Markets: crop progress behind normal

Weather boosted crop maturity with more heat units and USDA crop condition ratings are way above average this week. Crop development is way behind normal. Weather remains the major driving force in the markets.


Palm oil and soybean prices dropped to the lowest level in six months following USDA predictions of record production at 3.245 billion tons.

USDA crop condition ratings this week are 68 percent good to excellent. The rating is bearish but there is cooler weather in the forecast. A possible frost in the northern Corn Belt would support higher prices.

Traders are not adding to long positions but sellers are covering short positions with call options.

Argentina has enough rain to declare an end to the drought. Indian monsoon rains are 40 percent below normal.

China is predicting fewer soybean imports next month. The Chinese government is attempting to auction 4 million tons of stored soybeans. The auction this week sold 15,500 tons of 500,000 offered.

Soybean markets have corrected for the larger crop estimates. Ending supply after 42 bushel per acre yields will reach 220 million bushels. Export inspections were 10.2 million tons meeting market expectations and having little effect on prices. Weekly export sales were 704,400 tons. That number was higher than most market estimates but well below the one million tons bulls wanted.


Traders have stopped selling corn with the threat of frost in the forecast. Only 12 percent of corn is mature — 37 percent is average. The corn crop has now reached dent stage over 60 percent of U. S. acres.

USDA predicts yields near 162 bushels per acre and they have a track record of predictions below the actual yield. Total production numbers near 12.95 billion bushels are bearish but use is projected to increase to over 13 billion bushels.

Export demand for corn remains strong. Over 1 million tons were sold again this week. Export inspections reached 40.5 million bushels, making the high end of market anticipations. South Korea was again a major buyer. China is offering to pay other countries $38 per ton to import Chinese corn until 2 million tons are sold.


Traders hold a record number of sell contracts in wheat. World wheat supplies maybe factored into current price levels. United States carryover supplies are expected to remain the same, but world ending stocks will go from 183.6 million tons to 186.6 million.

Export inspections were 21.5 million bushels, exceeding market expectations. Weekly export sales of 449,400 tons were within market anticipations.

Only 69 percent of spring wheat harvest is completed — 82 percent is normal. Winter wheat planting progress is assisted by good weather.

The United Kingdom’s wheat exports are increasing. Ukraine has 26 million tons in storage. Australia has raised production estimates another 3.5 percent for their wheat crop.


Rice production estimates were bearishly increased to 6.7 million hundredweight. USDA now predicts ending stocks will reach 7.7 million hundredweight, a 2 million increase. That is a bearish number without increased export sales.

USDA increased yield estimates 12 pounds per acre to over 7,051 pounds.

Export estimates were reduced 4 million hundredweight to 67 million.

Wheat prices will affect rice markets because of substitution potential. Rice exports increased 44 percent. Weekly exports were 77,400 tons.


Cotton production estimates have been increased by 230,000 bales, but exports are expected to increase 300,000 bales. Weekly export sales were disappointing at 82,400 bales.

There are concerns that India may take some Chinese cotton business away from the United States. There is controversy over importing tires from China without tariffs. China could buy cotton elsewhere to bargain over tariffs. The increased market prices on stock markets in Asia, Europe and the United States are cotton bullish. Clothing sales have increased 2.4 percent.

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