Crop Markets Are Responding Negatively to USDA Reports

Last week’s high in December corn was $3.89, and November soybeans, $9.88 ½. Thursday, ahead of USDA’s Friday release of the supply/demand report, both futures contracts plunged. They were able to regain a few cents and finish higher Friday and Monday, but the weekly Crop Progress report added to the bearish tone and corn closed at new lows, while soybeans posted double-digit losses as support gave way in both markets.

The 18-state corn rating bumped up 2 percentage points from the prior week, to 62 percent good/excellent, and the poor/very poor end of the scale improved 1 point to 12 percent.

Worst-rated South Dakota saw a five point improvement on each end, to 31 percent on the low end and 34 percent on the upper end.

Corn Poor/very poor (percent) 8/13 Poor/very poor (percent) 8/6 Good/Excellent (percent) 8/13 Good/Excellent (percent) 8/6
18 States 12 13 62 60
Iowa 12 10 63 64
Kansas 15 15 55 54
Nebraska 13 16 63 59
South Dakota 31 36 34 29

The 18-state soybean rating worsened one point on the top end, to 59 percent good/excellent but held steady on the lower end at 12 percent.

Soybeans Poor/very poor (percent) 8/13 Poor/very poor (percent) 8/6 Good/Excellent (percent) 8/13 Good/Excellent (percent) 8/6
18 States 12 12 59 60
Iowa 15 12 56 59
Kansas 10 9 52 53
Nebraska 12 13 61 58
South Dakota 22 29 34 32

Many analysts and models still are guessing that yields ultimately will be lower than USDA’s projection for 169.5 bu. of corn and 49.4 bu. of soybeans, but for now the over-hang of 2016 supplies, combined with the current ratings, are enough to dampen price prospects.

Spring wheat remains the crop with production concerns. At 40 percent harvested, 33 percent of the crop is rated good/excellent, up one point from last week, while 42 percent is poor/very poor.

Weather Ahead

Recent rain in The Climate Prediction Center’s outlook for Aug. 21-25 supports the bears, with odds favoring both cooler than normal temperatures and above average rainfall.

6-10 day precip Aug 21-25

Source: http://www.cpc.ncep.noaa.gov