Prices and An Upside Down Weather Month - Thursday, 02 June 2016

For the first time since July, 2015 corn has closed above $4.00.  Funds and speculators appear to be more optimistic towards corn even with little fresh news in the headlines. It has been estimated that speculators are currently holding close to +100,000 long contracts. 

Global news regarding weather complications in South America has gained much attention over the past several weeks and it continues to hold the attention of producers and traders even now.  Argentina has been receiving heavy rainfall that has slowed the harvest progress and is now also causing “serious logistical restraints” which is preventing the country from exporting its usual large amounts of corn.  Brazil exported too much corn and is now finding it is out of the domestic supply they need, this shortage is expected to continue for the next year due to the widespread drought conditions that have ruined or reduced corn yields across many key growing regions. Poor weather conditions in Argentina and Brazil has intensified the importance of U.S. weather this summer and South America’s weather into the 2017 growing seasons. This means that for the time being the world’s attention has shifted toward the U.S. and away from South America for their upcoming import needs.  To add to the situation it has been reported that banks is South America have become nervous and producers are finding it difficult to secure financing for input costs.  This may force many producers to switch to the less expensive input alternative to corn…soybeans.

USDA’s Crop Progress report this week shows 94% of the U.S. corn crop has been planted.  Only 5 states were reported to have less than 90% of their corn planted, all of them are in the Eastern Corn Belt:

  • Indiana
  • Ohio
  • Michigan
  • Kentucky
  • Pennsylvania

Crop conditions sit at 72% Good to Excellent compared to 74% last year.  There are some stark differences though when looking at specific states in comparing the crop condition from last year to this year.  For example, currently Ohio and Pennsylvania both find conditions down -24 points from last year while Missouri is finding a +21 point improvement from a year ago.

Soybeans have been finding very strong price support the JUL16 contract has pushed past $11.00 per bushel and is currently at late-summer 2014 levels.  South America has been exporting very little soybean meal which may help keep the price supported for now but there is a good possibility that a portion of the currently  unplanted “corn” acres in the U.S. may shift to soybeans, which could push the total 2016 soybean acreage above +85 million acres. 

The USDA Crop Progress report this week has the soybean crop at 73% planted which is 7% higher than the 5 year average.  A few examples of states running considerably ahead or behind average are:

  • Minnesota +25 points ahead of normal
  • North Dakota is +35 points ahead of normal
  • Iowa reports a +10 point lead
  • Kansas is -27 points behind normal
  • Nebraska is currently -9 points behind normal


The latest seasonal forecast shows the month of June may deliver “upside down” temps across the U.S.  As you can see from the map below the heat for the early portion of the summer will be positioned mainly in the Northwest and areas west of the Rockies.  This map is expected to change rapidly as we progress into the following summer months.  Well above normal temps are predicted to push from the West Coast through the northern Plains, Great Lakes, Ohio Valley, mid-Atlantic and Northeast regions.  Above normal temperatures are expected to expand and cover the remainder of the country with the exception of a cooler than normal area that will run through Texas, Oklahoma, Arkansas and Louisiana.

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