Evening Report (VIP) -- July 31, 2012

July 31, 2012 10:13 AM


NWS 6-10 DAY FORECAST INCLUDES BETTER CHANCE OF RAIN FOR UPPER MIDWEST... The National Weather Service (NWS) forecast for Aug. 6-10 calls for above-normal precip across Minnesota, Wisconsin, northern Illinois and northeast Iowa. If realized, the rains would provide timely moisture for filling crops, although the forecast doesn't call for a widespread rain event. Normal precip is expected elsewhere across the Corn Belt. Meanwhile, above-normal temps in the western and southern Corn Belt will increase moisture requirements, while normal temps are expected over extreme eastern Iowa, northern Illinois, most of Indiana and Ohio. Click here for related maps.


CONSULTANT LOWERS CORN ACREAGE AND YIELD... Crop consultant Dr. Michael Cordonnier says in addition to declining corn yields, this year's production will be impacted by declining harvested acreage. As a result of the increased need for silage and larger abandonment, he lowered his harvested acreage estimate by 1 million to 83 million.

Additionally, Dr. Cordonnier says the crop continues to suffer from drought conditions. "With the corn crop now into the grain filling phase, what's important for the corn plant is to have enough moisture to fill the kernels. If it doesn't have enough moisture, then the plant aborts kernels starting from the tip of the ear working backwards," he says.

Saying recent, scattered rains have not been enough to stabilize the crop, Dr. Cordonnier lowered his corn yield estimate by 3 bu. per acre to 127 Bu per acre, which in combination with the lower harvested acreage figure, would result in a corn crop of 10.54 billion bushels.


CONSULTANT LEAVES SOYBEAN YIELD PEG UNCHANGED, FOR NOW... Dr. Cordonnier left his soybean yield estimate unchanged from last week at 38 Bu per acre, but says if the crop doesn't receive timely moisture soon, his estimate will be lowered. He also left his production estimate unchanged at 2.78 billion bushels.

"The next three weeks will be the primary pod-filling period for the soybeans which is the peak period of water demand," he reminds. "If moisture continues to be limited, the soybean plant may abort some of the pods, or fill the pods with one or two soybeans instead of the normal three. And, the seed size may be smaller-than-normal as well."

Dr. Cordonnier says he maintains a lower bias for the soybean crop, but recent rains in areas of the eastern Corn Belt were enough to leave the estimate unchanged for now.


CANADA ENTERS NEW GRAIN-MARKETING ERA... Starting Aug. 1, Western Canadian farmers can legally deliver wheat and barley to any buyer in Canada or the U.S., not just sales through the Canadian Wheat Board (CWB) as its monopoly ends at midnight.

The CWB isn't going away. Today, it announced it has struck a deal with Louis Dreyfus Canada Ltd. to handle grain from farmers who want to market their grain through CWB pools. But analysts say it will take time for CWB to rebuild its volume, as farmers' bins from last year's crop are either sold out or committed to another entity and this year's harvest of the spring-planted crop is just beginning.

Pro Farmer Canada Editor Mike Jubinville says current cash bids from private grain companies for fall delivery are at a premium to CWB bids. "We'll be watching this closely in the days and weeks ahead... but so far I'm not seeing much here price-wise to get particularly excited about. Hopefully "implied' Pool valuation will become competitive with the private trade," he says.


DROUGHT CONCERNS TRIGGER GOV'T ACTIONS IN INDIA... Monsoon rains so far have been a disappointment in India, coming in 19% below average to date. As a result, the country's farm minister says the government will halve the cost of diesel fuel in areas where rains have been 50% below average through the remainder of the season to divert some of the irrigation costs. Additionally, the farm minister announced the import duty on oilseed meal would be ended to help ensure sufficient feed supplies. But the ministry has not yet imposed a ban on farm exports or commodity futures trading, as some speculated would happen.

A ministerial panel will meet again soon and consider further actions to relieve stresses from drought after the farm minister has visited drought-impacted areas.

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