There’s A Difference Between Non-Threatening and ‘Ideal’ Weather

Overnight highlights: As of 6:15 a.m. CT, corn futures are mostly 3 to 4 cents higher, soybeans are mostly 3 to 7 cents higher and wheat futures are 2 to 5 cents higher. A firmer start to the day session is expected, but the question is whether the corrective gains will be maintained through the close given bearish attitudes and non-threatening weather. Cattle and hog futures are expected to be under pressure this morning. * Forecast stays cool, mostly wet. Forecasts continue to call for below-normal temps across the Corn Belt through the 10-day window, while normal to above-normal rainfall is also likely across much of the region. These conditions are seen as “ideal” or “near perfect” by traders, but the vastly staggered development of crops this year means there isn’t one “recipe” for ideal weather. While some crops will benefit from the cooler- and wetter-than-normal conditions, others need warmth and sunshine to speed development. So... while the forecast may be non-threatening, it doesn’t mean that it’s necessarily favorable. The long and short of it: Phrases such as “ideal” and “near perfect” pertaining to weather conditions signal traders’ concerns with the corn and soybean crops are low -- and fading. It appears as if the lone remaining potential weather threat this year is if crops aren’t allowed to fully finish before the growing season ends. * Japan lifts ban on U.S. western white wheat, soft white wheat. Japan’s ag ministry has lifted the ban on the import of U.S. western white wheat, effective Aug. 1, after the two countries agreed on a testing protocol. Japan has also lifted the ban on shipments of U.S. soft white feed wheat, effective Aug. 7. Wheat shipments will reportedly be tested for GMO material before leaving the U.S. and upon arriving in Japan. Trade sources in Japan indicated Monday the country would officially lift its ban on U.S. western white wheat as early as this week, so this announcement is not a surprise. But it does add to the friendlier demand outlook for wheat. The long and short of it: The wheat market still doesn’t have enough strength to divorce itself if corn futures continue to bleed. But if the corn market can stabilize, wheat is starting to build a base of demand support to potentially lead a price recovery. * Corn, bean CCI ratings slip again. USDA’s weekly crop condition ratings showed 63% of the corn and soybean crops were rated “good” to “excellent” as of Sunday. That’s unchanged for corn, but down 1 percentage point for soybeans. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the corn and soybean crops each declined 1 point to 365 and 361, respectively. While traders are focused on the relatively strong crop condition ratings, they aren’t paying as much attention to delayed crop development. As of Sunday, 71% of the corn crop was silking compared to 75% on average, while 8% of the crop is in dough stage versus 17% on average. For soybeans, 65% of the crop was blooming versus the five-year average of 74% and 20% of the crop is setting pods compared to 34% on average. The long and short of it: Relatively strong crop condition ratings and non-threatening weather are limiting traders’ concern with slowed crop development.