Crop ratings slide continues -- USDA
Crop ratings took another major step lower in the last week, raising fears that some of the largest corn and soybean production areas of the nation are going to see crops fall well below earlier estimates.
Monday's report shows corn conditions nationwide fell by 2% from the previous week; now, 54% of the nation's crop is in good to excellent shape, while 17% of the crop is in very poor or poor condition, Monday's USDA-NASS Crop Progress report shows.
Soybean conditions took a similar slide in the last week, losing 2% in the crop rated good to excellent. Now, just over half of the nation's bean crop is in those highest two quality categories.
Though they're both troubling sets of numbers for the crops as harvest looms in the Corn Belt, it's more of an uphill climb in key growing areas, namely the state of Iowa, where the declines in corn and soybean conditions were sharper than other parts of the nation. That's starting to fuel apprehension among traders and crop-watchers.
"The report showed corn and soybean crop conditions dropping lower again this week. The most important number in today’s USDA Crop Progress report is the large drop in crop ratings in Iowa, where the corn rating fell from 39% good to excellent to just 35% this week," says market analyst Al Kluis with Kluis Commodities. "For soybeans in Iowa, the rating fell by 6% (from 39% to just 33%) this week. Crop ratings are still high in Ohio and Indiana, but that will not offset what is happening in Iowa, the largest production state in the nation."
Still, with triple-digit temperatures common across parts of the nation's center on Monday, there were expectations for steeper slides in crop ratings. That makes Monday's 2% slip for both corn and soybeans a slightly bearish factor heading into the overnight trade and into Tuesday, Kluis says.
"Today's report (with ratings only dropping by 2%) is a little negative for prices tonight. I expect corn to start out 1 to 2 cents lower tonight," he says. "The soybean condition number dropping by 2% was also less than expected and will take prices slightly lower tonight."
Another factor in play for the markets between now and Thursday is that day's scheduled release of USDA's monthly World Agricultural Supply and Demand Estimates (WASDE) report. Until that report is rolled out, the markets will likely be taking a breather.
"This report will be a little negative for prices tonight. However, with the USDA supply/demand report out on Thursday morning, I look for quiet markets on Tuesday and Wednesday," Kluis adds.