Soybean Crop Rating Down Slightly
Jul 22, 2013
Soybeans started out strong Sunday night and carried the strength right through the close of the day session. August soybeans led the charge closing 29 ½ cents higher. August meal was lock-limit up $20 and limits will expand to $30 tomorrow. Despite the strength in the oilseeds, corn and wheat both closed lower. Much of Iowa missed the rains over the weekend but cooler temps and a more favorable 7 day outlook has kept a lid on corn prices. The midday outlook took some rain out of the second week outlook which was also supportive for soybeans.
Crop ratings were released at 3:00pm CST. The market was expecting an overall drop in corn/soybean ratings of 2-3%. Corn was down 3% as expected and soybeans were down only 1%. That means corn’s good-excellent rating is 63% and soybeans is 64%. For corn the most notable areas of decline were Missouri, (down 9%), Kansas (down 9%), and Nebraska (down 5%). Overall the ratings were in-line with the market’s expectations for corn and better than expected for soybeans. Winter wheat is now 75% harvested which has had a very quick comeback to bring us back to an average harvest pace. Spring wheat’s crop ratings were down another 2 percent at 68% good-excellent.
The market is still trading in a weather-based, choppy pattern. Crop ratings have declined slightly for both corn and soybeans but the national average yield isn’t expected to drop low enough for corn to bring carryout to a tight situation next year. If soybean yields drop and the USDA demand estimate is correct we can see how a tight situation could develop. However, we still believe a 10 MMT increase in Chinese imports year over year isn’t likely, especially at current prices. We also have to compete with a record South American soy production. Soybean demand is overstated in our opinion and the corn-bean ratio of 2.58 is on the high side as well. If we get to August 1st and rains are adequate we could see this spread come back in-line very quickly. For now we want to remain well hedged going into harvest using a combination of cash sales and options. To sign up for a free trial of our market letter including hedge recommendations, click here.
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