Corn futures came close to regaining the $6 mark, while wheat futures extended their recovery, as grain production hopes were dented by dryness on both sides of the Atlantic.
Chicago corn futures for December touched $5.99 ½ a bushel in early trading on Tuesday, taking to 6.2% their bounce for this week, before easing back to $5.97 ¼ a bushel, a gain of 2.3% on the day.
Chicago soft red winter wheat for September stood up 2.5% at $7.89 ¼ a bushel, now up 4.0% for this week.
Soybean futures for November added 1.3% to $13.64 a bushel, taking headway for the week to 3.6%.
Crop condition dips
The buying reflected, besides the doubts over Ukraine grain exports stoked by Russian missile attacks, a series of setbacks to grain production hopes, including from a weekly official US crop progress report overnight which made larger-than-expected reductions for assessments for the condition of US corn, soybeans and spring wheat.
The US soybean reading fell by 2 points week on week to 59%, in terms of the proportion rated “good” or “excellent”, compared with market expectations of a 1-point decline.
For corn, the rating dropped by 3 points to 61%, also exceeding expectations of a 1-point dip.
Meanwhile, the spring wheat score dipped by 3 points to 68% good or excellent, defying market forecasts for a flat reading week on week.
‘More rain would be welcome’
Corn investors are particularly sensitive to adverse weather in July, with the month bringing the pollination process which is particularly sensitive to dry and hot conditions, and which is crucial to yield determination.
In Minnesota, where the corn rating fell by 5 points to 63% rated good or excellent, officials said that “weekend rain provided some much-needed moisture in some areas, but more rain would be welcome throughout most of the state”.
In Nebraska, where the rating fell by 7 points to 57%, the proportion of topsoil rated “short” or “very short” of moisture rose by 9 points week on week to 68% – albeit with the dry conditions enabling rapid progress in the winter wheat harvest.
In Kansas, where the corn condition score dipped by 8 points to 39% good or excellent, the proportion of topsoil short or very short of moisture leaped by 13 points to 75%
For spring wheat, the cut in the national good or excellent reading was led by a 7-point drop to 43% in the figure for Montana, where officials reported that “temperatures were above average again”, and that “there was little change in drought conditions” covering 39% of the state.
‘Drought and heat stress’
The figures followed a separate USDA briefing overnight which cut expectations for Argentine corn and wheat production in 2022-23, citing the setback from dryness linked to La Nina conditions.
In the European Union, the official Mars agrometeorology bureau late on Monday cut by 0.62 tonnes per hectare to 7.25 tonnes per hectare its forecast for the bloc’s corn (maize) yield this year – a seven-year low – as it cautioned over weather damage to other summer crops, including sunflowers, too.
“The yield outlook for EU summer crops was substantially reduced due to continued hot and/or dry weather conditions in large parts of Europe,” Mars said.
“Apart from direct impacts on growth, drought and heat stress in several regions coincided with the flowering stage, resulting in reduced flower fertility.
“Moreover, in several of the regions where summer crops rely on irrigation, water reservoirs are at a very low level, insufficient to sustain demands.”
The sunflower yield forecast was cut by 0.19 tonnes per hectare to 2.18 tonnes per hectare, taking it below the five-year average, but remaining above the 2020 result of 2.04 tonnes per hectare.
Conditions are expected to remain dry in Europe, with World Weather foreseeing that “rainfall will be restricted over the next full week while temperatures are warmer than usual”.
However, the US Midwest is expected to see an improvement.
“The bottom line for the US includes improving crop conditions in the lower Midwest and especially in the south-western corn and soybean production areas during the coming week because of rain and cooler temperatures,” the weather agency said.
Some meteorologists see a return of less clement Midwest weather next month, with Agritel reporting that “temperatures are expected to rise and the weather to be drier at the beginning of August”.