Market analyst: Worries of drought in US ease with current weather
Traders are waging a battle between bearish numbers due to improving U.S. and South American weather and continued strong export demand in weekly numbers. So far it looks like a stalemate, as the improving South American weather is almost perfectly offset by the strong U.S. export demand.
Weather continues to ease worries of a drought in the U.S. (especially in the western corn belt) as rain and cooler weather has arrived in much of the nation. This will likely improve the moisture situation for corn and soybeans and improve crop conditions for winter wheat across much of the U.S.
Normal to above normal precipitation and normal/above normal temperatures are good forecasts to start spring, especially considering how short moisture levels are in the west. South American weather is also mostly cooperative, with improving chances of rain in Argentina. Brazil is also enjoying more cool and wet weather (like they have since mid-January). That has improved Brazil’s crop as rain during podding is critical to the soybean yield. In other words, Brazil has recovered after a disastrous start from September to January in order to produce an average crop.
The market wanted to go down to start the week on the improving weather, but weekly export shipments monday were outstanding for all crops, especially corn at 2.2 million metric tons or about 88 million bushels. It’s hard for a demand-led market to drop when demand continues to be extraordinary.
The U.S. Department of Agriculture is way too low in their export projections for corn and soybeans, and the weekly export report is operating as a “lie detector” against USDA’s continuous denial of the strong corn and soybean exports.
Weekly crop ratings for winter wheat were +2%good/excellent in Kansas, up to 38%, +4% in Oklahoma to 57% and +6% in Colorado to 25% so the crop is improving with the warm and wet weather. However, Russia 2021 wheat ratings are down from normal, and EU conditions were also down due to the cold winter temps.