Corn futures are increasing during Tuesday’s trading session, touching the highest since mid-July. Analysts say there are a couple of reasons behind it.
The U.S. Department of Agriculture (USDA) said the U.S. corn crop in the top 18 producing states is at 64%, a 5-point drop from the week prior. Crop ratings for Iowa dropped as well with USDA rating just half of the state’s corn crop in the “good to excellent” category. That’s a 9-point plunge from the week prior too. The “poor to very poor” category increased 4% to 21% as well.
“We’re talking about the largest corn growing state in the U.S. [at] 14 million acres,” says Jarod Creed of JC Marketing Services.
Creed traveled along the Western Leg of the Pro Farmer Crop Tour. He believes South Dakota, Minnesota and Nebraska won’t be able to “pick up the slack” to that degree.
“I don’t think the crop potential in Minnesota, South Dakota and Nebraska is enough to offset the losses that we are going to experience in Iowa from the drought and derecho,” says Creed.
Creed believes the drought could be the biggest impact to yield, especially if rain is sparse but both events will make a difference.
“At this point, my personal guess on our production loss in the state of Iowa from drought and the derecho, it could be somewhere between 250 million bushels and 300 million bushels,” says Creed. “That’s over a 20 bushel drop if it’s at 300 million bushels, just in the state of Iowa.”
The U.S. soybean condition in the top 18 producing states also dropped from the week prior as well. Now, 69% of the crop is rated in the “good to excellent” category. It was 72% the previous week.
Creed says he expects some changes in the September report, especially for a state-by-state basis. He believes the verdict is out on potential changes to the soybean crop in the September report since the crop is traditionally “made” during August.