Weather and Crop Conditions - Thursday, 28 July 2016

Weekly crop conditions reported by the USDA again show a tremendously high Good to Excellent corn rating of 76%.  This rating is one we haven’t seen this late in the growing season in over 20 years.  Expectations are 86+ million corn acres will be harvested this season with yields projected to surpass 170 bushels per acre.  Predictions such as this are certainly going to make it difficult for corn prices to improve in the near future.  In addition to the favorable weather situation found in the U.S. producers also have to contend with an increasing value in the U.S. Dollar and decreasing oil prices, all of which work against higher grain prices.  There is another “high heat” event expected to arrive next week (I have more information on this subject further in the report) but it will likely be difficult to convince traders that it will be a “game changer” at this point.  The USDA’s weekly crop conditions report also indicated that 13% of the nation’s corn crop is the dough stage which is typical at this point in time, and 79% of the corn is silking, which is 9% above normal.

Soybean Good to Excellent ratings also were not changed from last week and currently stand at 71%.  Soybeans setting pods are reported at 35% and 76% are blooming.  If timely rains continue the trade is not likely to see the need to move prices higher any time soon.

This graph from the Van Trump Report is helpful in visualizing exactly where are corn bushels get utilized.

Earlier this spring I told you about the concerning financial situation facing the U.S. Operating Loan Program offered through the FSA, well the fund is now officially broke! This program is designed to help keep farmers in business when they are unable to secure further operating loans at the bank.  According to Reuters, the need has surpassed the $2.65 billion that the government had allocated for the program this is due to the “worst agricultural downturn in more than a decade”.  The USDA is now searching for alternate sources for these funds in an effort to “bridge the gap” until additional funds are made available either later this year or next fiscal year.

Last week brought extreme heat to most of the U.S., now portions of the central and northern Plains could see temps fall -10-15 Degrees below normal and the Corn Belt -2-8 Degrees below normal.

We have been getting plenty of rainfall in our area but there are areas, as you can see from the map below, some areas in the Eastern Corn Belt are -1-3 inches below normal.  This lack of sufficient rainfall and temps running +3-+5 Degrees above normal particularly in Michigan and Ohio are causing an expansion of drought conditions according to last week’s Drought Monitor.

We were all “warned” several weeks ago that “July was going to likely be the 2nd hottest in 121 years, well it didn’t get that hot.  T-storm Weather developed a chart, posted yesterday, that shows us where this month ranks in comparison to July temps recorded since 1895, the information they provide indicates that the Corn Belt is expected to rank as only the #45th warmest in those 121 years.

Next week, August 1-7, the U.S. is predicted to experience the second major heat-wave for the summer.  This particular heat-wave is expected to be worse than the one last week for the Western and Central Corn Belt, with a major heat dome forecasted to set up and reside somewhere over Iowa.  Rainfall predictions remain high which is not typical during such events with heaviest rains expected in the drought areas of the Southeast. 

Weather Trends 360 reported that the “Equatorial Pacific Ocean is very much in a La Niña pattern and the weather around the world is classic La Niña with flooding and record rain in Southeast Asia, Australia, sub-Sahara Africa, hot/dry’ish summer in the U.S. etc.”.  The map below indicates that as well.  The comparison in the smaller box shows the dramatic changes that have occurred with our ocean temps over the past 12 months.

China has seen a dramatic shift in their weather pattern this year in comparison to the last couple.  Dry summer weather had prevailed in the previous 2 years but 2016 is off the charts with record flooding.  Several areas, including a large portion of the agriculture regions, have received 25-40 inches of rain in just the last 2 months.  The forecast does not improve for those areas in August as continued record shattering rainfall of 6-15 inches is predicted to fall adding to the 2nd costliest disaster ($22 billion) for the country according to Chinese government officials.  The regions hardest hit include approximately 40% of the crop regions that grow: corn, soy and wheat.

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