Evening Report (VIP) -- August 6, 2012

August 6, 2012 10:37 AM
 

August 6, 2012

Evening Report

HALF OF CORN CROP IN 'VERY POOR' TO 'POOR' CONDITION... As expected, USDA lowered the portion of the corn crop rated in "good" to "excellent" condition by one percentage point from last week to 23%, but the "poor" to "very poor" rating climbed by two percentage points to 50%. While this is about as traders' expected, the fact that 77% of the crop is rated "fair" to "very poor" says a lot about this crop -- it's severely damaged!

Corn

very poor

poor

fair

good

excellent

This week

25

25

27

20

3

Last week

23

25

28

21

3

Year-ago

6

10

24

45

15

As of Sunday, USDA reports 26% of the corn crop was dented compared to 13% last week and 7% on average. As a result, a rain won't do much to help this advanced crop. Illinois reports 38% is dented (11% on average); Indiana is at 25% (4% on average); and Iowa is at 27% (1% on average). USDA says 6% of the crop is mature compared to 2% on average.

 

SOYBEAN CONDITION DECLINES SLIGHTLY... This afternoon's soybean crop condition ratings could result in some confusion, as the portion of crop rated "excellent" improved by one percentage point from last week, while crop rated "good" declined by one point. But the portion of crop rated "poor" and "very poor" increased by one percentage point each to 39% combined, suggesting the crop is still declining more than its improving. However, further rains this week, if realized, would help to stabilize the crop and aid in pod development.

Soybeans

very poor

poor

fair

good

excellent

This week

16

23

32

25

4

Last week

15

22

34

26

3

Year-ago

4

9

26

48

13

As of Sunday, USDA reports 71% of the crop was setting pods compared to 55% last week and 53% on average. Illinois is at 82% (52% on average); Indiana is at 66% (43% on average); and Iowa is at 77% (68% on average).

 

SPRING WHEAT HARVEST NEARS HALFWAY MARK... USDA reports as of Sunday, 47% of the nation's spring wheat crop was harvested compared to 28% last week and 12% on average. Producers are hopeful that as harvest crosses the halfway point, basis levels will recover and hedge-related pressure will ease. South Dakota is nearly complete, at 96% harvested (38% on average), followed by Minnesota at 80% (14% on average) and North Dakota at 52% (8% on average).

 

COTTON CONDITION DECLINES... USDA reports the condition of the cotton crop declined last week, with 41% of the crop rated "good" to "excellent," which is down three percentage points from the previous week. The portion of crop rated "poor" to "very poor" climbed by five percentage points, with 27% now rated in these categories.

Cotton

very poor

poor

fair

good

excellent

This week

10

17

32

32

9

Last week

6

16

34

35

9

Year-ago

22

19

29

25

5

USDA reports 74% of the crop is setting bolls compared to 59% last week and 70% on average. USDA reports 9% of the crop is opening bolls compared to 7% on average.

 

NWS 6-10 DAY FORECAST DRY FOR EASTERN BELT... The National Weather Service forecast for Aug. 12-16 calls for above-normal temps west of the Mississippi River, with normal temps expected in eastern locations. However, below-normal precip in the forecast for Illinois, Missouri and Indiana which would maintain stress on crops, if the forecast is realized. Meanwhile, above-normal precip is expected in the Dakotas and Minnesota. Click here to view the maps.

 

MARTELL: SHIFT IN HEAT DOME OPENS DOOR FOR MIDWEST SHOWERS... Meteorologist Gail Martell of MartellCropProjections.com says the Midwest benefited from waves of thunderstorms over the weekend that produced more than one inch of rainfall over 65% of the region -- the best weekly rainfall since late May. The sudden cooler and wetter pattern is due to the westward shift of the high pressure ridge.

Martell says "ridge rider" storms that track along the northern and eastern edges of the western heat dome are expected this week. Up to one inch of additional rainfall is predicted this week in a narrow band from North and South Dakota southeastward through Iowa and Nebraska into central Illinois and Indiana. Click here for more weather highlights from Martell.

 

NO QUICK DECISION EXPECTED ON RFS MANDATE... As we previously reported, a livestock coalition has urged the EPA to modify the Renewable Fuels Standard (RFS) mandate. While the group may not qualify for a specific waiver request in which a decision would have to come within 90 days of any qualified petition being received, sources say the coalition group can urge a change via the administrative procedures act. Government contacts say the request will be discussed in upcoming meetings between EPA and various other government agencies, but a review will not likely be completed soon, as several USDA crop production reports will likely be needed before a complete assessment can be made.

Several corn-user groups have met recently with EPA and USDA officials about the matter. Participants at some of those sessions say government officials recognize the tight corn supply situation, but they gave no indication as to whether there would be RFS mandate changes. There will likely be several interagency committee meetings before any final decision is made. While the EPA administrator technically would make any decision to alter the RFS for corn, in reality any change would come via the interagency recommendations, and that panel would include direct representatives with close ties to the White House.

Upcoming USDA corn crop estimates and the price of corn are two points that will likely drive the RFS corn mandate decision. While no government official we talked with would give a crop estimate or corn price trigger point for an RFS change, congressional sources signal pressure for change would mount if corn prices reach $9 and would crescendo if the $10 mark is reached. Sources indicate a post-election decision on any RFS mandate change is likely unless the price parameters detailed previously are hit before Nov. 6.

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