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Yield models stable, prices at new lows
The 2013 crop continues to develop with good yield potential, thus putting pressure on prices (especially oilseeds) this week. Soybeans in particular were sharply lower, with it dragging the other crops lower as well. The old crop prices are crumbling as demand has waned and buyers seem to have already locked in supplies for the summer. So old crop soybean prices tumbled lower after moving to new highs last week, only to crumble to new recent lows by the end of the week.
One thing is apparent -- this is no 2012 crop! While in 2012 the crop conditions crumbled lower this time of year, in 2013 with cool weather during pollination of corn and bloom of soybeans, the late season crops are thriving under nearly ideal weather. The only thing that could be better is wet conditions in the central corn belt, and that is what the current forecast has allowed for the next 2 weeks. So forecasts couldn't be better for now for the Corn Belt crops.
Currently, as of July 29 the crops are developing at slightly above normal yield potential, with the Pro Ag yield models suggesting a 44.42 bu/acre soybean crop (vs. trend of 43.6 bu/acre) and a 162.6 bu/acre corn crop (vs. 157 trend). So we have a slightly above average crop, but that is a far cry from last year, when we had a disastrous crop coming in corn and a well below average soybean crop. Corn is rated 63% G/E, the same as last week but much above the 24% rating last year at this time. This year, 2013 is certainly different, and while the crop is slightly behind normal development (corn 8% dough stage vs. 17% normally, corn 71% silking vs. 75 normally), we still have potential for a large yielding crop. The right weather could provide a new record large yield in 2013, and that means lower prices such as the new recent lows in new crop prices for corn and soybeans.
Soybean development is also behind normal, with 65% of soybeans blooming vs. 74% normally, and 20% setting pods vs. 34% normally at this time. We are maybe 5 days behind normal development, but with cool weather forecast the coming 2 weeks (which is favorable weather right now), we will need a frost free fall for longer than normal to get this crop to maturity (or some hot weather in August and September yet). This might be the next big worry of the crop watchers, as the crop development is slightly behind normal. But ratings are 63% G/E, down 1% from last week but well above last year's 29% rating at this time.
Other crops are also developing in much better condition than last year. Sorghum is rated at 47% G/E, up 2% from last week and well above last year's 26% G/E rating. HRS wheat is rated 68% G/E, the same as last week and up from only 63% last year at this time. Considering last year was a very good crop, this is impressive to say the least. Barley conditions are rated 68% G/E, up 3% from last week and compared to 61% last year at this time. So the barley crop is also rated quite high. Pasture and rangeland is rated 44% G/E, up from only 17% last year at this time so we are much better off as there is no widespread drought in 2013.
So basically we have a above average crop in 2013 for most all crops - not at all like the disaster we had last year at this time. So prices are pushing to new recent lows, and we may have a long ways to do lower if current weather forecasts are correct in predicting below normal temps and above normal precip (perfect weather for ending July and starting August). The driest states, KS, MO, and NE have the most precip forecast for the coming week.
Pro Ag remains bearish, as the crop continues to develop in good Condition and crop ratings overall. Downside price targets remain $4.50 Dec corn, $9.50 to $10 Nov. soybeans, and $6 CBOT wheat.
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