June 29, 2004

 

 

US Wheat, Corn, Soy Conditions Little Changed

 

Winter wheat, corn and soybeans saw little to no change in their crop-condition ratings, according to the U.S. Department of Agriculture's crop progress report released Monday. Spring wheat did improve substantially, increasing its condition by four percentage points.

 

CORN

 

U.S. corn conditions improved by one percentage point from the previous week, rated at 71% good to excellent. The poor-to-very poor category remained constant, with last week at 8%.

 

Under the current favorable conditions, a robust increase in the good-to- excellent rating was expected, but the increase was 1 percentage point, said Dan Basse, analyst at AgResource Co. If corn is planted early, cool weather is favorable in some areas, depending on soil conditions.

 

"The last thing we want to see is hot, dry weather," Basse said.

 

"There may be further room for improvement if there is warm weather this weekend as expected," said John Kleist, of John W. Kleist Consulting.

 

As for the market effect, from the supply standpoint, corn will be slightly negative, but that was expected, and the market has accounted for it, Kleist said.

 

Nine percent of U.S. crop has reached the silking stage, which is five percentage points higher than the five-year average and the previous week.

 

SOYBEANS

 

Soy conditions also saw little change with the good-to-excellent ratings, dropping by one percentage point to 66%. The poor-to-very poor condition remained consistent at 8%.

 

The key states of Illinois, Iowa and Indiana continue their strong seasons, supporting the lackluster showing the lesser states are having.

 

Kentucky, Michigan, Ohio and Wisconsin continue to progress poorly to a large degree, Basse said. Kleist said the four states are reaching the "cut- off" point for planting their soy crops. Basse explained that the soy crop in those regions faced already poor crop conditions and that it is very difficult to see any sizable improvement in their ratings. Those states were hit with heavy rains earlier in the season, with excess moisture leading to standing water in fields.

 

For the first time this season, the USDA released a blooming report for the soy crop. The U.S. crop came in 7% bloomed, which is one percentage point higher than the five-year average of 6%.

 

Blooming will continue through the second or third week of August, Basse said. Normal temperatures, abundant sunshine and occasional rain would be ideal weather conditions for the blooming period.

 

WINTER WHEAT

 

U.S. winter wheat's condition increased in its good-to-excellent rating by one percentage point to 43%. The poor-to-very poor rating decreased two percentage points to 27%

 

The focus for winter wheat is primarily on harvest numbers, Basse said. Harvesting is past the halfway point, which will support the market and show diminished hedge pressure, he said

 

"The harvest glut is behind us," Basse said.

 

Kansas has made "pretty good progress," Basse said. At this point, another week of dry weather will finish harvesting in Kansas by Thursday or Friday.

 

Although with 69% of the crop harvested in Kansas and a poor to very poor rating of 44%, the crop is not of the quality of previous years.

 

The issue for the winter wheat was described by Kleist as a "two-edged sword of quality and exports." As the crop is harvested at a lower and lower quality, the exports decrease as more and more wheat becomes animal feed.

 

Nationwide, 51% of the crop has been harvested, which is 10 percentage points higher than the five-year average. Warm, dry conditions have helped to speed harvest.

 

SPRING WHEAT

 

U.S. spring wheat conditions improved four percentage points to 68%. The poor-to-very poor rating decreased by two percentage points to 8%. Sunshine and less rain helped spring wheat, Basse said.

 

"Warmth and sunshine are desired in the crop," Basse said. Too much rain and too little sunshine are damaging weather conditions.

 

The percentage of the crop headed has increased 13 percentage points from the previous week, but remains six percentage points down from the five-year average, at 26%.

 

"It's no big deal because a little warmer temperatures are expected; (the heading) could catch up quickly," Kleist said.

 

Kleist said the both wheat crop progress reports will have a positive effect on the markets, but the hedging on the market will neutralize it.