May concluded an excellent planting season for many farmers across the Corn Belt, but consistently wet conditions have raised concern about a majority of the U.S. corn and soybean crops. Weekly rainfall totals surpassed 17 inches in some areas of northwest Iowa in June, causing significant flooding.
"We're well passed the flood conditions of 1993 here in Illinois," commented a farmer contact in Macoupin County, Illinois. A farmer in York County, Nebraska noted, "Due to the rain we've already received this season, we may not have to turn on the irrigation until late July."
Excess moisture problems are present in North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, and Illinois in widespread and damaging effect. Until water tables decrease, yield damages will not be accurately estimated.
On June 30th, the USDA estimated 91.4 million acres of corn were planted in the U.S. The estimated corn acres mark the smallest planted U.S. corn crop since 2010 and 4% less than in 2013. Soybean planted acreage was estimated 11% higher than in 2013 to a record 84.8 million acres in 2014.
Corn prices declined by 8.8% throughout June and the July contract closed at $4.24 per bushel. Estimated U.S. corn stored in all positions was 39% higher year over year in the June 30th USDA Grain Stocks Report. Of the 3.85 billion bushels currently stored, 48% was estimated to be held on farm; up 48% year over year.
The USDA did not change the average corn yield estimate of 165.3 bushels per acre which is set to break the 2009 record of 164.7 bushels per acre, according to the June WASDE Report. Global 2014/15 corn production was estimated 2 million tons higher due to increased production in Russia, the EU, and Ukraine.
Soybean prices decreased by 6.2% this month, closing at $14.00 per bushel. The USDA stunned analysts in the Acreage Report on June 30th, estimating a record 84.8 million acres of soybeans were planted in the U.S. A delayed planting season and very attractive soybean prices lead farmers to plant substantially more soybeans than previously anticipated. The estimated 2014 planted soybean acres are 11% more than in 2013 and 7.4 million acres above the previous record.
The USDA reduced 2014/15 U.S. ending soybean stocks by 5 million bushels to 325 million bushels and also reduced 2013/14 ending stocks by 5 million bushels to 125 million bushels due to increased crush usage, according to the WASDE Report.
Wheat prices decreased by 10.1% in June and closed at $5.64 per bushel. USDA estimated wheat stored in all positions at 21.5 million bushels, 18% lower than in 2013. An estimated 56.5 million acres of all varieties of wheat were planted this year, an increase of less than 1% year over year. U.S. winter wheat production was estimated 21 million bushels less in the WASDE Report, due to the on-going poor crop conditions. Total U.S. wheat exports were estimated 25 million bushels lower to 925 million bushels, due to tighter U.S. supplies and growing global competition.
75% of the U.S. corn crop is in good or excellent condition and only 5% is in poor or very poor as of the June 30th USDA Crop Progress Report. Last year, 67% was in good or excellent condition and 8% in poor or very poor. Meanwhile, 72% of the U.S. soybean crop is in good or excellent condition and 5% is in poor or very poor. Last year, 67% was in good or excellent condition and 7% in poor or very poor condition as of the end of June.
The upcoming corn pollination period in mid to late July will greatly affect crop conditions and yields moving forward. Additionally, crop conditions may severely suffer due to all the excess rainfall. Standing and ponding water has been leaching the critical nutrient nitrogen out of the soil and may lead to a lack of nitrogen for the corn crop in the upcoming weeks.
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The bearish USDA Acreage and Grain Stocks Reports lead to a reduction in grain prices at month end, but we are optimistic moving forward due to these compelling reasons:
· Global demand for corn, soybeans, and wheat has been aggressively growing and major importers are now presented with an excellent window of opportunity to rebuild stockpiles creating renewed global demand.
· The Acreage Report was as of June 1st and the Corn Belt has been experiencing unprecedented rainfall throughout June, causing widespread major crop damage. The record soybean crop is at risk as is the corn crop due to poorly developed and shallow root systems. High soil moisture stunts root growth in June as crop roots do not need to expand out very far to source moisture. In later months, when rainfall diminishes, the root systems are unable to source adequate water for optimal growth.
· The USDA's record corn yield estimate of 165.3 bushels per acre is achievable only if all conditions are optimal. Since the June 11th WASDE Report, weather conditions have not remained advantageous and the total size of the U.S. corn crop could be in jeopardy.
Moving forward, the weather will be a major factor for grain prices. The crucial corn pollination period is within weeks away and can position the plant for excellent or very poor yields, depending on the humidity, temperature, rainfall, and wind.
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