7/28/20 - U.S. crops continue to impress as far as yield capability in spite of below normal rainfall much of the summer for much of the U.S. Temps have also been above normal for most of the last six weeks, which normally can hurt a crop as well. But despite some obstacles, the 2020 crop so far has thrived due to stored soil moisture at the beginning of the year - which was quite high. We’ve depleted a good share of the excess soil moisture in many areas, but for the most part crops still look quite good.
Crop progress on Monday was full of bearish news, with corn and soybean conditions improving 3% to 72% rated G/E, and yield models jumping 1.15 bushels/acre in corn to a yearly high of 180.7 bushels. Our soybean yield model also improved 0.28 bushels/acre to 50.5 bushels, now above USDA by over half a bushel/acre. So this development was definitely bearish, with many states showing improvements in ratings, including Illinois (up 11% corn and 9% soybeans), Nebraska (up 9% both crops), Kansas (up 5% corn and 10% soybeans), Indiana (up 6% corn and 5% soys), and Ohio (up 6% both crops). States that went the other way included Iowa (down 3% both crops), Pennsylvania (-6% corn), and North Dakota (-3% corn and -5% soys). Iowa and Pennsylvania were too dry, while North Dakota is drowning out in flooded conditions in some areas.
Weather forecasts include less precip in the next 14 days, with a drier forecast for the northern corn belt the next seven days (almost no rain in Iowa), and less rain in the 8-14 day forecast as well (below normal precip for all the corn belt now). The band of heavy rain the next seven days is also reduced in coverage, but still over 3” of rain is forecast for southern Missouri, northern Arkansas, Kentucky and Tennessee. It was raining in Oklahoma on Tuesday, but very little other organized precip is falling. Temps also have cooled in the forecast to below normal for most of the corn belt in the next seven days, and below normal for at least half the corn belt in the 8-14 day outlook. So that will improve the atmosphere for reproducing crops — with better weather for seed formation of soybeans in the podding stage of development.
Overall, crops have fared quite well, especially corn and soybeans, despite warm and somewhat dry conditions the past six weeks. While the corn belt experienced warm/dry, much of the Upper Midwest has experienced wet/wet/wet! North Dakota in particular has some soggy fields, as anywhere from 7” to 10” have already fallen in many areas in July, which is typically 50% or more of the annual precip. Tiled ground certainly is shining next to the other dryland crops (which are drowning out).
Corn and soybean crops are also ahead of normal crop development since they were planted early and we’ve had mostly above normal temps much of the summer. Soybeans are 43% setting pods (+7% from normal), corn is 82% silking (+7%), and corn dough stage is 22% (+5% from normal). Conditions of other crops mostly improved this week, too, with cotton up 2% to 49% rated good/excellent, sorghum up 2% to 53% G/E, hard red spring wheat up 2% to 70% G/E, and barley up 5% to 80% G/E. Winter wheat is 81% harvested, 1% below normal, and some northwestern winter wheat is not very good due to drought (western Nebraska/South Dakota).
Soil moisture levels also improved this week as beneficial rains fell, with topsoil now 63% adequate/surplus (+3%) and subsoil 65% adequate/surplus (+1%). This reverses the previous decline in soil moisture levels experienced over the past few weeks, so that is also a positive development for 2020 crops.
Overall, it appears that the past few weeks of some scattered rains have meant “rain makes grain,” as our headline last week declared. Usually when rain makes grain, grain prices go down. It will be interesting to see if we can go much lower as we already are at or near the bottom of our recent price range.