June 23, 2015
Close June 23
2 week change
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Corn and wheat were weaker, while soybeans gained over the past 2 weeks. Persistent and heavy rains keep dropping on many prime areas of the Midwest, including Missouri, parts of Iowa, Illinois, Indiana and Ohio. As of Sun June 21, 10 percent of the soybeans remained unplanted. It is getting late for replanting also on many of drenched fields that will take a week to properly dry out.
Ten percent doesn’t sound like much, but it is over 8 million acres. Ontario grew just over 3 mln last year. On June 30, USDA will estimate new crop acres and stocks as of June 1 and, but the report will likely not factor all the unplanted acres. This is an important USDA report on the 30th, and big moves often accompany it.
In their weekly crop ratings report on June 21, corn was still rated 71 percent good or excellent (g/e), down 2 from last week, and 74 percent last year at this time. Soybeans also dropped 2 points to 65 g/e, and well below the 72 a year ago. Ratings will surely fall again next week with all the rain.
The soft and hard wheat regions are also suffering from the excess moisture, with harvest starting in the more southern areas. Only 19 percent of US winter wheat is harvested. Normal is 35. Yield losses are likely increasing, but quality is the bigger issue. With plenty of relatively cheap corn around, feed wheat will need a large discount to work into livestock rations.
Markets are finally beginning to pay more attention to the conditions. Since June 15, corn, soybeans have rallied $.20, .72 and .39 respectively, wiping out the losses just prior to that. These moves have improved the technical outlook on the charts, but only soybeans are now above their 100 day moving average.
Much of Ontario is suffering as well. The latest rain on June 22/23 was highly variable, but unneeded and unwanted. Much side dressing and spraying still needs to be done. Many dry beans still aren’t planted, and many that are, are suffering from wet feet. Once again, it has been a challenging spring.
At our Forest location, we have had over 12 inches of rain in 25 days. That’s about what we usually get over 4 months, as we average about 80 ml per month during the growing season. The final effects aren’t known now, but yields may be reduced. That is not what farmers need with the high input costs that went into the crop.
Mother Nature can seem mean at times, but she is also resilient. This isn’t the first time farmers have faced adverse conditions, but somehow things always turn around. It’s always the darkest before the dawn. Weather will improve and crops can still end up decently despite this setback, although top end yields are likely gone in many areas.
Volatility is apt to increase now for the balance of the summer, starting with the June 30 report. Shortly after is the US July 4th holiday and traders are wary of having large positions over that long weekend. Strengthening Chicago prices are the best hope to get farm incomes back to where farmers and industry want to see them. A weaker Canadian dollar would also help. ♦
- Frank Backx, HDC Grain Marketer