(Agrimoney) – The extent of the setback from hail, frost and heavy rains to US spring crops was underlined by data showing that corn had made a worse-than-expected start, with spring wheat ratings among the weakest since the mid-1990s.
The US Department of Agriculture, in its first rating of this year’s domestic corn crop, pegged 65% in “good” or “excellent” condition, a figure short of investor expectations of some 68-69%.
It was also below the average opening reading of 70% for the previous 10 years.
This year’s figure included well-below-average ratings for crops in the eastern Corn Belt states of Indiana and Illinois – two of the three so-called “I” states, with Iowa, viewed as bellwethers for US production.
‘Excessive rains and crusty topsoils’
In Illinois, 52% of corn was rated as good or excellent, after persistent rains and cold temperatures – conditions which have also left Indiana’s crop with a 43% reading.
The USDA’s Indiana bureau reported that, last week, “frequent rains left many fields with standing water, making it difficult for farmers to do any fieldwork”, besides “leaving emerged crops underwater.
“Some rain storms were accompanied by strong winds and, in some cases, hail.”
“Both corn and soybeans were reported to have emergence issues in some areas due to excessive rains and crusty topsoils.”
‘Really suffering from lack of moisture’
For spring wheat, the proportion of crop rated good or excellent, at 62%, was nine points behind market expectations, and the fourth lowest initial reading on data going back to 1995.
Again, the reading reflected in part low temperatures, with scouts in Montana, for instance, where 52% of spring wheat was seen as good or excellent, flagging “some very cold nights” last week.
However, unlike in the eastern Corn Belt, dryness was seen as growing issue too, with Montana scouts flagging that “precipitation was hit or miss” last week, and noting areas where “crops are really suffering from lack of moisture”.
In South Dakota, where just 39% of spring wheat was rated as good or excellent, and which witnessed “patchy frost” last week, half the state is rated as “abnormally dry”.
The USDA also cut by 2 points week on week, to 50%, its estimate for the proportion of winter wheat seen in good or excellent health, down in part to a South Dakota downgrade, although a decline in crop condition approaching harvest is not considered unusual.
Price support
The data were viewed as positive for prices, with Commerzbank, for instance, attributing the USDA data as spurring recoveries in corn and wheat futures in early deals on Wednesday.
At Chicago broker Futures International, Terry Reilly said that for spring wheat “the initial rating is bullish”, with futures also gaining support from worries over Canadian sowings, and of a poor quality result to the newly-started US winter wheat harvest, a factor which would lift premiums for higher-protein supplies.
However, price prospects will also be influenced by ideas of the US weather outlook, of which there were varying interpretations.
Mr Reilly said that while “more rain will return to the Midwest on Thursday through Saturday, slowing fieldwork activity… overall, there will be opportunities for planting during the next two weeks as most areas will see multiple stretches of multi-day periods of dry weather”.
Benson Quinn Commodities said that “for the first two weeks of June show temperatures, while still seen mostly below normal, not quite as cool or below normal as seen in recent weeks and outlooks.
“Precipitation also is moderating with more windows to complete planting in the east” of the Corn Belt.
Weather outlook
However, CHS Hedging took a slightly less upbeat view, saying that “the forecast still has a large area that just can’t find the heat.
“The eastern Corn Belt has also seen the most rain and could use the heat to dry out.”
WExRisk.com said that “there is not a lot of model agreement between the GFS and the European models”, with the GFS “much wetter” for the next five days over eastern Kansas, Mississippi, central and southern Illinois and much of Iowa.
“In addition, the European model has more rain over central and eastern Texas as well as Louisiana, Delta than the GFS model.”
