Corn futures soared to their highest in nearly two months as official data revealed that the US crop had declined to its weakest condition rating since 2012, adding to concerns over yield prospects posed by the first day of a high-profile Midwest tour.
Chicago corn futures for December leaped to $6.65 ¾ a bushel at one point, before easing back to close at $6.55 ¼ a bushel, up 4.2% on the day and the contract’s best finish since late June.
The gain followed a double dose of disappointing news on the condition of the US corn crop, which has been tested by dryness and heat in many Midwest states.
Worst since 2012
In the first blow, the US Department of Agriculture late on Monday revealed that the condition of the US corn crop had declined by 2 points week on week to 55% rated “good” or “excellent”.
That exceeded investor expectations of a 1-point decline, and meant that the crop was now the lowest rated for the time of year since the drought year of 2012, when the US yield slumped to a 17-year low.
Up to now this growing season, the US corn crop had been rating at least above its 2019 peer, which was the lowest yielding in six years.
‘Pollination issues’
Hours later, the Pro Farmer Crop Tour, one of the most closely-watched of the many Midwest crop monitoring events, revealed year-on-year declines in both of the states covered by its first day.
In the eastern Corn Belt, the tour pegged the Ohio yield at 174.17 bushels per acre, below last year’s figure of 185.06 bushels per acre, although above the three-year event average for the state of 169.03 bushels per acre.
Further west in South Dakota, the tour pegged the corn yield at 118.45 bushels per acre, below last year’s 151.45 bushels-per-acre figure and the three-year event average of 161.59 bushels per acre – and, indeed, the lowest figure since 2012.
In South Dakota, “dry conditions starting before pollination and continuing through the end of pollination were evident in the corn samples we pulled,” said Brent Judish, an Iowa farmer and one of the tour scouts.
“Most of the ears we did pull showed pollination issues from both ends of the ear as well as pollination issues on the bottom side of the ears.”
‘Bullish yields’
The observations come at a time when the “trade is desperate for a real-time take on US corn and soybean yield potential”, said Richard Feltes at broker RJ O’Brien, adding that many investors suspect the tour “will undermine” US Department of Agriculture forecasts.
The USDA in its August 12 Wasde ag estimates report trimmed its estimate for this year’s US corn yield to 175.4 bushels per acre but, unexpectedly, lifted the soybean figure to 51.9 bushels per acre, above last year’s result.
“We are bullish yields,” said Terry Reilly at Futures International, heralding a downgrade to the broker’s yield expectations. Dr Michael Cordonnier, the respected analyst, has already lowered to 173.0 bushels per acre his forecast for this year’s US corn result.
Dr Cordonnier noted that the data used by the USDA in compiling its Wasde yield forecast “was approximately two weeks old by the time the report was released.
“The corn condition declined during the first two weeks of August, so I decided to trim the corn yield a little more.”
‘Trending wetter’
However, the weather outlook has turned more benign, with Mr Feltes noting that models are “trending wetter for the western Midwest” with “no sign of sustained Midwest heat”.
Rains over the weekend had trimmed dry areas to “25% of the US Corn Belt”.
World Weather said of the outlook that “the bottom line for the United States will be mostly good” over the next week.
Already, “rain that has already fallen in Texas and Oklahoma has increased soil moisture for better crop development for those crops not seriously damaged or destroyed by this year’s drought.
“Weather in the Midwest, Delta and south eastern states will be mostly good for summer crop development, although there will be pockets that are still a little too dry, but very few areas are critically dry.”
Dr Cordonnier said that the weather forecast “is now more favourable and if the forecast verifies, it might help to stabilise the corn crop”.
Similar to 2012, but…
On the Pro Farmer tour, AgWeb’s Chip Flory reported that “there was a lot of talk this evening about 2012 and how this year’s crop is similar in many ways.
However, even a South Dakota yield of 118.45 bushels per acre would come in well above the state’s 2012 result of 74 bushels per acre, reflecting improved seed types and agronomics.
“It’s probably not a 2012-type disaster.”
The decline in the weekly USDA corn crop rating reflected largely declines in dryness-pressed central and southern Plains states, such as Nebraska, where the reading dropped by 5 points to 42% good or excellent, even as the proportion of topsoil rated “very short” of moisture gained 4 points to 43%.
In Texas, where the rating fell by 2 points week on week to 17%, USDA scouts noted that in the north of the state “there were reports of corn struggling with pollination due to high temperatures”.
