Prices and Weather Outlooks - Thursday, 07 June 2018

Update for June 7th, 2018

 

Corn and soybean prices have been in a tailspin thanks to several factors, one of them being weather. The months of June and July are generally when traders become more focused on weather headlines and concerns.  The delayed planting in several key growing areas this spring gave producers a bit of an early “weather market” but now that the crop is planted without many further issues we have lost some of the risk-premium the market had built into prices. There are so many contradicting forecasts outlooks for the month of June it’s really impossible to guess what to expect over the next few weeks.  Some weather models have shown hot and dry for the Corn Belt in June but as we know the weather changes quickly and right now traders see some cooler and wetter outlook models and strong crop condition ratings and they are not ready to push prices higher.

Trade negotiations have whip-sawed the market a few times now.  Talks with China were originally going well and then abruptly ended with few explanations and then a couple of weeks ago they reported a deal was close and now it appears we are back to square one. NAFTA also seems to be in limbo and in addition now the U.S. is dealing with retaliations from Mexico, Canada and the E.U. enacting tariffs on several U.S. goods and products. All of the trade issues also raise questions regarding the USDA’s export estimates and the export sales data and what this all could indicate in regards to overall demand and where that could be headed as a result. Obviously the two W’s… Washington and Weather are very hard to predict so continue to pay attention to further developments. Some of the other headlines in the news:

  • E-15 not approved for year around use.
  • Quality of U.S. wheat very low and may not make milling quality standards this is offering some strength to corn.
  • It is very early but current crop condition ratings indicate 182 bu./acre corn and 51 bu./acre soybeans.
  • Exports of U.S. ethanol are up 86% from last year.
  • U.S. DDG’s exports are 15% higher than a year ago.
  • Another truckers strike in Brazil is possible.
  • Funds have been selling off their long positions 7 out of the past 9 sessions.
  • Funds are now long 125,000 corn and 77,000 soybean contracts.

The USDA crop conditions report this week showed a 1% drop in the Good to Excellent category for corn bringing it down to 78% vs last year when 68% was rated good to excellent.  States with the largest decline in their corn conditions are: Texas and Washington which deteriorated by -11%; North Carolina -8%; Louisiana and North Dakota -6%; Colorado, South Dakota and Virginia -4%; Illinois -2%; Georgia, Iowa, Indiana and Pennsylvania -1%.  States showing the largest improvements from the previous week are: South Carolina +18%; Alabama +8%, Arkansas +6%; Nebraska 4%; Oklahoma +3%; Kentucky, Michigan, Mississippi, Minnesota and Tennessee +2%; Ohio and Wisconsin both saw a +1% improvement.

The soybean crop received the first crop condition report of the year with 75% of the nation’s soybeans in the Good to Excellent category which is one of the highest initial ratings for the U.S. soybean crop in the past 30 years.  Last year the initial rating wasn’t given until the following week and started out at 66% Good to Excellent.  The biggest producing states look to be in very good condition: Illinois has 78% of the soybean crop rated Good to Excellent; Iowa 80%; Minnesota 88%; Nebraska 86% North Dakota 80% and Indiana 74%.  The full Crop Progress report from this week can be found at the bottom of this report.

Interest rates in the U.S. remained at a low and affordable level for several years.  Now though interest rates have slowly begun to climb higher which effects everyone that borrows money. Unfortunately the Federal Reserve has indicated that it will likely continue to increase rates and the Washington Post reports that the Federal Reserve will likely raise the interest rate at least 5 more times by the end of 2019.  The Washington Post reports that farmers could face interest rates of more than 7% by the end of next year.  This is an alarming thought for everyone that remembers the 1980’s Farm Crisis which was predominately caused by skyrocketing interest rates that climbed to over 20% and put many hard-working farmers out of business from across the country.

Important Note: The USDA reports that they have again started accepting applications for the Conservation Reserve Program.  This program pays farmers to take environmentally sensitive land out of production.  The department was forced to halt continuous CRP enrollments last fall to assess the number of acres still available for enrollment in order to remain under the 24-million acre cap which was set by Congress in the current farm bill.  Eligible farmers can sign up for the program until August 14th.

The National Weather Service’s CPC 3-7 Hazards Outlook shows continued high temps and ongoing drought conditions across the Plains.  This outlook is highlighting widespread heat hazards that are expected to be in place as a mostly stationary region of upper-level high pressure continues to bake the central portion of the U.S. This extreme situation will likely stress developing corn and soybeans, especially corn entering the pollination stage and filling wheat in western Kansas. The map shown below indicates where the much above normal temps and severe drought conditions are located.

 

The northern Plains, Midwest and Northeast have seen thunderstorms move through as a pair of cold fronts move across the country allowing cooler air from the northeast to clash with warm air in the Heartland.  According to the Weather Channel these storms are expected to drop between 1 to 3 inches in the upper and northern Midwest.  Similarly to the map above the first map below shows a “Ring Of Fire” weather pattern that will bake the southern Plains while keeping the path of thunderstorms and rainfall to the north. The second map shown below indicates where the rainfall is expected and the amounts.

 

The Climate Prediction Center’s experimental 3 to 4 week outlook for June 16-29th expects “increased odds for warmer and drier than usual conditions across much of the West and Great Plains”.  According to NOAA we are in the midst of a fairly stable pattern which means we should see heat and dryness continue.  Under these conditions we are cautioned to watch for possibility of flash drought conditions developing.

 

 

CROP PROGRESS REPORT

 

Corn Planted - Selected States

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

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                 :            Week ending            :          

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

      State      :  June 3,  :  May 27,  :  June 3,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

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

                 :                    percent                   

                 :                                               

Colorado ........:    92           85          97         94    

Illinois ........:    97          100         100         97    

Indiana .........:    90           95          98         94    

Iowa ............:    98           96          99         97    

Kansas ..........:    89           93          97         94    

Kentucky ........:    94           90          94         93    

Michigan ........:    90           64          80         92    

Minnesota .......:    99           93          98         96    

Missouri ........:    99          100         100         95    

Nebraska ........:    98           96          99         98    

North Carolina ..:    99           98          99         99    

North Dakota ....:    98           87          95         92    

Ohio ............:    90           82          90         93    

Pennsylvania ....:    81           59          75         88    

South Dakota ....:    98           91          97         97    

Tennessee .......:    98           97          98         98    

Texas ...........:    98           90          96         95    

Wisconsin .......:    89           81          89         90    

                 :                                              

18 States .......:    95           92          97         95    

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Corn Emerged - Selected States

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

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

                 :            Week ending            :          

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

      State      :  June 3,  :  May 27,  :  June 3,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

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

                 :                    percent                   

                 :                                              

Colorado ........:    77          58          72          75    

Illinois ........:    89          89          91          90    

Indiana .........:    72          81          89          79    

Iowa ............:    89          77          91          88    

Kansas ..........:    74          81          90          80    

Kentucky ........:    82          68          81          81    

Michigan ........:    63          40          61          71    

Minnesota .......:    90          66          87          85    

Missouri ........:    93          91          96          89    

Nebraska ........:    89          81          92          88    

North Carolina ..:    96          94          97          96    

North Dakota ....:    83          34          66          69    

Ohio ............:    77          66          79          75    

Pennsylvania ....:    66          32          50          68    

South Dakota ....:    88          50          80          82    

Tennessee .......:    94          89          95          93    

Texas ...........:    89          83          91          90    

Wisconsin .......:    65          48          75          69    

                 :                                              

18 States .......:    84          72          86          83    

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Corn Condition - Selected States: Week Ending June 3, 2018

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

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

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

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

                :                          percent                         

                :                                                          

Colorado .......:     -           4           8          81           7    

Illinois .......:     1           2          16          56          25    

Indiana ........:     1           4          18          61          16    

Iowa ...........:     -           2          17          60          21    

Kansas .........:     1           5          36          48          10    

Kentucky .......:     -           1          12          72          15    

Michigan .......:     2           3          24          49          22    

Minnesota ......:     -           1          11          62          26    

Missouri .......:     -           8          25          59           8    

Nebraska .......:     -           1          12          78           9    

North Carolina .:     2           8          23          58           9    

North Dakota ...:     -           1          24          70           5    

Ohio ...........:     -           2          12          60          26    

Pennsylvania ...:     -           5          27          61           7    

South Dakota ...:     -           -          30          62           8    

Tennessee ......:     1           2          16          61          20    

Texas ..........:     7           7          40          45           1    

Wisconsin ......:     -           1           8          69          22    

                :                                                          

18 States ......:     1           2          19          61          17    

                :                                                          

Previous week ..:     1           2          18          63          16    

Previous year ..:     1           5          26          58          10    

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

-  Represents zero.                                                        

 

Soybeans Planted - Selected States

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

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

                 :            Week ending            :          

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

      State      :  June 3,  :  May 27,  :  June 3,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

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

                 :                    percent                   

                 :                                              

Arkansas ........:    84          87          91          73    

Illinois ........:    82          90          94          77    

Indiana .........:    72          87          94          79    

Iowa ............:    89          81          93          81    

Kansas ..........:    56          65          79          50    

Kentucky ........:    58          56          65          48    

Louisiana .......:    96          96          97          90    

Michigan ........:    72          45          65          79    

Minnesota .......:    92          80          93          84    

Mississippi .....:    92          89          92          86    

Missouri ........:    69          77          85          55    

Nebraska ........:    89          87          95          86    

North Carolina ..:    55          50          54          53    

North Dakota ....:    92          72          88          78    

Ohio ............:    71          67          81          80    

South Dakota ....:    89          61          87          80    

Tennessee .......:    61          63          69          55    

Wisconsin .......:    69          63          79          74    

                 :                                               

18 States .......:    81          77          87          75    

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

 

Soybeans Emerged - Selected States

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

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

                 :            Week ending            :          

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

      State      :  June 3,  :  May 27,  :  June 3,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

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

                 :                    percent                   

                 :                                               

Arkansas ........:    77          77          83          64    

Illinois ........:    59          75          85          57    

Indiana .........:    45          63          79          53    

Iowa ............:    59          44          72          57    

Kansas ..........:    37          42          61          31    

Kentucky ........:    36          33          48          29    

Louisiana .......:    93          92          94          85    

Michigan ........:    42          26          45          52    

Minnesota .......:    64          29          65          58    

Mississippi .....:    88          79          86          75    

Missouri ........:    49          52          69          39    

Nebraska ........:    58          53          77          58    

North Carolina ..:    40          35          46          38    

North Dakota ....:    53          20          46          42    

Ohio ............:    50          46          64          53    

South Dakota ....:    57          16          56          50    

Tennessee .......:    43          39          48          36    

Wisconsin .......:    31          25          51          44    

                 :                                              

18 States .......:    55          47          68          52    

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

 

Soybean Condition - Selected States: Week Ending June 3, 2018

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

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

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

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

                :                          percent                         

                :                                                          

Arkansas .......:      1           6          26          52          15   

Illinois .......:      1           3          18          59          19   

Indiana ........:      1           6          19          60          14   

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

Kansas .........:      1           5          37          52           5   

Kentucky .......:      -           1          11          69          19   

Louisiana ......:      5          11          25          53           6   

Michigan .......:      1           4          27          52          16   

Minnesota ......:      -           1          11          63          25   

Mississippi ....:      -           1          22          59          18   

Missouri .......:      2           9          35          49           5   

Nebraska .......:      -           -          14          78           8   

North Carolina .:      -           2          44          51           3   

North Dakota ...:      -           2          18          73           7   

Ohio ...........:      -           2          14          63          21   

South Dakota ...:      -           7          26          62           5   

Tennessee ......:      -           1          18          67          14   

Wisconsin ......:      -           1          10          72          17   

                :                                                           

18 States ......:      1           3          21          61          14   

                :                                                          

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

Previous year ..:   (NA)        (NA)        (NA)        (NA)        (NA)   

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-    Represents zero.                                                      

(NA) Not available.                                                        

 

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