- Last night saw the release of the latest US crop condition an d progress report which showed soybeans to now be 95% planted, up from 92% last week and just ahead of the five year average. The crop Is rated 72% good/excellent a 1% decline from last week, but ahead of last year when it was 65%. Corn is rated 74% good/excellent, 2% down from last week but ahead of last years 65%. Winter wheat is 30% good/excellent, unchanged week on week and 2% down on last year, whereas the proportion rated poor/very poor is 44%, 1% ahead of last year. The crop is now 33% harvested, up from 16% last week, 19% year on year and ahead of the five year average of 31%.
- All in all, having heard so much doom and gloom over flooding and crop damage in the last week there is little of significance being reported in the latest data. Any excess surface moisture appears to be draining fast into thirsty sub-soils, potentially future proofing crop demands into the warmer summer months. Based upon nearby weather forecasts we would not be surprised to see crop conditions nudge ahead and increase the potential for better than trend-line yields, which is already being discussed openly my many in the trade. The only area of debate is the degree rather than the possibilities of such positive yield direction.
- Historically, the years 1994 and 2004 are being discussed, corn yields were above trend-line by 14% and soybeans by 10-12%. Linear projections would, if we were to see a 10% over trend yield in corn, show 174 bu/acre and even more if a weather adjusted trend-line was used. In the face of such thoughts any bullish momentum is difficult to comprehend. The impact on corn should not be forgotten when looking at wheat prices, the two grains have to be considered very closely related as “feed grain” and pricing decisions made accordingly.
- Soybean markets, cash markets in particular, have shown little impact of the prospect of the US running out. The Jul/Nov spread has closed in to around $1.80 (Jul premium), a level not seen since February. First notice day on the July ’14 contract is fast approaching, and we wonder if the USDA will spring any surprises in the upcoming stocks report on 30 June.
- US DDG’s are coming under price pressure and we have heard that any buyer is being “picked off” very smartly as stocks build and sales are difficult to come by. Whether this will provide import opportunities into Europe, specifically the UK, remains to be seen, but it appears that bargains are around in the US. The trigger for the price decline was the instigation, by China, of a ban of further imports due to MIR 162 “contamination”. Reports of a decline in ex plant prices in late March from $245/ton to $150/ton today are not uncommon. There seems little to suggest that China will change their stance any time soon, so the potential for cheap DDG’s looks set to remain for a while.