Content ID

315500

Average corn, soybean crops could be the 2021 story, analyst says

It’s a tale of two Corn Belt crops.

The year of 2021 really is becoming the tale of two crops, with the southeast U.S. seeing great summer weather (cool and wet) for them, and the Northwest facing a terrible drought (hot/dry weather) that is becoming a crop disaster.  

It’s rare that there is such a difference between one side of the country and the other, but 2021 is certainly that way. It seems the rain/cool weather stops about at the Iowa border, so that north and west of there, very little rain falls. Because of that, temperatures soar during the day (just like in the desert) and bake the crop even more than moisture shortages alone. That has been a good summary of the past few months’ weather, and certainly the forecast as well.   

Weather forecasts remain split for the U.S., with above-normal temps/below-normal precip forecast for the northwest U.S. the next two weeks, and below-normal temps/above-normal precip for the Southeast. This tale of two Corn Belts continues to be forecast with slight variations each day. Yet, the crux of the matter is the crop is being damaged in the West, and improving in the East as each week goes forward. Today, there is a bit larger dry area being forecast in the northern Corn Belt, now encompassing about half the U.S.    

Yesterday’s crop progress report is revealing in many ways, showing a corn/soybean crop that is pretty much holding its own in yield potential – but a rapidly declining HRS wheat crop.  

Specifically, corn conditions declined a small 1% to 64% rated G/E, and the yield model was mostly steady with only a 0.4 bu/acre decline in yield potential to 174.4 bu (2.5 bu below trend).  

Soybean conditions were steady at 60% rated G/E, but the yield model rose about .33 bushel to 48.9 bu/acre (0.9 bu/acre below trend). The Delta is a strong soybean producing area and there were cool/wet conditions there last week, so that’s probably why soybean yield potential improved while corn declined slightly. Winter wheat conditions were down 1% to 48% G/E, but the yield model was down only slightly (-0.06 bu/acre to 51.38 bu) and still above 50.56 trend.  

Winter wheat is about one third harvested, so conditions will not change now unless there are harvest problems; it’s likely that winter wheat production will be slightly above average.  

It’s becoming more likely that weather might be just good enough for corn and soybeans to produce about an average crop. Each week that conditions do not change much in yield potential means more weather premium needs to be extracted from the market, as the yield potential is realized (even if it is only average or slightly below average). So each week, premium will be extracted.

 In Pro Ag’s eyes, that means options can start to be sold in grains, especially in soybeans and corn, as the crop gets cemented in. (Each week is like an hour for cement drying… it becomes less and less likely to change as each growing season week passes.)  

Contrast that with HRS wheat: Rapid declines occur each week that has below-average rainfall. This week had some rains in those areas that greatly benefitted from them, but the majority of HRS wheat country received less than normal rainfall — and conditions continued their rapid decline with a 7% decline to 20% rated G/E.  Last year it was rated 69% G/E, so this crop is in rapid deterioration stage.  

Many Western producers say it’s likely they will not harvest an acre, with rapid abandonment likely to occur the next 30 days. Even Eastern producers in the Red River Valley say they will be lucky to have half a crop since conditions are dire. Rains are unlikely to reverse very much of the damage, either — unlike corn and soybeans where a decent crop might still be able to be salvaged. Barley conditions also declined significantly (8% to 31% rated G/E), so the Northern Plains are a disaster.  

Ironically, while the Northern Plains burn up, the southeastern two-thirds of the country has received beneficial rains so that U.S. soil moisture levels rose significantly last week, with topsoil up 4% to 59% rated adequate/surplus, and subsoil up 2% to 59% rated adequate/surplus. The hike is in the Southeast, while the Northwest bakes crop yield potential away.  

So, the tale of the two crops continues — the good crop in the southeastern two-thirds of the U.S. growing region, and the disaster unfolding in the northwestern third.  
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NOTE:  Weekly video updates posted every Saturday morning.

View our Saturday weekly market seminar at the video section of our website (www.progressiveag.com/video), with a 10-15 minute summary of all the major events of the week, and more importantly, what we think will happen next.  These will be posted at 7 am every Saturday morning, and this quality information might be all you need to become a great marketer!     

Ray can be reached at raygrabanski@progressiveag.com.  
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Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country.  See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com. 

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