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The most critical corn growth period approaches the Corn Belt, analyst says
Weather forecasts have improved recently, and markets that were rallying have stalled almost immediately.
They are waiting to see how this more recent pattern of cooler and wetter weather will play out. Will it just be a temporary period in an otherwise dry summer? Or, will it be a weather pattern change that reverses the course of the 2020 season?
Regardless of how you see it, any improvement from the hot/dry period in mid-June will improve yield prospects – but daily precip totals will likely dictate how much it improves. Weather forecasts today are turning a bit drier in the eight- to 14-day forecast in the northern Corn Belt.
However, we still have a normal to above-normal precip forecast the next seven days, with mostly below-normal temps. That is quite a change from the above-normal temps and below-normal precip forecast of just a week ago.
This is a much more favorable forecast going into July for the growing crop, which will soon use high amounts of moisture during the rapid vegetative growth stage. There is rain today in Texas (which will delay winter wheat harvest), Indiana, Michigan, and Wisconsin as well as rains of the more scattered variety.
Crop conditions released Monday, 6/22 continue to show pretty good crops of corn, soybeans, and winter wheat are in the fields.
Specifically, it showed a 2% decline in soybeans to 70% G/E, but the Pro Ag yield model was up 0.1 bu/acre to 49.5 bu in spite of the decline in conditions. Corn conditions were up 1% to 72% G/E, which also resulted in a yield increase of 1.6 bu to 177.6 bu/acre. Winter wheat also saw a 2% hike in conditions to 52% G/E, with the yield model rising 0.4 bu to 51.6 bu/acre. So overall, the crops continue to get better.
Meanwhile, though, soil moisture levels are continuing their rapid decline with a 4% decline in subsoil rated adequate/surplus to 72% adequate/surplus, and topsoil had a 3% decline to 66%. Other crops went the other direction with a decline in ratings, including cotton (down 3% to 40% rated G/E), sorghum (down 1% to 47% G/E), barley (-2% to 75% G/E), and HRS wheat (-6% to 75% G/E).
These crops saw declines in crop ratings this week, with yield potential likely reduced as well (especially HRS wheat).
With these numbers and the continued better weather forecast, grains are under pressure despite a higher stock market. A forecast is one thing, but what will the weather actually be like? We can’t continue to deplete soil moisture into July and expect another bumper crop, can we?
We are entering probably the most critical time for growing crops, with pollination of corn after July 4 nearly nationwide, and podding of soybeans coming quickly after that. The next four weeks will have a lot to say about the corn yield potential, and the four weeks after that in August will be extremely important to soybean yields. This is when we will likely determine whether we have a 5% above average crop, or 5% below average. But with the moderate situation right now, dramatic yield losses (or gains) might not be possible, so this might be a crop that becomes very close to average.
Given that scenario, price outlooks would turn bleak later in July. Can the crop be hurt the next eight weeks? That might be the million dollar question.
An increase in COVID-19 cases in Oklahoma, Florida, California, Arizona, and Texas adversely affected all markets initially, but now the effect is becoming smaller each day.
Ray can be reached at email@example.com.
Ray is president of Progressive Ag Marketing, Inc., a top-ranked marketing firm in the country.
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