Corn, Soybean Conditions Slip Slightly; Light Market Reaction Expected
The U.S. corn and soybean crops are developing at a pace ahead of normal despite the fact the last week's seen a slight dip in the condition of both as new forecasts hint at a continued shortage of rainfall in much of the Corn Belt through the early days of August, the most critical month for soybean development in the U.S.
Overall soybean conditions dipped 2% in the last week, but 71% of the crop remains in good or excellent condition. Pod-set remains ahead of normal, now with 38% of the crop setting pods as of Sunday, according to Monday's USDA-NASS weekly Crop Progress report. That's almost 20% higher than the previous week and 7% ahead of the normal pace.
Corn conditions saw a slight dip overall as well; 75% of the crop is in good or excellent shape, down from 76% a week ago. That's still 12% ahead of the amount of the U.S. crop in the highest two quality categories in USDA's reporting. Corn silking, as of Sunday, was at 78%, 3% higher than the normal pace for this week of the year and 22% ahead of where it was a week ago.
Crop conditions are as good as they've been in decades in some spots around the central U.S. and Midwest, but will that change soon? New weather forecasts released Monday show few raindrops expected in the next 10 days to two weeks in corn and soybean country, and for the latter crop, that could spell trouble unless cooler-than-normal temperatures can prevent a lack of rainfall from inflicting much crop damage.
"The dryness has developed too late for major impacts to pollinating corn, but some minor soy losses are possible to pod-setting soy in drier sections of the southwest quarter of the belt in the next 10 days," according to the Commodity Weather Group on Monday. "Cool air will limit losses though, and an expected return of 11- to 15-day showers to the western Midwest would be in time to avert serious impacts. The 16- to 30-day is also similar to wetter across most of the Midwest, although confidence is still low. Regardless, heat risks remain low through August. The upturn in August showers will be most important for shallow-rooted soy areas in the northwest Midwest."
"Yield forecasts from 25 locations across the Corn Belt indicate above-average yield potential for well-managed dryland corn in fields unaffected by hail or flooding. However, there is still a chance of having an average or below-average dryland corn yield potential at several locations if weather conditions are unfavorable during the rest of the season. Irrigated corn yield potential looks to be about average. However, if adequate rainfall and temperatures continue through the end of July and into August, we would expect both dryland and irrigated yield forecasts to go up," according to a report released by a team of university agronomists in the Midwest led by Patricio Grassini, University of Nebraska agronomist, who led an effort to tally corn yield potential using the university's Hybrid-Maize Model. "Cooler-than-normal weather, however, could increase the probability of an early killing frost at locations that were planted late, resulting in yields lower than currently forecast."
But, these projections -- regardless of region-wide weather conditions -- should not be taken without a grain of salt that comprises your specific conditions, adds Iowa State University Extension agronomist Mark Licht.
"Interpreting this forecast yield potential requires the understanding that the long-term yield potential may not always match up with actual production history because of limiting factors such as fertility, weeds, insects, and diseases or because of weather events such as early frost damage, hail injury, or flooding that are not accounted for by the model," he says. "An appropriate way to interpret that data is to apply the percent deviation from long-term yield potential to your own actual production history or past county yield estimates."
Back in the short-term, Monday's numbers aren't likely to mean much to prices; if anything, USDA's corn data may be slightly bearish for the overnight trade and prices heading into Tuesday, according to Kluis Commodities market analyst and broker Al Kluis.
"Today's report is a little negative for prices tonight. I expect corn to start out 1 to 2 cents lower tonight," he says. "Today's report is likely to take soybean prices a little higher tonight for new-crop prices."