Crop Conditions Better Than Trade Expected

Published on: 10:48AM Aug 11, 2015

Good Morning! Paul Georgy with the early morning commentary for August 11, 2015 at 5:15 am.

Grain markets are lower as they adjust to yesterday’s rally and the USDA Reports tomorrow. The US Dollar is firmer and crude oil gives back most of yesterday’s gains.

A dry forecast for the 6 to 10 period sparked buying yesterday which triggered new fund buying and technical short covering. Will we have a typical “Turnaround Tuesday” or will the funds be back as buyers today ahead of tomorrow’s USDA report?

Crop conditions surprised trade as USDA put the Good/Excellent the same as last week, 70% in corn and 63% in soybeans. The trade was expecting a drop of 1% in corn and 1% to 2% in soybeans. The winter wheat harvest is virtually done at 97% complete versus the 5 year average of 90%. Spring wheat is rated 69% Good/Excellent, down 1% as expected. There is 28% of the spring wheat crop harvested versus the 5 year average of 20%.

If USDA feels the crop is in such great condition compared to the 58% average for both corn and soybeans during this week in the growing season. How will they feel about cutting yields on the report Wednesday?

The USDA actually uses two types of surveys to collect data for the monthly NASS forecasts in August through November. The Monthly Agricultural Yield Survey (AYS) of approximately 25,000 producers in 32 states for corn and 29 states for soybeans. They also use the Objective Yield Survey (OYS) which is conducted in 10 states for corn and 11 states for soybeans.

Allendale and ProFarmer start their annual crop surveys on Monday of next week. Allendale will be asking farmers all across the cornbelt to assess their own production to determine the national average yield estimate. Historically the producers know their fields better than anyone.

Roach Ag Marketing says US soy plantings will be 83.1 million acres vs. 85.139 million acres in the June government survey. They expect U.S. corn planted acreage to be 88.2 million acres vs. USDA’s 88.897 million acres in June.

Federal Reserve Bank of Atlanta President Dennis Lockhart says the Fed is close to raising short-term interest rates for the first time in nine years, noting the economy is "approaching an acceptable normal."

The effect of the above normal rainfall has improved pasture conditions and is having an impact on total beef production. Cow slaughter weights are above a year ago which is offsetting some of the shortfall of fed cattle.

Cutout values for hogs and cattle have been on the rise providing a packer cutout in the black. The difference between hogs and cattle situation over the next few months is hog marketing are expect to increase. Market ready cattle numbers in feedlots are less than we are seeing currently.

Dressed beef values were higher with choice up 2.18 and select up 1.78. The CME Feeder Index is 216.66. Pork cutout values are up .37.

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