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By no means shocking, it was still a slight surprise to see crop ratings deteriorate for corn and beans quite this early on yesterday’s report. I suspect this helped shore up prices overnight and after the action yesterday, boy did we need it. Spot corn was pressed down to the lowest point traded since December of last year, and while beans did not press into lower lows per se, they did record the lowest close in nine years. Back in February, the Economic Research Service of the USDA was already predicting that net farm income in the United States was on track to record the lowest number, $59.5 billion, since 2006 in nominal terms. If we take into account that yield potential would not appear to be above average and the ongoing tariff induced price performance, one has to suspect this number continues with a negative trajectory. I am just a bit surprised someone has not uttered the “D” word to describe the farm economy, and I do not mean D-lighted.
As I mentioned previously, crop ratings did deteriorate slightly with corn in the good/excellent bracket down 1% to 77% overall and beans down 2% to 71%. Hardly a worrisome figure but as I commented, maybe just a bit early to see a setback but the crop is more advanced than average. In beans, it would appear that the excessively wet conditions are taking a toll while in corn, the extreme heat experienced in much of the growing region is creating concern. Of course, the million (or maybe billions) dollar question is “will that continue?” Both the 6 to 10 and the 8 to 14-day outlooks appear rather toasty.
There are other things going on about the world that markets seem to be paying little attention to at this point. The Russian Ag Ministry reports that grain harvest is 5% complete with overall yields around 3.82 metric tons per hectare compared with last year at 4.42 at a comparable date. The independent consultancy firm, IKAR, expects the Russian corn output to be down .5 MMT or 4%, to 12.3 MMT. In Ukraine, the Ag Ministry is projecting that overall exports for the 2017/18 crop year will be down 4.4 MMT. Last but not least, the term “El Nino” has been uttered once again as the Australian Weather Bureau predicts a 50% chance that it will return this year.
Dan, I agree with your last comment. Unfortunately, I do not think the news is at its bleakest yet.
I don't think we have seen the bleakest news yet either. If Mexico did sign contracts to buy 100 percent of their corn from Argentina and Brazil it's not going be pretty.
Japan, EU and Canada are all looking that direction and are in talks??
It doesn't matter what the US corn crop is, if there are no buyers.