KANSAS CITY — Corn and soybean futures soared in the second week of June and early last week as an enduring dry pattern across the US Corn Belt took a toll on crop conditions. Prices ended the week lower on profit taking and a more favorable forecast going into the weekend of June 24-25.

Analysts said the extended dry period during key development periods for row crops could diminish production when the crops are harvested in a few months. Spillover pressure helped pull wheat futures higher even as the winter wheat harvest advanced northward in the Mid-South and southern Plains regions.

The US Department of Agriculture in its weekly Crop Progress report issued June 20 rated 55% of the US corn crop in the 18 principal production states in good to excellent condition as of June 18. That was down six percentage points from 61% good to excellent a week earlier and down nine points from 64% on June 4 when the planting of the US crop was nearly completed. The June 20 rating compared with 70% good to excellent at the same time a year earlier.  

In the top production state of Iowa, 59% of the corn crop was rated in good-to-excellent condition as of June 18, compared with 70% a week earlier and 77% in the week ended May 28. Even more dramatic was the decline in Illinois, where the USDA pegged good-to-excellent corn conditions at 69% on May 28, 50% on June 4, 48% on June 11 and 36% on June 18. Nebraska corn conditions slipped from 62% good-to-excellent on May 28 to 59% on June 18. And in Minnesota, conditions eased from 75% good-to-excellent on June 11 to 67% by June 18, the USDA said.

Corn futures on June 21, the day after the USDA’s latest condition ratings were released, surged to six-month highs. September corn topped $6.21 per bu for the first time since Jan. 18. Corn futures had been on an upward trajectory since dipping below $4.87 per bu on May 18.

“Corn conditions are the worst since the early 1990s,” said Erin Nazetta, an agriculture research analyst with Broadview Capital Holdings, St. Louis. “The crop was in early, so it will go through pollination, which is its critical development phase, earlier than normal this year. And we’ve seen soil moisture levels continue declining over the last few weeks. Not only will we need a large amount of rain to stabilize the crop conditions, but even more to start to see improvements.

“Right now, looking at forecasts through June and into July, we’re not seeing that kind of precipitation. Some rains continued to appear out past the six- and seven-day forecasts, but they haven’t come to fruition. Soil moisture continues to dry down and doesn’t look to improve before that crucial period for corn.”

Soybeans, also grown in 18 principal production states, many the same as for corn, also took a hit in the Department’s condition ratings in the late spring. Fifty-four per cent of the crop was in good-to-excellent condition on June 18, down from 59% a week earlier and 62% for the week ended June 4, the first week the USDA evaluated the crop’s condition. In Iowa, good-to-excellent condition ratings were 70% on June 4, 66% on June 11 and 56% on June 18. Illinois soybeans were 51% in good-to-excellent condition on June 4. By June 18, the rating had plummeted to 33%.

“If we were to see ‘normal’ weather in July, August, September, we still have great production potential,” said Alex Norton, president of Beeson and Associates, Louisville, Ky. “The fear is we get a pattern like 2012 and you don’t get that moisture until it’s too late. Our weather models suggest mostly normal conditions returning once we hit July-August and that will be the more critical window for production impact than weather in June.”

Soybean futures also soared after the USDA’s ratings for the third week of June. August soybeans touched $14.47 per bu, a level not seen since mid-March. Soybean futures’ upside trend kicked off June 1 after sliding below $12 a bu a day earlier.

“Soybeans are in as bad a shape as the first conditions report in 2019, which was a few weeks later that year, a year where there was a lot of prevented planting, it was too wet and we ended up losing a lot of acres,” Ms. Nazetta said. “Dryness looks a little bit worse for soybeans than for corn, but soybeans’ key yield-determining phase is a bit later, in August. But soybeans can handle dryness a little better and even if the plants aren’t large at this stage of the game, we can see them put on a decent number of pods and fill them if they get precipitation in their most important development phase.”

The USDA’s soil moisture ratings reveal the extent of dry conditions. The Department said short-to-very-short topsoil moisture conditions on June 18 were 61% in Nebraska, 70% in Iowa, 87% in Illinois and 59% in Indiana. Short-to-very short subsoil moisture ratings on the same date were 71% in Nebraska, 64% in Iowa, 83% in Illinois and 58% in Indiana.

Meanwhile, condition ratings for the spring wheat crop, “are a bit below average but the past few years we’ve had some pretty volatile conditions,” Ms. Nazetta said.

The USDA said the spring wheat crop in the six production states was 51% in good-to-excellent shape on June 18, a sharp drop from 60% a week earlier and compared with 59% a year ago. The Department said good-to-excellent ratings were 55% in North Dakota (67% on June 11), 32% (all good) in South Dakota (47%), 67% in Minnesota (72%), 40% in Montana (48%), 60% in Idaho (60%), 42% in Washington (32%).

“We do have those early condition drops, but the northern Plains weather nearby looks to be improving sooner than in the Corn Belt,” Mr. Norton said. “I’m less worried and more optimistic about spring wheat production because you do have some of those storms or rain events up into Canada that have provided some relief further west and further north, and some of that precipitation could work its way into the northern Plains and help the crop in the Dakotas and Montana.”

Initial winter wheat production forecasts for 2023 were released by the USDA in May. The first spring wheat forecast will come in July, and the initial corn and soybean estimates will be issued in August.