Crop Progress/Condition Data Short-Term Supportive

June 18, 2013 01:14 AM
 

What Traders are Talking About:

Overnight highlights: As of 6:15 a.m. CT, corn futures are around 2 to 4 cents higher, soybeans are 5 to 7 cents higher and wheat futures are 1 to 4 cents higher. Key to price action today will be whether bulls can maintain an upper hand through the end of the overnight trade and into the reopening of trade this morning. Cattle futures are expected to open steady to weaker, while hogs are called mixed.

 

* Progress/condition data gives markets a boost. Corn and soybean markets are responding to USDA's weekly crop progress/condition data with modest price gains through the overnight hours. On corn, traders were expecting 65% of the crop to be rated "good" to "excellent" while USDA put 64% in the top two categories. Still, that was a 1-percentage-point increase from last week. For soybeans, the planting pace came in just a tick below expectations at 85% complete, while the first crop condition ratings of the year put 64% of the crop in the "good'' to "excellent" categories. When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the corn crop improved 1.69 points to 364.39. Last year on this date, the corn crop had a 360.86 CCI rating. Meanwhile, the first soybean CCI rating of the year came in at 361.37. That's around 2 points lower than the initial rating last year (on June 3) but 17.17 points higher than year-ago on this date.

The long and short of it: Crop uncertainty is keeping bulls and bears from getting too aggressive. Traders are playing it safe as they wait to see how the corn and bean crops progress after slow starts.

* Plenty of 'holes' in crops. There are lots of "holes" in corn and soybean crops this year, as excessive wetness has led to emergence problems, especially in the wettest areas of Iowa and southern Minnesota. These "holes" may not be fully reflected in USDA's crop condition ratings and will soon be masked as crops put on growth, but they are a nick to yield potential. Unfortunately, the poor emergence/crop stands can be talked about extensively, but the market may not wake up to this until much later in the growing season -- possibly after combines roll -- especially if crop conditions perk up amid warmer, sunny weather. While there are holes in crops in some areas, there are also very good looking (although later than normal) crops in other areas that will make it harder for traders to focus on the trouble spots.

The long and short of it: This year seems to be shaping up as one with a very wide range of crop stands, conditions and yield potential. Key to price action will be whether traders choose to focus on the good or the bad. It may be a case where neither is dominant in their eyes and price action is highly choppy.

* Winter wheat harvest, spring wheat planting slower than normal. A slower-than-normal pace of winter wheat harvest and spring wheat planting is giving wheat futures a modest boost this morning. As of Sunday, winter wheat harvest was 11% complete versus 25% on average. USDA said 0% of the Kansas crop was harvested, but reports out of the state signaled combines moved into far southern regions late last week. Meanwhile, only 92% of the spring wheat crop was planted and only 84% had emerged, five and 10 percentage points behind the respective five-year averages. The top production state of North Dakota remains the primary concern. But while it appears some of the spring wheat crop in North Dakota won't get planted, the crop that is seeded, is said to be progressing nicely.

The long and short of it: Seasonally, it's going to be hard for wheat futures to muster more than modest corrective gains in the face of winter wheat harvest, even with a short HRW crop this year -- unless corn and soybeans lead the way.

 

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Comments

 
Spell Check

Anonymous
6/19/2013 05:33 PM
 

  WC Iowa, Audubon County: Corn in almost every field goes from yellow to deep green within inches, depending on each plant's proximity to an anhydrous knife track... Uuuuuugly! But on the bright side, the average is getting greener and the patterns are slowly disappearing with the few days of sun and warm temperatures of late. In some spots, however, the corn has died altogether from lack of oxygen and other spots are so leached of N that the yellow is probably irreversible. It's hard to put your thumb on just what to expect this fall.

 
 
Anonymous
6/19/2013 05:33 PM
 

  WC Iowa, Audubon County: Corn in almost every field goes from yellow to deep green within inches, depending on each plant's proximity to an anhydrous knife track... Uuuuuugly! But on the bright side, the average is getting greener and the patterns are slowly disappearing with the few days of sun and warm temperatures of late. In some spots, however, the corn has died altogether from lack of oxygen and other spots are so leached of N that the yellow is probably irreversible. It's hard to put your thumb on just what to expect this fall.

 
 

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