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Market Commentary

Afternoon Comments 06/18


Tight old crop conditions seemed to support corn futures Tuesday morning, with wire service sources citing cash market strength, particularly in the western Corn Belt, for early CBOT gains. Meanwhile, concerns about the ultimate size of 2013/14 crop with summer heat looming apparently boosted the deferred contracts even more substantially. July corn closed 4.75 cents higher at $6.7325/bushel Tuesday afternoon, while December jumped 12.0 cents to $5.505.
Market Info

Bad news for corn, soybean crops

Angela Bowman, Staff Writer  |   July 2, 2012
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Get ready for a bumpy growing season. The USDA has reported more deteriorating crop conditions in its weekly Crop Progress update, released on Monday afternoon. Condition ratings for both corn and soybean crops dropped by 8 percentage points this week.

Overall conditions: 48 percent in “good” to “excellent” condition compared to 56 percent last week.

Corn condition experienced another significant decline:


Very Poor

Poor

Fair

Good

Excellent

This week

7

15

30

40

8

Last week

4

10

30

45

11

Previous year

3

6

22

52

17

Two states – Minnesota and North Dakota – continue to report higher-rated corn crops.

Many meteorologists are comparing this year’s drought with the drought of 1988, which cost American agriculture an estimated $78 billion. Read more.

Looking at the USDA’s Crop Progress report from 1988, here are comparisons for the overall U.S. report as well as five states currently struggling against nature:

  • U.S.

 

Very Poor

Poor

Fair

Good

Excellent

This week

7

15

30

40

8

July 3, 1988

6

23

48

21

2

  • Colorado

 

Very Poor

Poor

Fair

Good

Excellent

This week

15

21

30

33

1

July 3, 1988

0

1

13

71

15

  • Indiana

 

Very Poor

Poor

Fair

Good

Excellent

This week

19

31

31

18

1

July 3, 1988

11

54

35

0

0

  • Kentucky

 

Very Poor

Poor

Fair

Good

Excellent

This week

19

29

32

19

1

July 3, 1988

31

37

30

2

0

  • Missouri

 

Very Poor

Poor

Fair

Good

Excellent

This week

19

29

34

17

1

July 3, 1988

13

60

26

1

0

  • Ohio

 

Very Poor

Poor

Fair

Good

Excellent

This week

8

18

41

29

4

July 3, 1988

14

35

42

8

1

Little Drought Relief
Weather forecasts show little relief from the drought – or the heat – in the next few weeks. Some rain could develop across Michigan, northern Indiana and northwestern Ohio within the next five days, but it would be hard to make a significant dent in the current drought situation.

"We're still looking at a scenario providing below-average rainfall for at least the next 10 days," John Dee of Global Weather Monitoring told Reuters.

The 11-to-15-day forecasts did show wetter outcomes for the southwestern section of the Midwest, but the forecast outcomes can change multiple times in the meantime. Other than the drought, one thing has also dominated the forecasts: heat.

"Hot and hotter will continue to be the story from the Plains to the Atlantic Coast for the next few days," the National Weather Service reported on Monday.

Silking process: Slow, but above 2011’s pace
Corn silking is currently at 25 percent, well above last year’s pace of 5 percent and the five-year average of 8 percent. The early planting and extended heat may create headaches for farmers according to Tom Hoegemeyer with the University of Nebraska.

“Heat, especially combined with lack of water, has devastating effects on silking. If plants are slow to silk, the bulk of the pollen may already be shed and gone,” Hoegemeyer wrote. “Even in some stressed areas within irrigated fields (extreme sandy spots, hard pans or compaction areas where water isn’t absorbed and held, and some “wet spots”) we can see stress-induced slow silking and resulting seed set issues. Historically, this has been the most important problem leading to yield reduction, particularly in stressful years. Once silks begin to desiccate, they lose their capacity for pollen tube growth and fertilization.”

Soybeans: Blooming yet struggling
Currently 26 percent of soybeans in the nation have bloomed, compared to 10 percent last week and 5 percent last year. Crop conditions are very similar to corn’s, having dropped 8 percentage points this week:


Very Poor

Poor

Fair

Good

Excellent

This week

7

15

33

39

6

Last week

4

11

32

45

8

Previous year

2

6

26

53

13

Missouri reported the worst conditions of the reporting states with nearly half – 49 percent – of their soybeans in “poor” to “very poor” condition. See how your state is doing here.


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Russ    
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Texas  |  July, 03, 2012 at 09:17 AM

Texas and New Mexico, hit very hard financially,
as well as all animal agriculture everywhere, due
the drought and 2 1/2 to 3 1/2 times the feed
costs since the beginning of the escalating ethanol
mandate, pushed by EPA, Vilsack@USDA, POET,
and the Obama green agenda, continues to defy
common sense. China is stockpiling as our reserves
go to nothing, yet no one asks why we are still
burning corn in our fuel tanks.

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