The U.S. Department of Agriculture on Aug. 12 forecast the largest corn crop ever for the United States as well as the third largest soybean crop ever. Those forecasts seem likely to be fulfilled with only a few weeks left in the growing season, and the corn harvest well under way in southern states. But weather challenges have sent corn and soybean futures prices higher the past two weeks on ideas the return of hot, dry weather may trim final yields.
Most expected a strong rebound from last year’s drought-reduced fall crops, especially corn, but the season began with and appears to be ending with some weather challenges. At the start of the season, cool, wet weather delayed planting, and crops have progressed at a slower-than-average pace all summer. Since 43% of the corn crop was planted in a single week during May, which tied a record for planting progress in a week, observers worried that the bulk of the crop would be pollinating during the hottest time of the summer. But that “bullet” was dodged when unseasonably cool, wet weather coincided with the key pollination stage (silking and tasseling) in July and early August.
The slower-than-average pace of development has raised concerns that an early frost may limit yield potential. The most severe progress lags are across the northern tier of states, where the earliest frost also is most likely to occur. But a bout of warmer weather covered much of the northern and central parts of the United States last week and was expected to carry through the month. The weather provided the much-needed heat that was expected to give corn and other fall-harvested crops, including soybeans and sugar beets, the boost needed to mature adequately ahead of any widespread frost.
While meteorologists agree frost is difficult if not impossible to forecast far in the future, some suggest that a wetter soil profile reduces the proclivity for an early frost. Top soil moisture rated short to very short as of Aug. 18 was 47% in North Dakota (61% last year), 32% in South Dakota (81%), 48% in Minnesota (54%) and 59% in Wisconsin (62%), according to U.S.D.A. state field offices.
The final weather concern for this year’s fall crops is developing dryness across the Corn Belt, especially in the Upper Midwest. Despite the better-than-year-ago soil moisture profiles, most of those values have deteriorated over the past few weeks and likely will decline further with the hot and mostly dry weather in late August. While the situation is far from the disaster of 2012 that left much of the Corn Belt in severe to extreme drought, this year’s dryness is neither as severe nor as early. Last year’s drought was developing in June and became obvious in July although much of the Upper Midwest was spared because early planting and crop development “beat” the onset of the drought. This year temperatures were much more moderate and rainfall much better into August, and any dryness has a shorter period to affect the crop. The question is, are this year’s crops far enough along to escape significant damage?
The trade and meteorologists tend to expect large crops, but many also expect final numbers will come in below the U.S.D.A.’s 2013 corn crop forecast of 13,763 million bus and soybean forecast of 3,255 million bus. The latest condition ratings from the U.S.D.A. would tend to support that scenario. The U.S.D.A. rated the corn crop in the 18 major corn producing states at 61% good to excellent as of Aug. 18, down from 64% a week earlier and the first decline since mid-July. The soybean crop in the 18 major soybean growing states were rated at 62% good to excellent, down from 64% a week earlier. Still, this year’s ratings are far better than 23% good to excellent for corn and 31% for soybeans at the same time last year.
Those weather concerns were evident in CME Group futures the past two weeks. Futures prices rose modestly the day of the crop report (Aug. 12), reacting to production and carryover numbers below the average of trade expectations for both corn and soybeans. But corn futures then turned lower on Aug. 13 only to post strong gains the remainder of the week, largely because of continued weather concerns. Last week corn futures opened the week with 10c-a-bu gains on concerns of disappointing reports of weekend rainfall, declined Tuesday then rebounded Wednesday. At a minimum, weather has contributed to market volatility.
December corn futures last week were up about 25c a bu from three-year lows set in mid-August, but still were about $1 a bu, or 15%, below July highs and were well below year-ago values when nearby futures set record highs above $8 a bu in August. New crop corn futures traded between $email@example.com a bu last week.
Soybean futures have posted strong gains because of weather concerns as well. November soybean futures last week climbed above $13 a bu, up more than 10% from early August lows and nearing June highs near $13.30 a bu. But like corn, prices still were well below year-ago levels that peaked in late August-early September near $18 a bu.
Despite increasing concerns about weather, crop scouts on last week’s Pro-Farmer Midwest Crop Tour reported corn yield estimates and soybean pod counts above three-year averages in many areas, but they also noted rain was needed in the next week or two to maintain the favorable forecasts. This year may prove to be the exception to the manta that “large crops get larger and small crops get smaller.”