Content ID

260316

Crop Prices Ride Weather Teeter Totter

Last week we talked about a potential weather pattern change, one that would provide cooler and wetter weather than normal – a shift from the warm/dry pattern that we’d been in to start the month of June. That weather pattern change occurred in the past week, with temperatures cooling off to below normal across most of the Corn Belt last week, with that forecast to continue the next seven days. However, just as a weather pattern can change from hot/dry to cool/wet, it can also change back again! And that is exactly what is forecast in about another week. Yes, we are back to a forecast of warm and relatively dry in the eight- to 14-day forecast, which would basically start the month of July.  

The seven-day precipitation forecast is calling for normal to above-normal precipitation in the central Corn Belt (Iowa, Illinois, Missouri, and Ohio), but below normal in most of the rest of the Corn Belt. Temperatures are still forecast below normal for the next seven days, then switch to above normal for the entire Corn Belt in the eight- to 14-day forecast, which also dries up the precipitation amounts to very little anywhere in the Corn Belt. The recent updates to forecasts (which occur every 12 hours) have continually dried out and warmed up the forecast in the eight- to 14-day period, so that has the market a bit concerned as we head into pollination of corn in the next few weeks.     

Crop progress and conditions were out yesterday, and while the market expected corn and soybean conditions to improve last week, they didn’t. In fact, soybean conditions declined 1% in G/E, while corn was steady along with winter wheat. Corn conditions remained at 67% rated G/E, down from 75% last year at this time. Soybean conditions dropped 1% to 66% G/E, down from 72% last year at this time. Pro Ag yield models for both corn and soybeans were up slightly in spite of the steady to lower conditions, with soybeans up 0.12 bushels per acre to 46.55 bushels per acre, still below USDA’s projection of 48 bushels per acre. Corn yields were up 1 bushel per acre to 165.6 bushels per acre. Winter wheat conditions also were steady at 49% rated G/E, but the Pro Ag yield model was up 0.28 bushel per acre to 50.32 bushels per acre as the cool and dry weather aided development and harvest.  

Crop development is about normal, with corn silking 4%, 1% behind normal. Soybean emergence is 94%, 3% ahead of normal while 9% of soybeans are blooming, 2% ahead of normal. Winter wheat is 41% harvested, 2% ahead of normal. Cotton planting is 98% complete, 1% behind normal while cotton squaring is 34%, 4% ahead of normal. Cotton conditions dropped 4% to 57% rated G/E, compared to 56% last year. HRS wheat headed is 36%, 1% ahead of normal while HRS wheat conditions dropped another 1% to 40% rated G/E, down from 72% last year. Barley is 27% headed, 11% below normal. Barley conditions declined another 4% to 60% rated G/E, down from 75% last year. Sorghum planting is 95% complete, 2% ahead of average while 20% is headed, 2% behind normal. Sorghum conditions declined 1% to 65% G/E, down from 70% last year. Sunflowers are 97% planted, 8% ahead of average. Oats are 73% headed, 1% behind average and crop ratings dropped 2% to 54% rated G/E, now well below last year’s 67% rating. 
 
Soil moisture conditions declined again last week, down 3% in topsoil adequate/surplus rating to 69%, equal to last year. Subsoil moisture ratings declined 2% in adequate/surplus to 75%, still 1% above last year.  

While yield models rose slightly last week on mostly steady to declining crop conditions, the market was surprised conditions didn’t improve more. Also, weather forecasts are becoming more threatening, with warm and dry forecasts now in the eight- to 14-day weather runs after turning more and more toward that result the past few days. So markets are trying to run higher, and if this trend continues, will probably continue to trend higher. 

We desperately need some support to the corn and soybean market, as soybean prices fell to the lowest level for November soybeans in over a year. December corn also fell to its lowest level in 2017, with a pretty sharp decline last week on the expectations for improving crop conditions and development. HRS wheat, however, has rallied sharply as the crop has declined significantly in the past month. Drought has dominated the western HRS Wheat Belt, and many growers now believe there will be little to harvest in the western HRS wheat belt.  

The next major news from USDA will come on Friday, with U.S. grain stocks and planted acreage estimates. While the trade expects only small revisions to acreage from the March 31 Intentions Report, there are private estimates of higher shifts in acreage from corn to soybeans. Pro Ag believes we will see a higher soybean planted acreage estimate than corn, the only question is how much more? And alternatively, how much soybean acreage increase has already been built into the market prices? All of that news and more will be out by Friday.  As the 4th of July approaches, weather becomes even more important as we get into the reproductive stages for corn and soybeans, and a critical time in development of HRS wheat. Stay tuned! It’s just starting to get interesting for marketing of 2017 grains.

Ray Grabanski is President of Progressive Ag Marketing, Inc., the top-ranked marketing firm in the country the past eight years. See http://www.progressiveag.com for rankings.

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. 

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