessee (+3%). Soybeans are 90% blooming (2% ahead of average), with 65% setting pods (3% ahead of average).  

The corn yield model rose 0.22 bushel per acre to 167.9 bushels per acre in spite of a 1% decline in the crop rated G/E. The yield is still below USDA’s 170.7-bushel-per-acre estimate that they started with this year in May (and left unchanged every month since then). If the crop improved the rest of the year, though, we still could make the USDA trend yield, but it would take improvements each week in order to regain the nearly 3 bushels per acre we are below USDA right now. States that improved include Colorado (+2%), Indiana (+3%), Kentucky (+3%), Missouri (+2%), North Dakota (+1%), and Tennessee (+1%). States with significant declines include Illinois (-5%), Kansas (-2%), Nebraska (-2%), North Carolina (-2%), and Pennsylvania (-4%). Corn is 93% silking, 1% behind the average pace, with 42% in dough stage (2% behind average pace). With corn and soybeans still capable of meeting current USDA yield projections with improvements the rest of the year, USDA may decide to not change current yield projections in the August report Thursday (or make just very small changes). The trade seems to expect larger yield cuts, and that could be detrimental to the market if they don’t get them.

Cotton conditions improved 1% to 57% rated G/E, with 58% setting bolls (10% behind average) and 8% bolls opening (1% behind average). Sorghum ratings were unchanged at 61% rated G/E, with 62% headed (1% behind average) and 26% coloring (6% behind average). Winter wheat is 94% harvested, 2% ahead of average while HRS wheat is 24% harvested, 3% ahead of average.  

HRS wheat conditions improved 1% to 32% rated G/E, still well below last year’s 68% rating due to the drought. Eastern areas are under way with harvest, and yields there are better than expected and basically near average to slightly above average in some areas as they did not suffer as much from drought as the drier western areas. Barley conditions went the other way, down 4% to 45% rated G/E, with 25% of the barley harvested (3% ahead of average).  

Soil moisture nationally improved this week, up 3% in topsoil (to 56% rated adequate/surplus), and up 2% in subsoil moisture (to 59% adequate/surplus). The improvement in soil moisture comes at a critical time, when corn and soybeans are using a lot of water to fill crops. That also provides insurance against a dry period in the remaining weeks. It looks like 2017 will not be a crop failure, and at most will be slightly below-average yields for corn, soybeans, sorghum, and oats. Of course, HRS wheat and barley yields will suffer as the northwest Corn Belt and HRS Wheat region has suffered the most in the country from drought.   

The seven-day forecast is now calling for above-normal precipitation for the southern half of the U.S., with mostly normal to below-normal precipitation for the northern half. Temperatures are below normal for nearly all crop growing regions, with the exception of the HRS region including the Dakotas and Montana, which will have normal to above-normal temperatures.  

The eight– to 14-day forecast has a similar forecast as the next seven days, with normal to below-normal precipitation in the North, and above-normal precipitation in the South. Temperatures are mostly below normal in the southern two thirds of the U.S., with temperatures normal to slightly above normal in the northern third. Overall, this is a forecast that may lead to further moisture stress in the northwest Corn Belt, including the states of the Dakotas, Minnesota, Iowa, and Nebraska. The rest of the country should enjoy good weather for filling corn and soybean crops, but for these states, crop maturity is a concern as development of crops in the wet areas of the country is behind normal.  

Ray Grabanski is president of Progressive Ag Marketing, Inc., the top-ranked marketing firm in the country the past eight years. See http://www.progressiveag.com for rankings.

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. 

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. 

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that advice we give will result in profitable trades.

Read more about