Update for July 12th, 2018 - Thursday, 12 July 2018

Update for July 12th, 2018

Later this morning the USDA will release the July WASDE report. Traders are expecting an increase in corn, soybean and wheat carryout compared to the last report. In the past 10 years the USDA has only reduced corn yields 2 times, those years being 2008-09 and 2012-13.  The remaining 8 years saw no change from the June estimate. The higher yield expected by the trade shows the confidence traders have in the highly rated crop conditions and the improved seed genetics which they feel deserve bigger yield estimates for this July report.

2018-19 USDA U.S. Yield (bu./acre)

 

USDA

July

2018-19

Average Trade Est.

Range of

Trade Est.

USDA

June

2018-19

Corn

 

174.9

172.6-179.5

174.0

Soybeans

 

48.6

47.0-49.5

48.5

 

2018-19 USDA U.S. Production (billon bu.)

 

USDA

July

2018-19

Average Trade Est.

Range of

Trade Est.

USDA

June

2018-19

Corn

    

14.269

14.045-14.683

14.040

Soybeans

 

4.314

4.200-4.402

4.280

 

2018-19 Wheat Production (billon bu.)

 

USDA

July 2018

Average Trade Est.

Range of

Trade Est.

USDA

June 2018

All Winter

 

1.196

1.178-1.218

1.198

HRW

 

0.650

0.634-0.675

0.650

SRW

 

0.316

0.305-0.334

0.316

White

 

0.229

0.202-0.244

0.232

All Wheat

 

1.858

1.825-1.923

1.827

 

 

 

2017-18 USDA U.S. Grain Carryout (billon bu.)

 

USDA

July

2018-19

Average Trade Est.

Range of

Trade Est.

USDA

June

2018-19

Corn

   

2.107

2.052-2.177

2.102

Soybeans

  

0.507

0.478-0.530

0.505

Wheat

  

 

 

1.080

 

2018-19 USDA U.S. Grain Carryout (billon bu.)

 

USDA

July

2018-19

Average Trade Est.

Range of

Trade Est.

USDA

June

2018-19

Corn

  

1.712

1.545-1.922

1.577

Soybeans

   

0.471

0.390-0.571

0.385

Wheat

   

0.973

0.924-1.021

0.946

 

2017-18 USDA World Grain Carryout (million tons)

 

USDA

July

2018-19

Average Trade Est.

Range of

Trade Est.

USDA

June

2018-19

Corn

 

191.42

189.50-192.88

192.69

Soybeans

 

91.76

89.00-93.00

92.49

Wheat

 

272.46

271.00-274.50

272.37

 

2018-19 USDA World Grain Carryout (million tons)

 

USDA

July

2018-19

Average Trade Est.

Range of

Trade Est.

USDA

June

2018-19

Corn

 

156.27

151-00-163.00

154.69

Soybeans

 

88.15

85.00-92.00

87.02

Wheat

 

265.50

262.00-268.00

266.16

 

Corn prices have fallen about -12% from a year ago. Exports are strong and will likely be raised higher in todays report, with some looking for a +20 to +40 million increase. Ethanol demand continues to remain robust but the big question mark is the new acting head of the EPA, Andrew Wheeler and what his response will be to current biofuel issues in Washington. Many see the exit of Scott Pruitt from the position as a benefit to U.S. agriculture and a way for President Trump to “get back into the good graces with farmers.”

 

 

The grain markets have been selling off for over a month now with many traders afraid to enter the market due to the uncertainty of a trade war. Last Thursday the U.S. national average for cash soybeans reached the lowest prices seen in 10 years. The overall impact of the Chinese tariffs on soybeans is unknown but strong Chinese demand and Brazil’s infrastructure issues keeping supplies tight at the ports and continued matters regarding trucking prices and producers unwillingness to assume that risk offer some hope for U.S. beans.

 

 

There have been many headlines following the implementations of tariffs last week.  As had been expected, Chinese buyers of soybeans canceled orders of 432,000 MT ahead of the Chinese tariff on U.S. soybeans.  These canceled orders consisted of 366,000 MT for the current marketing year which will end next month and an additional 66,000 MT for the following marketing year which begins in September.  Weekly data from the U.S. Commerce Department showed that export volume in May lowered the U.S. trade deficit to its narrowest margin since October 2016 and the volume was likely even stronger in June.  Unfortunately this increase did little to reduce the downturn in prices and stress for farmers that are bearing an enormous cost for these global trade sanctions.

The weather this growing season has been anything but predictable and Justin Gilsan, state climatologist for the Iowa Department and Land Stewardship explains much of this is due to the lack of either a La Niña or El Niño weather pattern in place.  The lack of either of these weather patterns is known as “neutral conditions”. Gilsan said, “When we are in neutral conditions, there’s normal sea surface temperatures in the Pacific, there’s not a good forecast ability because when we are in either of those other phases, that can give us pretty good guidance for one, two, three months out because we know what pattern to expect with the jet stream.”

As we look back over the past few months we have seen several extremes.  April was the coldest on record, the month of May brought the third warmest on record and right now it looks as though June may rank in the top 10 warmest and 13 wettest years in the record books.  Gilsan explained that we have been seeing a zonal jet stream which means we have been seeing almost a straight line across the country form but it has formed much further to the north than usual.  This zonal flow allows warm, moist southern air to stream further north than it should bringing a lot of moisture to the state.  “That jet stream has been at the Canadian border, northern Minnesota on average for the past two months. What happens is little troughs or fronts develop.  These are low pressure systems that transverse across the northern part of the state causing stationary fronts, or warm fronts that tend to stall. They are slow moving fronts. What they do is separate warm air from relatively cool air.  When these frontal features are over the northwest part of the state for example, and you have the moisture streaming from the south, once it hits that front, it has nowhere to go but up and so when it goes up you get thunderstorms to form.”

What is it though that has been making these events so extreme? He explained, “We have been in this stagnant pattern where we either have connective activity on a daily basis driven by the sun or overnight convection. With these stationary warm fronts these storms pop up and either move slowly and drop tons of rain on the same spot of the state, or they will move fast and they’ll train.” (Thunderstorms that follow along over the same path dropping large amounts of precipitation, like what we saw in Des Moines earlier this month)

Gilsan reminds us that with the neutral conditions in place at the current time weather outlooks are not always as accurate as usual.  He encourages producers to watch the 6-10 and 8-14 day outlooks from the Climate Prediction Center for some short term guidance.

The trade continues to monitor the heat and dryness across some areas of the

 

Above normal temps have delivered heat advisories in many areas this week and is expected to last through the week but models are in agreement that a significant cooldown across the Corn Belt is expected for the second half of July.

 

In addition to cooler temps arriving soon the 5 day outlook shows rainfall
across a majority of the U.S. with totals of 1-2 inches across the central
Plains and Upper Midwest.

 

The 6-10 day outlooks from the National Weather Service also shows a shift to slightly wetter than normal conditions and cooler temps across the Northern Plains, Minnesota and Iowa while warm temps will remain through the Ohio River Valley.

 

 

CROP CONDITIONS

Corn Silking - Selected States

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

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

                 :            Week ending            :          

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

      State      :  July 8,  :  July 1,  :  July 8,  : 2013-2017

                 :   2017    :   2018    :   2018    :  Average 

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

                 :                    percent                   

                 :                                               

Colorado ........:     1           -           4           4    

Illinois ........:    30          40          76          32    

Indiana .........:    17          18          49          16    

Iowa ............:     6           7          35           9    

Kansas ..........:    34          30          48          34    

Kentucky ........:    57          44          62          45    

Michigan ........:     2           2           5           3    

Minnesota .......:     3           1           8           4    

Missouri ........:    47          48          76          47    

Nebraska ........:    13           8          31          13    

North Carolina ..:    86          68          82          86    

North Dakota ....:     4           -           6           6    

Ohio ............:     9           5          30           8    

Pennsylvania ....:     5           1          13           9    

South Dakota ....:     2           -          10           5    

Tennessee .......:    78          60          83          68    

Texas ...........:    65          59          68          68    

Wisconsin .......:     -           1           6           1    

                 :                                              

18 States .......:    18          17          37          18    

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

-  Represents zero.                                             

Corn Condition - Selected States: Week Ending July 8, 2018

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

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

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

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

                :                          percent                         

                :                                                          

Colorado .......:     2           5          23          65           5     

Illinois .......:     2           3          14          49          32    

Indiana ........:     2           4          18          55          21    

Iowa ...........:     2           4          16          55          23    

Kansas .........:     4          12          32          45           7    

Kentucky .......:     1           1          13          66          19    

Michigan .......:     3           8          23          52          14    

Minnesota ......:     1           4          16          53          26    

Missouri .......:     3          14          35          42           6    

Nebraska .......:     1           2          11          65          21    

North Carolina .:     5          21          34          36           4     

North Dakota ...:     -           1          13          72          14    

Ohio ...........:     1           3          14          54          28    

Pennsylvania ...:     1           4          24          58          13    

South Dakota ...:     2           4          20          56          18    

Tennessee ......:     -           1          15          56          28    

Texas ..........:    10          15          37          36           2    

Wisconsin ......:     1           4          12          49          34    

                :                                                          

18 States ......:     2           5          18          54          21    

                :                                                           

Previous week ..:     2           4          18          55          21    

Previous year ..:     3           7          25          52          13    

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

-  Represents zero.                                                        

 

Soybeans Blooming - Selected States

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

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

                :               Week ending               :            

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

      State     :   July 8,   :   July 1,   :   July 8,   :  2013-2017 

                :    2017     :    2018     :    2018     :   Average  

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

                :                        percent                       

                :                                                      

Arkansas .......:     78            69            81            57     

Illinois .......:     29            44            64            26     

Indiana ........:     29            33            54            26     

Iowa ...........:     30            21            46            25      

Kansas .........:     25            20            38            15     

Kentucky .......:     21            12            28            15     

Louisiana ......:     86            82            92            76     

Michigan .......:     22            11            27            21     

Minnesota ......:     23            13            32            26     

Mississippi ....:     78            69            79            63     

Missouri .......:     21            27            43            15      

Nebraska .......:     48            35            50            34     

North Carolina .:     24            14            23            18     

North Dakota ...:     22            11            42            24     

Ohio ...........:     23            22            44            18     

South Dakota ...:     27             7            30            31     

Tennessee ......:     37            24            42            22     

Wisconsin ......:     20            13            29            18      

                :                                 &a

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