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Grain prices finished mostly lower with a couple of exceptions as the weather forecast calls for soaking rains in the heart of the U.S. belt.
Grain Market News
U.S. Corn Crop Condition
Corn crop conditions started out exceptionally high 76% G/E, conditions fell 4% and then 4% and now another 3% and we’re down to 65% G/E which is a below average crop rating. The hot, dry conditions definitely pressing crop conditions lower but the market expects crop conditions to improve due to the rain the forecast.
Corn – Change in G/E Rating
This chart shows the weekly rating for each state. Areas in the far east saw improvement this week while SD, MN, and IA saw significant declines due to the lack of rain and the heat last week. Crop conditions 3 weeks ago at 76%, 2 weeks ago down to 72%, last week at 68%, and this week sitting at 65% G/E. Crop conditions are certainly declining in the western belt where heat and dryness have had a significant impact on crops.
U.S. Soybean Crop Condition
The soybean crop condition dropped 2% from 62% down to 60% G/E and beans also looking at a below average crop rating at this time.
Bean – Change in G/E Rating
Week to week changes show we were down 5% last week and this week down an additional 2%, to 60% G/E. Conditions improved out east in MI, OH, and IL while SD, MN, IA, and NE all seeing conditions decline in the western belt.
Winter Wheat Crop Condition
Winter wheat crop rating up 1% to 49% G/E. This crop has been about stable between 47-50% G/E for the last 2 months. Now that we’re harvesting the winter wheat crop we’re not expecting an major changes in conditions. Typically, by early July USDA ends crop conditions as harvest pass 50%. Right now we’re sitting at 17% harvested compared to 26% on average.
U.S. Spring Wheat Crop Rating
Spring wheat crop rating fell dramatically from 37% last week down to 27% G/E. Average for this time of year would be about 71% G/E. This clearly shows the effect of drought in the northern Plains and specifically ND which is the U.S. largest spring wheat producer.
Grain Market News
Daily Corn Water Use
This chart shows the daily water use for corn. On the vertical margin it shows the inches of water used per day. When you get up to a 0.25” that’s about 2” per week. When its hot and dry and the wind is blowing the daily use can go as high a 0.4” per day. On the horizontal margin, it shows the days after planting. That tells us for the first month after planting the corn plant doesn’t require a lot of moisture. As we get towards the V8-V10 stage we start to see a pretty significant demand of water from the corn crop from about day 50 through day 100. This means we have about 6-7 weeks of peak water demand from the corn plant and it starts about now and goes into early August.
Water Required to Produce Yields
This chart is from Iowa St University and shows the water required to produce a certain corn yield. Bottom line, to produce a 150 bu corn yield you need about 16-17” of rain. To produce a 200 bu crop you need about 20” of rain. To produce a 250 bu crop you need about 23” of rain. This chart shows there’s a very good correlation between the amount of rainfall require to produce specific yields in corn.
7-Day Observed Precipitation
Eastern IA all the way through the eastern belt has done quite well with 1-2”, 2-3” of rain with a few areas seeing even more. There are some blue areas that were less than 0.5” of rain but they’re relatively small. The bigger concern is in the Plains and far western belt where a lot of blue is showing up which is less than 0.5” of rain. In fact, some areas have only seen 0.10” or so. These are the areas that could see further crop decline if rain does not fall soon.
7-Day Precipitation Forecast
The 7-day precipitation forecast shows big rains from central IA and MO all the way through the eastern belt. 1-3, 3-5” of rain expected with most of this rain expected to fall in the Thurs, Fri, and Sat timeframe. Some rain is expected in the central Plains but very little rain expected in the northern Plains and extreme northwestern blet. If you’re in the areas that missed out on the rain in the far west and northwest but the market is focusing on the big rain for basically the heart of the U.S. corn and bean belt over the next 7 days and that was the primary drive pushing prices lower today.
6-10 and 8-14 Day Forecast
The 6-10 and 8-14 day forecasts show some heat starting to pick up in the northern Plains and push eastward into the northwestern belt in the 8-14 day forecast. We’ll have to monitor to see if this heat starts to build as we move closer to the first of July. We also see with the heat, dryness developing in much of the western and northwestern belt in the 6-10 day and that dryness continuing in the 8-14 day. There are some concerns for the western and northwestern belt longer term but at least in the short term the market is focused on some big rain potential in the Thurs, Fri, and Sat timeframe.
July Corn Chart
Corn prices are stuck in a pennant formation. That’s a formation when we have lower highs and higher lows and it’s a narrowing formation. Right now anything within this pennant formation is fair game in the near term. If the rains materialize we could breakout to the downside which may put $6 within range from a chart perspective. If the rains fall apart or do not materialize, overhead resistance is the lower $7 range. The rains in the Thurs-Sat timeframe are going to be extremely important for grain price direction.
July Soybean Chart
Soybeans have been falling sharply over the last couple of weeks, but we do see some bottoming action over the last few days. Today’s close was very disappointing but overall we still see some chart and technical indicators telling us we’re seeing some bottoming action. As we mention quite often, in the heart of the growing season the weather, how much rain falls and the forecast can trump any chart or technical signal.
July KC Wheat Chart
Wheat prices also in a pennant formation with a downtrend in place since early in March but a longer term uptrend still in place going all that way back to last fall. This puts chart support down in the $5.75 area. Overhead resistance in the $6.25 area. This is the expected range in the near term as we go towards next week’s stocks and acreage report.
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