USDA released their weekly report today.
I am a bit surprised to see that the overall soybean conditions rating actually improved. I had expected that we might see a tad of deterioration ( nothing of significance ) but even that did not happen.
The percentage of the crop that is rated in the Good/Excellent category bumped up 1% from 70% to 71%. More specifically, 54% is rated Good while 17% is Excellent, which is unchanged from last week.
In going over the 18 states and their average, I can see only two states that showed any deterioration in the condition of the crop. Every other state remained unchanged from the previous week or improved. The two states showing some deterioration of the crop were Iowa and Kansas. Iowa lost one point while Kansas lost one as well.
Nationally, the crop remains ahead of last year's progress. 95% of the crop is blooming compared to 91% last year at this time and the 5 year average of 95%. 83% of the crop is setting pods compared to only 70% last year and the 5 year average of 79%.
With the regular, timely rains we have been getting, and with more rain in the forecast at times, any heat at this point will be very welcome by the bean plants. As long as they have sufficient moisture, beans like heat when setting pods. That leads to bigger individual beans and better filling.
I am hard-pressed to find anything bullish about the conditions report especially given the current forecast.
When it comes to corn, there was some slight deterioration in the crop nationally. A mere 72% ( this is said with tongue in cheek) of the crop is rated Good/Excellent with 21% Excellent and 51% Good. That is down from 73% last week.
Iowa dropped to a paltry 75% rated Good/Excellent down from 76% last week. Illinois dropped to 80% Good/Excellent from 82% last week. Indiana improved to 73% Good/Excellent compared to 72% last week.
Progress-wise corn is 70% in the Dough stage compared to 49% last year and the 5 year average of 63%. The crop nationally is 22% in the Dent stage compared to last year's 10% and the 5 year average of 27% ( something which I will admit I am confused about).
Again, heat, as long as there is sufficient moisture in the soil, will be very welcome by farmers.
The forecasts are calling for some heat through the mid-West later this week but then cooling off again by the weekend. If those forecasts hold, and the scattered rains show up as predicted, that will be ideal for these crops.
The same guys who were buying the August beans on the tight old crop supplies, are now doing the same, as expected, in the September bean contract. I am not sure what it will take for farmers to let go of some of those old crop beans that are still sitting in storage but at some point those are going to have to be moved to make room for what more and more appears to be a bin-buster.
About the only thing I can see that the bulls have that they can play at this point is talk of an early freeze. I find it interesting to read some of the bullish stories especially by some who are still holding back old crop supplies hoping for higher prices. First they talk up the heat as being stressful on the crop. Then, nearly in the same breath, they talk up an early frost. The heat ( as long as we are not talking big High Pressure Ridge ) is what the crop needs at this point to hurry it along. I should point out that both crops are generally ahead of the 5 year average in key categories ( with the exception of corn being in the dent state which is rather confusing given the earlier than normal condition in other categories).
We are probably going to have to wait until the combines start rolling to see the beans react to the size of the expected crop. In the interim, the "tight old-crop" supplies story will be repeated over and over again. It really is a tale of Two Cities ( I mean Crops).
One other thing, I will have to do some digging when I can spare a bit of time and see what kinds of margins ethanol producers have right now, especially with unleaded gasoline prices continuing their disappearing act. Unleaded scored a 6 month LOW today! Ethanol producers lose profitability as gasoline prices erode although with corn as cheap as it currently is, they can still afford to buy the stuff and turn it into fuel. Note - I HATE ETHANOL....
The idea of burning our food supply in our gas tanks is madness. I know farmers love it but I think it is a price-distorting waste of a valuable food item. If ethanol was such a good thing that it could stand in the marketplace on its own two feet, without the federal government subsiding the stuff, it would be one thing. But it is not.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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