Best looking corn crop in years
The weekly Crop Progress and Conditions report from the U.S. Department of Agriculture showed that the U.S. corn crop is in very good shape in the early going. Seventy eight percent of the crop is rated good or excellent, and just three percent falls in the poor or very poor condition category.
The impact of this (along with improved precipitation expectations and lower temperatures in the forecast) are being witnessed in the market. Prices have fallen 35 cents on the December futures contract from the high in late May. But does it matter? Of course, a more highly rated crop tends to see a better yield, but the correlation is not a strong one. Weather during the key pollination window in July is often a better determining factor for eventual yield. Early good ratings can quickly give way to a poor crop if the weather does not cooperate during the hotter summer months.
Kansas and Chicago wheat prices continue to make a volatile climb higher. The Minneapolis market has been resisting any push higher as last year's premium over the other wheat classes is simply being whittled away.
The forces pushing Kansas City and Chicago higher began with drought conditions in the U.S. Plains. Many areas remain dry, but some improvements have taken place. More recently, weather concerns in the Black Sea region are lending support. These factors have provided a generally strengthening market, but the day-to-day moves are large and include plenty of drops, as well. Canada's crops got in the ground, and though dry and hot weather were the story for the spring, improvements promise to aid the early summer's development.
The durum market remains depressed as strong supplies of old crop are keeping a lid on prices. The U.S. Department of Agriculture showed 66 percent of the crop rated good or excellent and just two percent rated poor.
Canola prices have fallen this week, trading in sympathy with the U.S. soybean oil market. For the bears, weather has improved in Canada. The increased rainfall helped ease fears of a crop shortfall. Additionally, soybean oil markets have been on the defensive. Finally, fears of trade disruptions between the U.S. and Canada make for potentially reduced demand. But all is not pointing to lower prices. The Canadian dollar was weaker this week, limiting major downside. Also, Strategie Grains reduced their expectations for European rapeseed output.
Peas and lentils
Pulse plantings have basically been completed in the U.S. and Canada. Dry and hot conditions allowed farmers to get their crops in the ground. Recent rains provided some relief for the short soil moisture, and temperatures are expected to drop to normal in the weeks ahead.
Mustard seed markets are making the transition to new crop fundamental drivers. Planting is nearly complete in Canada, with Saskatchewan reporting 92 percent completion compared to the average pace of 71 percent. This rapid planting has been allowed by dry conditions — a blessing in the short term for farmers but a concern for overall crop development. However, recent rainfall in many areas and a drop to more normal temperatures have alleviated fears of crop production shortfalls.
The barley crop in the U.S. is planted (technically at 97 percent completion). Much of the crop has emerged, and it is in very good shape. The weekly Crop Progress and Conditions report from the U.S. Department of Agriculture showed 79 percent of the crop rated good/excellent. This is a huge improvement from the previous week's 69 percent and in line with last year's crop.