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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Crop Progress: Corn Condition Continues to Deteriorate
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