Grain prices are all in the green this morning. Canola is acting quite resilient in the face of the Canadian Loonie touching 79.5 cents USD. December corn is back above $4 USD / bushel and November soybeans are back into double digits as well.
Corn: Big Goals
Yesterday, the USDA released its crop progress update, and as expected, quality fell across the board.
National corn good-to-excellent (G/E) ratings decreased by 1 point from last week to 64%. Last year it was 76% at this time.
The areas fairing the worst are the usual suspects:
South Dakota registered only 30% G/E (and 38% poor-to-very poor or P/VP);
North Dakota hit 45% G/E (24% P/VP); and,
Indiana at just 47% G/E (and 18% P/VP).
It's worth noting that the percentage of the corn crop across the country in a sinking state is only 40%. That's a bit behind the 53% it was a year ago at this time and the 47% average we've seen the last five years.
Yesterday, we pointed out that Hackett Financial Advisors is getting some press for calling for $6 USD / bushel corn. Between declining inventory levels, pollination risk during heat waves, and falling yields, Hackett, via Barron's, is pushing out the most bullish narrative we've seen yet.
While there's a case to be made for the three factors above pushing corn prices higher, there's a lot of domestic and global supply that will put pressure on rallies.
This theme has continued all year.
One could argue that Hackett is just pushing a contrarian narrative.
However, with the rest of the marketing accounting for these variables to a certain extent and with smaller upside targets, click-bait by Barron’s and annual subscription sales from Hackett seem to be the goal here.
Soybeans Performing Well?
The crop progress report showed that 61% of the US national crop is considered to be in G/E shape.
Like corn, this is down 1 point from last week and tracking well behind last year’s G/E rating at this time of 71%.
The Northern Plains are faring the worst with just a 29% G/E rating in South Dakota (33% P/VP) and 40% G/E in North Dakota (25% P/VP).
And again, Indiana isn’t doing super great, with only 49% of the crop rated G/E and 15% considered to be in P/VP shape. Ohio isn’t faring too well either, sitting at 50% G/E and 15% P/VP.
From a crop development state, 52% of the U.S. soybean crop is in bloom (aligned with the 5-year average). 16% of the crop is also setting pods, matching last year’s pace and ahead of the 13% seasonal average.
Elsewhere in the soybean complex, NOPA’s monthly crush report came out yesterday.
It met the market again with disappointing results. 138.1 million bushels of soybeans were crushed in the month of June, about 3 million less than the trade's expectation. This figure is also a 7.5% drop from what we saw in May and a 4.8% decline from June 2016.