Weather locks prices-Ray Grabanski
So far, the heat has persisted and prices continue to hold at very high levels. This is in spite of a yield potential that is still indicating a crop size very close to USDA's last July report.
Temps remain mostly 3-8 degrees above normal across most of the Midwest, and prices are reflecting the persistence of the heat as prices are near the yearly highs.
Crop conditions started their decline from the heat last week, with corn
conditions down 4% to 62% G/E, and soybeans down 2% to 62% rated G/E. That provided the first significant Progressive Ag yield model drop of the year, with soybeans down .34 bu/acre to 43.4 bu/acre. That is essentially the same yield that USDA guessed at their last report in July. So, thus far, there doesn't seem to be a need for USDA to change their yield projection for soybeans in the August report. Corn yield models are also very near USDA July numbers, with the corn yield down 2 bu/acre at 158.6 bu/acre vs. 158.7 bu/acre projected in July.
While the heat is reducing yield potential for corn and soybeans (especially the southern Corn Belt heat), the crop is also catching up to 'normal' maturity after a mostly late planting season nationwide. Corn is now 65% silking, just 4% behind the 'average' 69% percent silking. Corn rated in the dough stage is now at 9%, just 3% behind the 'average'.
Soybeans are 60% blooming vs. normally 68% at this time, so the heat is advancing the maturity of the 2011 crop as well.
Actually, heat in the northern Plains and northern Corn Belt might be a good thing for crops, as it needs to advance the maturity of the 2011 crop to avoid frost risk this fall. However, warm weather during pollination of corn and blooming of soybeans is not good for the crop in the southern half of the Corn Belt. The crop needs cooler weather to allow it to reach its full potential, and here the frost risk is minimal to begin with. Only Ohio needs heat to advance the corn crop development, and that state is getting some heat the past few weeks.
Actually, the most bullish weather right now would be hot and dry in the
southern half of the Corn Belt, and cool/wet in the northern part of the Corn Belt. Instead, we have warm and wet for most of the US right now that is keeping prices pretty much in check - not rising much but not declining very fast, either. The market is simply locked in the range, looking for the next big item that can affect prices. The heat in the South is taking its toll, though, and overall the negative affect on yield potential from heat in the South is overcoming the benefits to the crop in the north in the past week.