Corn and soybean crops improve
7/11/16 — Corn and soybean crops improved significantly in the last crop progress report out Monday afternoon, July 11. That report showed a 1% improvement in both corn and soybean crop conditions, resulting in a significant yield hike in Pro Ag yield models. Unfortuntately, that is bearish as it means there will likely be larger carryouts for grains at the end of this year. Nothing is more important it seems in summer than the size of the yield of the crops, and when yield models go up significantly, it’s difficult for the market to rally that week.
Crop conditions came out yesterday and showed an improvement in corn and soybeans of 1% each in G/E to 76% rated G/E in corn, and 71% rated G/E in soybeans. That translated into some large yield model hikes, with corn up 2.4 bu/acre to 170.6 bu/acre, and soybeans up a large 0.63 bu/acre to 46.77 bu/acre. So this shows last week was a very good week for the corn and soybean crop. That is bearish, and shows the market was rightly lower in the past few weeks as the weather forecast improved. Soybeans are 7% setting pods at this time vs. 5% normally, and 40% blooming vs. 31% normally at this time. Corn is 32% silking vs. 26% normally at this time.
HRS wheat conditions, however, showed a decline of 2% in the G/E category, down to 70% rated G/E now vs. 71% last year at this time. Harvest is fast approaching, as spring wheat was planted relatively early this year. HRS wheat is 91% headed vs. only 64% normally, so you can see that 2016 is an early planted year. Barley conditions also declined 1% this week to 74% rated G/E, still ahead of last year?s 72% rating.
Winter wheat crop ratings are no longer being issued as we are now over 50% harvested with the winter wheat crop, this week coming in at 66% harvested vs. 65% normally. We slowed the harvest a bit this week as rains arrived in much of winter wheat country. The yields of winter wheat thus far have been record large in many locations, and already USDA is projecting record shattering winter wheat yields. These projections were reflected in Pro Ag yield models while they were still being issued, and also in yield reports from the combines of winter wheat. The last bit of harvest is being delayed a bit, and will mean lower quality on the remaining winter wheat harvest in Kansas, Oklahoma, and Texas.
Sorghum conditions remained quite high at 69% rated G/E, still a high rating for sorghum this late in the year. Last year we had a good crop, and we were only rated 67% rated G/E at that time.
Probably the most disconcerting to the drought bulls was the replenishment of subsoil and topsoil moisture this week. Topsoil moisture conditions were rated 71% adequate/surplus, up 4% from last week?s 67% rating. Subsoil also improved 1% to 73% rated adequate/surplus, which means more cushion in case a dry week or two did come along. That means the nation’s corn crop, especially, has less of a chance of hurting the crop by harvest, as pollination of most corn is just around the corner. So this is a critical time for growing conditions.
So prices for most grains are at or near a bottom (for wheat and corn), and that is giving people a bit of heartache as we get closer to the time when people would like to have a portion of grain marketed. If it wasn’t sold in June, there just haven’t been many opportunities to sell grain this year. In fact, wheat never really gave us much opportunity to sell at decent prices. But in mid-June, both corn and soybeans did give us some opportunity to lock in a small profit for many producers.
Weather forecasts today for the 8-14 day show an improvement, with less heat and more rainfall than yesterday’s somewhat threatening forecast. That may apply some pressure today along with the improving crop conditions and Pro Ag yield models. The next 7 days still shows warm weather, but good rainfall forecasts throughout the Corn Belt the next 7 days.
There still is a lot of summer left as far as weather, but with corn and soybeans mostly planted early along with HRS wheat and crop conditions and soil moisture levels still relatively good, it may be difficult to get much of a weather rally going unless the weather is drastically bad from here on out to harvest. If not, then we may have all the grain priced pre-harvest we are going to get done, and we may have to wait for post-harvest pricing opportunities.