How Will High Temperatures Impact Crop Conditions and the Grain Markets?
After a challenging start, the U.S. corn and soybean crops are looking good. Planting is nearly complete and condition ratings are strong.
USDA says corn planting reached 97% complete as of June 12, which is in line with the five-year average. North Dakota still had 10% of its crop to plant, while Minnesota nearly caught up to its five-year average with only 2% of the crop left to plant.
Corn emergence increased 10 percentage points to 88%, a point behind average for the date.
Crop conditions dropped a point to 72% “good” to “excellent” from last week.
For soybeans, planting advanced 10 percentage points over the past week to 88%, right in line with the five-year average. Crop emergence jumped 14 points to 70%, though that was still four points behind normal.
USDA’s initial soybean crop condition ratings pegged 70% of the crop as “good” to “excellent.” Only 5% of the crop was rated “poor” to “very poor.”
The Impact of Heat
Those good condition ratings could be put to the test this week, says Brian Grete, Pro Farmer Editor, as sizzling temperatures spread across most of the U.S. Yet, so far, the markets don’t seem concerned by the heat.
“At this point in time, the heat probably does wonders for the crops,” he says. “You can almost hear the corn growing. A lot of these areas have had ample soil moisture. Now if you roll the clock forward a month and it's July 15, you have real concerns.”
Listen to Grete discuss market price action on AgriTalk:
Luckily the high-pressure ridge behind the high temperatures is not necessarily an omen for the summer forecast, Grete says.
“World Weather Inc. says most of the longer-range forecast models, including the GEFS, EPS and CFS computer forecast models, suggest a much less intensive high-pressure ridge for the summer,” he says. “The pattern advertised by each of these longer-range forecast models is mostly good with timely rainfall and near to above-average temperatures in the western and central parts of North America and milder-than-usual conditions in the eastern United States.”
The World Weather, Inc. Trend Model has a bias toward less impressive heat and dryness during the summer of 2022.
Luckily, Grete notes, World Weather, Inc. is still looking for some challenges to the growing season in the Plains and western Corn Belt, but a full-blown drought like that of 2012 or 1988 or 1983 seems a little unlikely.
Weather Market Moves
Grete encourages farmers to keep current prices in perspective. Corn prices around $7.50 per bushel and soybean prices near $17 per bushel are historically high.
“Is there more upside potential? Sure,” he says. “But you sure have to cover some risk at these price levels, if you haven't already done so.”
Ask yourself: Is this too good of an opportunity to pass up?
“We're not trying to sell highs here, you shouldn't be trying to pick the top in the markets,” Grete says. “You just want to put a lot of sales at these high price levels, so you get a strong average price.”
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