Slipping Crop Ratings & Vacillating Heat Has Corn Market On Edge
Market Analysis
This year’s declining USDA crop ratings and a vacillating high-pressure heat dome in the SW US swinging into the Plains and the Western Corn Belt has the corn market nervous as this crop is moving further into pollination. Over the last two weeks corn’s top two categories (good/ excellent) have slipped 4% nationally to 64%; the lowest level of the summer and the lowest rating in four crop years. Ten of the twelve largest states good/excellent combined ratings slipped this week. The WCB led the decline with IA (6%), SD (7%), ND (7%), NE (3%) and KS (2%) having some hefty weekly changes. The USDA’s current procedure to utilize a 3-year average (2014-16) planted area weighting for each state’s impact on the US national levels likely helps explains the modest 1% drop in Good conditions despite the big drop in ratings in states west of the Mississippi River this week.
Monday’s USDA corn progress report also showed a modest jump in the US pollination level (silking) of 21% to 40% vs. the 5 year average of 47% and last year’s 53%. The need for replanting because of excessive rainfall in the East (IN, IL and KY) while cold soil temperature slowed seedings in the West (IA, MN, SD and ND) has pushed a higher portion of 2017’s corn crop into the hottest 2-3 weeks of summer this year. With this week’s extreme heat centered over the N. Plains & WCB, the national G/E ratings are likely to decline another 1-2%. Utilizing 2017s plantings and this week’s silking progress, the WCB’s had 31 of its 48.8 million acres (63.5%) of corn still yet to pollinate while temperatures were in 90s and 100s. In the ECB, 59.1% of its 26.65 million plantings (15.75 million acres) were still open to pollinating earlier this week. Heat can hurt corn’s yield potential during pollination, but weather during ear filling can also reduce ear length and kernel depth if overnight temperatures are elevated during August reducing a field’s yield.
What’s Ahead
Given this season’s weather & crop ratings, the trade’s current US average corn yield is likely near 166 bu. This could put the US crop at 13.86 billion bu, down 1.51 billion from 2016. But using the USDA’s demand levels, corn‘s stocks would only drop to 1.93 billion. Utilize rallies near recent July highs to have your old-crop sales cleaned up to only 10% left with new-crop at 40-45% of a conservative yield.
Disclaimer – The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of The PRICE Futures Group, any of ...
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