Corn and soybean futures rallied sharply on Monday based on a dry, long term, weather forecast and technical positioning before the USDA August crop report, set to be released on Wednesday. Cody Bills, with Grain Hedge, told HAT the 6 to 10 day forecast looks dry for most of the grain belt, “There is growing concerns by the market in this dry pattern, especially for soybeans.” Jim Riley, with Riley Trading, added a dry spell will also spell trouble for corn, “Corn needs rain in August to help fill out those kernels.”
After some weekend precipitation, the Hoosier State will see a dry period ahead. According to HAT chief meteorologist Ryan Martin, “The rest of the week looks dry, from Tuesday right on into the weekend. Models are in agreement that a front works through around the 14th-15th, but most models also have that front mostly dry.”
Meanwhile, Indiana crops show very little improvement in condition. Nationally the USDA left the corn and soybean conditions unchanged from last week in their weekly report on Monday, with 70% of the corn and 63% of the soybeans rated in good to excellent condition. Indiana corn was also left unchanged, with 47% g/e and 53% f/p, but they did indicate a small reduction on Indiana soybean conditions.
Yet, according to the Indiana report, many farmers are reporting very small ears of corn and serious disease issues in soybeans. The report also stated that much of the corn crop remains yellow, and some corn stands have aborted kernels at the ear tips due to the lack of nitrogen and disease. As for soybeans, the late application of herbicides left soybeans vulnerable to competitive weeds such as glyphosate-resistant marestail and waterhemp, which have become more prominent with the mild temperatures.
Arlan Suderman believes that, despite the unchanged soybean rating, the actual size of the soybean crop will be well below USDA expectations, “We believe the crop is smaller than projected by USDA and smaller than is being projected by the crop tours when one considers how late millions of acres went into the ground and when considering the impact of soybeans sitting in saturated soils for so long. Furthermore, harvested acres are expected to drop through the fall as well.”
On a positive note, after running behind average most of the year, the corn has finally caught up to the average pace of development. US corn acres doughing surpassed the five-year average, with 96% of corn acres having achieved the silking stage as of August 9 and 51% of corn acres in the doughing stage. The acres having reached the doughing stage moved one point ahead of that number by August 9. In this first estimate of the acres in the dented stage, the progress trailed the five-year average by six points.