Markets Markets Analysis Grain Prices Vs. Grain Fundamentals With crops enjoying generally favorable weather in July, its likely crop yield potential will continue to improve. By Ray Grabanski Ray Grabanski President, Progressive Agwww.progressiveag.com Successful Farming's Editorial Guidelines Published on July 19, 2018 Close Grain markets seem more affected by politics than grain fundamentals, but then again, it's hard to separate the two. The USDA in the July report certainly highlighted that information, as with their Chinese tariff anaylsis, soybean exports drop 250 mb from June, and carryout is up 195 mb (or about 50%). So to say that politics don't matter for grains is an understatement (as anyone who lived through the 1980 embargo and after affects can attest). While China has stuck its chin and chest out, internally their economy is suffering, with the stock market down about 15% this year (mostly on tariff impacts). That is compared to the US stock market which is up about 5% for the year. Now the greatest impact on the outlook for grains is whether or not we can solve our trade dispute with China. This seems to be impacting soybeans (and agriculture) more than the other parts of the US economy. Weekly crop progress shows a rapidly advancing crop, with corn silking at 63% (26% ahead of average). Soybeans are 65% blooming (20% ahead), while 26% are setting pods (15% ahead). But while the crop is advancing quickly, conditions actually declined 3% in corn to 72% G/E, while soybeans declined 2% to 69% rated G/E. Pro Ag yield models still rose in spite of the condition decline, with soybeans up 0.11 bu/acre to 48.84 bu/acre. Corn yield potential rose to 176.5 bu/acre, up 0.56 bu/acre from last week. This was surprising that conditions could decline, but yield potential go up. However, although we've developed some dry areas, it looks like pollination will occur in cooler conditions, and with some additional rain to come in the next few weeks. Typically, every few years we have pollination problems with heat (especially in southern states), so perhaps that explains why yield potential is not declining? Cotton is now 2% ahead of normal squaring at 72%, with 31% setting bolls (7% ahead). Ratings for cotton are 41% G/E, unchanged from last week. Sorghum is 31% headed (1% ahead of normal), and 19% coloring (1% behind normal). Sorghumconditions are 47% rated G/E, down 4% from last week and well below last year's 63% rating. Winter wheat is 74% harvested, 3% ahead of average. HRS wheat is 93% headed, now 8% ahead of normal while conditions were steady at 70% ratedG/E. Barley is 90% headed, 2% ahead of normal while conditions were rated a high 85% G/E, the same as last week. Oats is 96% headed (1% ahead of average), with 16% harvested (2% ahead) and ratings are 71% rated G/E (down 2% from last week). Pasture and range condition declined 4% this week to 47% G/E, down from last year's 52% rating. So westernregions are starting to suffer from lack of moisture. Moisture conditions declined tremendously from last week, with topsoil down 8% to 62% rated adequate/surplus. That is now near last year's 60% level. Subsoil dropped 5% to 63% rated adequate/surplus, and now below last year's 64% rating.If we continue to have dry conditions like the previous week or two, these soils could continue to decline quickly. Weather forecasts are calling for a pattern change, though, with cooler temps forecast for the entire 14 day forecast into the end of July in the Corn Belt. Precip amounts are also forecast to improve to normal to above normal, which if that combination occurs would be ideal late July weather for the crop, which is already ahead of normal development in almost every crop. With crops enjoying generally favorable weather in July, its likely crop yield potential will continue to improve as we move through this critical time frame. As long as rains forecast to fall actually do fall, and temps cool to where they are forecast, its likely crop conditions will continue to suggest an improving US 2018 crop. As unlikely as it may have seemed, it looks like 2018 will, once again for the fourth year in a row, produce above trend yields. Ray Grabanski can be reached at [email protected]. +++++++++++++++++++++++++++++++++++++++++++++++++++ Ray Grabanski is President of Progressive Ag Marketing, Inc., the top Ranked marketing firm in the country the past 8 years. See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com. This material has been prepared by a sales or trading employee oragent of Progressive Ag Marketing, Inc. and is, or is in the natureof, a solicitation. This material is not a research report prepared byProgressive Ag Marketing's Research Department. By acceptingthis communication, you agree that you are an experienced user of thefutures markets, capable of making independent trading decisions, andagree that you are not, and will not, rely solely on thiscommunication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BYLAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULDINFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION ORRESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THISCOMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOURJURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THISCOMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial andeach investor and/or trader must consider whether this is a suitableinvestment. Past performance, whether actual or indicated bysimulated historical tests of strategies, is not indicative of futureresults. Trading advice is based on information taken from trades andstatistical services and other sources that Progressive Ag Marketingbelieves are reliable. We do not guarantee that such information isaccurate or complete and it should not be relied upon as such. Tradingadvice reflects our good faith judgment at a specific time and issubject to change without notice. There is no guarantee that advice wegive will result in profitable trades. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit