USDA Report, Tariffs vs the Family Farm and Weather Forecast - Tuesday, 03 July 2018

Update for July 3rd, 2018

For the first time in 35 years soybean acres in the U.S. will surpass corn acres.  According to an article from Bloomberg, growers across the country planted 89.557 million acres of soybeans and 89.128 million corn acres which according data released last Friday is the most valuable U.S. crop. Corn acres were a bit above recent estimates while soybean acres were slightly lower than expected. The Quarterly Stocks Estimate found close to 40 million more bushels of corn than previously thought, soybean totals came in where expected. The total acreage of the 8 major U.S. crops which include corn, soybean, wheat, cotton, sorghum, oats, rice and barley totaled 254.3 million. This is up from the March estimate of 251.3 million and last year’s acreage of 252.1 million acres. Below is the worksheet showing the data from last Fridays USDA crop reports.

June 1 Quarterly Stocks Estimate

 

June #

Avg. Trade Est.

Trade Range

March USDA

Corn

5.306

5.268

5.004 - 5.500

8.888

Soybeans

1.222

1.225

1.115 - 1.305

2.107

Wheat

1.100

1.091

1.042 - 1.190

1.494

June 1 Planted Acreage

 

June #

Avg. Trade Est.

Trade Range

March USDA

Corn

89.128

88.562

87.600 - 90.463

88.026

Soybeans

89.557

89.691

89.100 - 90.700

88.982

All Wheat

47.821

47.102

46.575 - 47.700

47.339

Winter Wheat

32.732

32.633

31.469 - 33.100

32.708

Spring
Wheat

13.202

12.431

12.000 - 13.000

12.627

Durum Wheat

1.887

2.030

1.996 - 2.119

2.004

Cotton

13.518

13.781

13.450 - 14.137

13.469

Sorghum

6.04

5.909

5.700 - 6.200

5.932

 

 

The weekly crop conditions report showed a 1% decrease in the nation’s corn crop to 76% GD/EX which is 5% above the 5 year average. The graphic below gives an interesting visualization of crop conditions and the correlation to final yields.

 

U.S. soybeans have also seen ratings fall this week by 2% to 71% GD/EX.  This rating is still 4% above the 5 year average.

 

Top Producer Market Strategy Columnist, Jerry Gulke wrote an article addressing the tariff battle between Washington DC and Beijing.  He noted that the “July 6th, self-imposed line in the sand owned by this administration will either accelerate or forestall actions as there is an escape clause that can be used to implement a 30-60 day delay if there is evidence of progress in negotiations. With China now showing resolve in their actions, such progress may be in the eyes of the beholder. It is obvious what the lack of buying can do for a market.” It’s very likely that the Chinese will purchase some soybeans from the U.S. but how much it will amount to and what that lack of export business will do to U.S. carryover in the years to come is a major unknown. When Ag Secretary Sonny Perdue was asked what the administration was going to do to support agriculture his answer was quite concerning.  He stated, “It’s difficult to ascertain just how much to blame on the tariff situation when tariffs hadn’t actually been implemented.” He added, “Price is determined by supply and demand and weather and farmers understood that prices go up and they go down.” Gulke believes that based on Perdue’s comments there isn’t a plan in place to address the situation facing America’s farmers and that the administration still feels that everything will be resolved soon. He added,  “If we believe that the intellectual property rights problem will or can be solved in a matter of 6-8 weeks before we start harvesting another bumper crop, we may be as naïve as those with irrational exuberance thinking that we had China’s back against the wall.” In his conclusion Gulke wrote, “Talk is cheap but it takes real money to support the average farm family. To be used as a pawn in the trade war is ridiculous.”

U.S. Farm Report debated the best and worst case scenarios if these tariffs go into effect with Bob Utterback of Utterback Marketing and Doug Werling of Bower Trading, these are their thoughts:

Looking at the worst case scenario Utterback believes that we see corn prices fall well below the cost of production.  “I think $3.10 to $3.20 corn futures will be the long-term low.  It will take beans back down to $8.10 to $8.20. Prices will be low with wide basis.” This situation would ultimately reduce acres and throw markets into a long term bullish cycle.  He also sees that the U.S. is too reliant on export markets, “We should be focusing more on domestic utilization if at all possible or the only alternative left is supply contraction.” Werling of Bower Trading said, “So if we get into this trade issue, and this goes through, well Brazil is going to come in here, they’re going to be No. 1 in soybeans, they’re probably not going to be deforesting and expanding like they had in the past but they’re going to come from somewhere.” Werling also sees that the long-term consequences of a trade war are the most frightening. “We shut ourselves off from the world and the world says, Well we’ve got to figure out how to get our supply needs from somebody else because they’re independent. We went through it in the grain embargo and we went through it in the 30’s. Protectionist measures in markets and dealing with food is a bad thing down the road.  I don’t like it as a negotiating tool at all.”

Looking at a best case scenario Werling said, “The best-case scenario is we salvaged the business that we are hurting right now and gain more.” When considering prices Utterback believes that the short-term outlook comes down to the yield this season.  “If we’re to 180 we won’t get back above the spring highs, but if we can get back down to around 172 then you can get more optimistic. But right now, you’re probably looking at 1.9 billion bushel carry over and that’s not going to support $4.25-$4.50 corn without something significant happening.”

This alert is important information for producers to be aware of, this could greatly effect upcoming report data:

 

· Alerts History

  • 29-Jun-2018 04:15:02 PM - USDA WILL FACTOR CHINA AND MEXICO TARIFFS INTO JULY GLOBAL SUPPLY-DEMAND CROPS REPORT, IF TARIFFS TAKE EFFECT -USDA ECONOMIST
  • 29-Jun-2018 04:15:02 PM - USDA CROP REPORT FORECASTS WILL ASSUME THESE TARIFFS, IF IMPLEMENTED, "ARE GOING TO HOLD FOR THE REST OF THE YEAR" -USDA ECONOMIST

USDA CROP REPORT FORECASTS WILL ASSUME THESE TARIFFS, IF IMPLEMENTED, "ARE GOING TO HOLD FOR THE REST OF THE YEAR" -USDA ECONOMIST - Reuters News

The 6-10 day forecast from The National Weather Service shows above normal temperatures and continued drier than normal conditions for the Plains and Corn Belt.  Temps are expected to remain warmer than normal at least through mid- month. According to agronomist Dr. Michael Cordonnier when July temps are above normal corn yields average at or below trend in 2/3rds of those hot years.  He said, “What makes this year’s corn estimate so tricky is that the corn started out in very good condition and the soil moisture is above average. I think there is ample soil moisture for the first half of pollination, but I am less certain about the second half of pollination.”

 


CROP PROGRESS REPORT

Corn Silking - Selected States

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

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

                 :            Week ending            :          

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

      State      :  July 1,  : June 24,  :  July 1,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

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

                 :                    percent                   

                 :                                               

Colorado ........:     -           -           -           1    

Illinois ........:    11           2          40          11    

Indiana .........:     7           2          18           5    

Iowa ............:     -           -           7           1    

Kansas ..........:    17          13          30          19    

Kentucky ........:    41          16          44          26    

Michigan ........:     -           -           2           1    

Minnesota .......:     -           -           1           -    

Missouri ........:    22          11          48          24    

Nebraska ........:     7           2           8           4    

North Carolina ..:    75          47          68          74    

North Dakota ....:     2           -           -           4    

Ohio ............:     3           -           5           2    

Pennsylvania ....:     2           -           1           2    

South Dakota ....:     -           -           -           1    

Tennessee .......:    58          33          60          43    

Texas ...........:    62          57          59          60    

Wisconsin .......:     -           -           1           -    

                 :                                              

18 States .......:     9           5          17           8    

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

-  Represents zero.                                             

 

Corn Condition - Selected States: Week Ending July 1, 2018

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

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

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

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

                :                          percent                         

                :                                                          

Colorado .......:     2           3          17          67          11    

Illinois .......:     1           2          12          53          32    

Indiana ........:     1           4          19          56          20    

Iowa ...........:     2           4          16          53          25    

Kansas .........:     4          11          32          46           7    

Kentucky .......:     -           1          12          71          16    

Michigan .......:     2           5          22          53          18    

Minnesota ......:     -           3          14          57          26    

Missouri .......:     2          12          34          45           7    

Nebraska .......:     -           2          12          67          19    

North Carolina .:     3          16          30          45           6    

North Dakota ...:     -           2          16          71          11    

Ohio ...........:     1           3          13          56          27    

Pennsylvania ...:     1           7          26          56          10    

South Dakota ...:     3           4          28          51          14    

Tennessee ......:     1           2          17          55          25    

Texas ..........:    11          17          42          30           -    

Wisconsin ......:     1           3          12          51          33    

                :                                                          

18 States ......:     2           4          18          55          21    

                :                                                          

Previous week ..:     1           4          18          58          19    

Previous year ..:     2           6          24          55          13    

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

-  Represents zero.                                                         

 

Soybeans Blooming - Selected States

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

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

                :               Week ending               :            

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

      State     :   July 1,   :  June 24,   :   July 1,   :  2013-2017 

                :    2017     :    2018     :    2018     :   Average  

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

                :                        percent                       

                :                                                      

Arkansas .......:     68            57            69            46     

Illinois .......:     14            23            44            11     

Indiana ........:     12             8            33            11     

Iowa ...........:     11             4            21            10      

Kansas .........:     11             7            20             6     

Kentucky .......:     11             3            12             6     

Louisiana ......:     82            73            82            67     

Michigan .......:     11             1            11             7     

Minnesota ......:      8             2            13             9     

Mississippi ....:     71            54            69            48     

Missouri .......:     11             4            27             7      

Nebraska .......:     25            14            35            17     

North Carolina .:     11             5            14             8     

North Dakota ...:      7             1            11            12     

Ohio ...........:      8             6            22             6     

South Dakota ...:     14             2             7            13     

Tennessee ......:     18            13            24            10     

Wisconsin ......:      9             -            13             7     

                :                                                      

18 States ......:     17            12            27            13     

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

-  Represents zero.                                                     

 

Soybean Condition - Selected States: Week Ending July 1, 2018

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

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

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

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

                :                          percent                         

                :                                                           

Arkansas .......:     2           8          27          46          17    

Illinois .......:     2           3          17          53          25    

Indiana ........:     2           5          21          55          17    

Iowa ...........:     2           4          18          55          21    

Kansas .........:     1           8          37          49           5    

Kentucky .......:     -           2          12          69          17    

Louisiana ......:     5          11          36          37          11    

Michigan .......:     2           4          22          59          13    

Minnesota ......:     -           3          20          57          20    

Mississippi ....:     -           2          30          54          14    

Missouri .......:     3          12          37          43           5    

Nebraska .......:     1           2          11          70          16    

North Carolina .:     -           7          38          50           5    

North Dakota ...:     -           3          20          68           9    

Ohio ...........:     -           4          20          57          19    

South Dakota ...:     3           6          32          51           8    

Tennessee ......:     -           3          19          58          20    

Wisconsin ......:     1           3          13          58          25    

                :                                                          

18 States ......:     1           5          23          55          16    

                :                                                          

Previous week ..:     1           4          22          58          15    

Previous year ..:     2           7          27          54          10    

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

-  Represents zero.                                                        

 

 

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