Hot Forecast and Crop Conditions - Thursday, 31 May 2018

Update for May 31st, 2018

Several negative factors have caused the grain markets to slide lower the past couple of days.  The most notable of these being the on again-off again trade situation with China and now with the NAFTA negotiations as well.  Traders were undoubtedly impressed by the condition of the U.S. corn crop which was included in this week’s USDA crop progress report for the first time this season.  The report showed that 79% of the U.S. corn crop is rated good to excellent which is 7% above trade expectations and 8% above the 5 year average.  In comparison to previous years this week’s corn condition rating is the highest recorded for this date since 1994 when 79% was rated good to excellent making this the best in 24 years. (The Planting Progress report is shown at bottom of newsletter).  Lack of any threatening weather outlooks also adds to the weakness in the market although there are some concerns regarding the drought affecting the Southwestern U.S. 

According to recent reports, 2/3rds of this affected region is suffering from some degree of drought conditions.  Of this 40% has been classified as extreme drought which affects not only crops but livestock as well. As we look into extended outlooks for June the forecast for the 2nd week of June indicates this already parched region can expect temps into the triple digits.  This will only add to the dryness concerns facing the southern Plains. 

 

The International Grains Council has updated their world balance sheets.  In their recent update they estimate that the world grain production for this year to be 2.1 billion metric tons which is a 2.3% decrease from a year ago. The group’s latest new crop production estimate increased from the previous projection to 2.09 billion metric tons. Unless there are further increases to this figure it will be the 2nd year in a row with reduced world grain production. 

With the increased demand for corn found around the globe the world corn reserves are receiving heightened attention.  Considering U.S. demand alone, corn reserves are projected to see a 500 million bushels reduction.  This fact is moderated by small grains reserves which are expected to be able to off-set some of the corn demand.

While there are no imminent weather issues to drive prices higher the above average heat and dry conditions found in some areas is worth watching as the season gets going.  The hot temps and dry conditions that are breaking records in many regions and is leading many to wonder if this abnormally hot May could also lead to abnormally hot temps the next couple of months. In our part of the country most people would say the hot temps this last week were exactly what our crop needed. Bringing Growing Degree Units back to levels closer to normal and getting the crop up and out of the ground faster than we typically see. The question is though, what if the extreme conditions were to stretch into the summer?  The University of Nebraska researched this scenario a couple of years ago and this was their conclusion:

"Whether in the presence or absence of adequate soil moisture in the soil profile, heat stress can be an important risk and/or limitation to plant growth and development. While some crops are more susceptible to heat stress during critical growth stages [e.g., pollination for corn and R3 (flowering) stage for soybean], both corn and soybean are also susceptible to extreme heat (and water) stress during early vegetative stages.

Extreme heat stress can reduce plant photosynthetic and transpiration efficiencies and negatively impact plant root development, which collectively can negatively impact yield. The decline in the photosynthetic rate under both heat and water stresses are frequently attributed to

  • lowered internal plant CO2,
  • inhibition of photosynthetic enzymes (e.g., Rubisco) and
  • Synthesis of ATP (adenosine triphosphate), which produces chemical energy that is needed for regulating plant biochemical reactions.

Extreme heat stress (even in the presence of adequate soil moisture) can cause a reduction in plant stomatal conductance, which reduces plant transpiration rate, causing reductions in plant productivity and yield. If extreme heat stress is coupled with dry wind over the plant canopies, the magnitude of stomatal closure and the reduction in rate of transpiration is greater for corn and soybean.

Heat stress is a complex function of intensity, duration, and the rate of the increase in air temperature. In addition, the effect of an increase in soil temperature (as a result of increase in air temperature) may be even stronger when accompanied by a decline in soil water content.”

Traders are watching the escalating social unrest in Brazil very closely.  The recent truckers strike has managed to turn into something much larger than originally expected as farmers and federal police also joined in support of the truckers.  At that point the Brazilian government then ordered the use of military force which “was like throwing gas on a fire”.  As of last weekend some airports were beginning to run out of fuel, livestock facilities were running out of feed and homes were running low on natural gas. This situation could be an opportunity for U.S. producers as many global buyers will be forced to buy U.S. soybeans sooner than expected.  The latest information regarding the situation from Bloomberg stated, “Trucks arrived at Paranagua Port in Parana state around 2 p.m. local time, escorted by the Federal Road Police, a press official from the port authority says in a telephone interview.  In two hours, 52 trucks entered the port complex, trucks with 42,000 tons of soybeans are expected to unload in the next 24 hours. Only partial shipping operation are underway.”

AgriTalk host, Chip Flory asked chief meteorologist Michael Clark of BAMWX.com what production year farmers can most closely compare this growing season to and this was his response, “In a nutshell, 2012. Do I think it’s as severe? No, I do not.  Let that be clear.  I do not think this is a repeat by any means, but with all the drivers and everything lining up, 2012 is at the top of my list right now.” Clark expects that the heat we’ve seen will stay around for a while yet and he also forecasts limited rainfall. He explained that the weather models continues to show the heat ending but then as the 11 to 15 day forecast moves up to the 6 to 10 day outlook period it just keeps getting hotter. He explained the situation like this, “So the models will say, “Hey it’s going to get cold in the east, it’s going to cool off, the heats going to back off,” and then you get into the 6 to 10 day and the heat is still there…So with that being said, I mean, could there be a relax? You know, the second week of June, it could maybe relax a little bit, but I think that this ridge and the resiliency of this ridge and the heat, especially mid to late June can come back and possibly in a big way.” In general Clark does not see the Corn Belt cooling off any time soon and he looks for waves of intense heat followed by less intense heat, a cycle that looks quite similar to that of a La Niña weather pattern.  He concluded with, “We’re coming out of a La Niña, Chip.  But just because we’re coming out of the La Niña does not mean that the atmosphere can’t still resemble those characteristics and behavior.  A lot of what we’re seeing is indicating that coming into mid to late June the La Niña could reemerge.” Clark sees the possibility of the entire country being above normal through the end of July.

As we look at the 6-10 day outlooks from The National Weather Service we see a warm and dry start to the month of June across the Midwest and Plains. If the BAMWX.com outlook holds true we will have many more of these maps as we progress through the summer.

 

 

 

CROP PROGRESS REPORT

Corn Planted - Selected States

[These 18 States planted 92% of the 2017 corn acreage]

-----------------------------------------------------------------

                 :            Week ending            :          

                 :-----------------------------------:          

      State      :  May 27,  :  May 20,  :  May 27,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

-----------------------------------------------------------------

                 :                    percent                   

                 :                                               

Colorado ........:    86          67           85         87    

Illinois ........:    92          96          100         94    

Indiana .........:    80          88           95         85    

Iowa ............:    96          86           96         95    

Kansas ..........:    80          82           93         88    

Kentucky ........:    90          81           90         87    

Michigan ........:    80          50           64         81    

Minnesota .......:    96          77           93         92    

Missouri ........:    96          96          100         92    

Nebraska ........:    94          88           96         95    

North Carolina ..:    98          96           98         98    

North Dakota ....:    92          62           87         84    

Ohio ............:    81          71           82         82    

Pennsylvania ....:    73          35           59         78    

South Dakota ....:    94          66           91         92    

Tennessee .......:    97          94           97         96    

Texas ...........:    95          88           90         91    

Wisconsin .......:    75          56           81         81    

                 :                                              

18 States .......:    90          81           92         90    

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Corn Emerged - Selected States

[These 18 States planted 92% of the 2017 corn acreage]

-----------------------------------------------------------------

                 :            Week ending            :          

                 :-----------------------------------:          

      State      :  May 27,  :  May 20,  :  May 27,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

-----------------------------------------------------------------

                 :                    percent                   

                 :                                              

Colorado ........:    58          31          58          58    

Illinois ........:    78          84          89          81    

Indiana .........:    58          61          81          63    

Iowa ............:    79          53          77          76    

Kansas ..........:    62          56          81          66    

Kentucky ........:    72          52          68          69    

Michigan ........:    39          22          40          48    

Minnesota .......:    78          24          66          69    

Missouri ........:    88          84          91          82    

Nebraska ........:    73          53          81          73    

North Carolina ..:    95          89          94          93    

North Dakota ....:    62           8          34          46    

Ohio ............:    59          45          66          55    

Pennsylvania ....:    50          13          32          53    

South Dakota ....:    70          15          50          62    

Tennessee .......:    89          79          89          87    

Texas ...........:    85          81          83          81    

Wisconsin .......:    43          21          48          49    

                 :                                              

18 States .......:    70          50          72          69    

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Corn Condition - Selected States: Week Ending May 27, 2018

[These 18 States planted 92% of the 2017 corn acreage]

----------------------------------------------------------------------------

      State     : Very poor :   Poor    :   Fair    :   Good    : Excellent

----------------------------------------------------------------------------

                :                          percent                         

                :                                                          

Colorado .......:      -           1           7          84           8   

Illinois .......:      1           2          14          52          31   

Indiana ........:      1           4          17          63          15   

Iowa ...........:      -           1          17          63          19   

Kansas .........:      2           6          35          49           8   

Kentucky .......:      1           2          12          69          16   

Michigan .......:      1           2          28          58          11   

Minnesota ......:      -           1          13          65          21   

Missouri .......:      -           4          26          61           9   

Nebraska .......:      -           1          16          77           6   

North Carolina .:      -           6          19          60          15   

North Dakota ...:      -           1          18          79           2   

Ohio ...........:      -           1          14          57          28   

Pennsylvania ...:      -          11          20          66           3   

South Dakota ...:      -           -          26          67           7   

Tennessee ......:      1           2          18          60          19   

Texas ..........:      5           7          31          53           4   

Wisconsin ......:      -           -          10          71          19   

                :                                                          

18 States ......:      1           2          18          63          16   

                :                                                          

Previous week ..:   (NA)        (NA)        (NA)        (NA)        (NA)   

Previous year ..:      1           6          28          57           8   

----------------------------------------------------------------------------

-    Represents zero.                                                      

(NA) Not available.                                                         

 

Soybeans Planted - Selected States

[These 18 States planted 96% of the 2017 soybean acreage]

-----------------------------------------------------------------

                 :            Week ending            :          

                 :-----------------------------------:          

      State      :  May 27,  :  May 20,  :  May 27,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

-----------------------------------------------------------------

                 :                    percent                   

                 :                                              

Arkansas ........:    80          81          87          66    

Illinois ........:    60          81          90          62    

Indiana .........:    53          73          87          60    

Iowa ............:    75          58          81          71    

Kansas ..........:    39          50          65          37    

Kentucky ........:    43          35          56          34    

Louisiana .......:    94          93          96          86    

Michigan ........:    53          29          45          60    

Minnesota .......:    80          48          80          73    

Mississippi .....:    89          84          89          78    

Missouri ........:    52          61          77          45    

Nebraska ........:    73          68          87          72    

North Carolina ..:    42          38          50          42    

North Dakota ....:    79          33          72          61    

Ohio ............:    52          50          67          59    

South Dakota ....:    70          24          61          65    

Tennessee .......:    51          50          63          44    

Wisconsin .......:    43          33          63          56    

                 :                                              

18 States .......:    65          56          77          62    

-----------------------------------------------------------------

 

Soybeans Emerged - Selected States

[These 18 States planted 96% of the 2017 soybean acreage]

-----------------------------------------------------------------

                 :            Week ending            :          

                 :-----------------------------------:          

      State      :  May 27,  :  May 20,  :  May 27,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

-----------------------------------------------------------------

                 :                    percent                   

                 :                                              

Arkansas ........:    70          61          77          55    

Illinois ........:    35          57          75          35    

Indiana .........:    30          38          63          31    

Iowa ............:    36          18          44          33    

Kansas ..........:    22          21          42          18    

Kentucky ........:    24          13          33          17    

Louisiana .......:    90          84          92          77    

Michigan ........:    17          11          26          28    

Minnesota .......:    36           3          29          35    

Mississippi .....:    83          66          79          67    

Missouri ........:    32          33          52          26    

Nebraska ........:    32          25          53          33    

North Carolina ..:    25          22          35          25    

North Dakota ....:    24           1          20          20    

Ohio ............:    32          22          46          29    

South Dakota ....:    27           2          16          26    

Tennessee .......:    27          25          39          24    

Wisconsin .......:    11           7          25          23    

                 :                                              

18 States .......:    34          26          47          32    

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