September 22, 2009

The lagging development of US corn and soy crops remain focal points of market attention, with Monday's weekly crop progress report from the USDA showing both crops continuing to develop behind schedule.

 

Meanwhile, harvest progress continues on the spring wheat crop, while winter wheat planting progress picks up momentum.

 

The maturity of corn and soy crops may fuel some more concern in the market, as this is the first time since 1993 that USDA hasn't reported harvest progress at this point in the year for corn or soy, said Mario Balletto, analyst with Citigroup Global Markets Inc. in Chicago.

 

The USDA said 68 percent of the corn crop was in good-to-excellent condition, down one percent from the prior week. Traders and analysts were expecting the rating to drop by as much as two percent. Most states saw only minor changes to the condition of the crop.

 

The small drop in ratings is no surprise, as ratings usually drop as the crop moves closer to maturity, said Gavin Maguire, director of research at E-Hedger in Chicago.

 

USDA said 97 percent of the crop had reached the dough stage, up from 93 percent last week, but below the five-year average of 99 percent.

 

The USDA said that 80 percent of the crop was dented as of Sunday, up from 66 percent the prior week, but below 89 percent last year and the five-year average of 93 percent.

 

Mature crops reached 21 percent, up from 12 percent last week, but down from 30 percent last year and the five-year average of 55 percent.

 

"The question now becomes, do we have enough time for the crop to finish, before weather shuts plants down," Maguire said. The lagging development pace keeps attention on weather, as the crop needs time to mature as well as dry down, Maguire said.

 

The USDA said 67 percent of the soy crop was rated good-to-excellent, down one percent from the prior week. Traders were expecting ratings to hold steady.

 

There were only minor changes in most states.

 

As of Sunday (Sept 20), 40 percent of the crop was dropping leaves, up from 17 percent the prior week but down from 41 percent last year and the five-year average of 58 percent.

 

The soy crop continues to lag behind in maturity, and that will continue for the rest of the growing season due to the late start for the crop, Maguire said.

 

Late plantings and a cool summer left soy development behind, and that could leave a significant portion of the crop with a maturity problem with a late September freeze.

 

However, given the current weather outlook, crops will continue to have the opportunity to play catch up, Maguire added.

 

In Illinois, 20 percent of the crop is dropping leaves, compared with the average of 56 percent, and Indiana was at 40 percent compared with the average of 66 percent. Iowa was at 50 percent, down from its average of 64 percent.

 

Harvested spring wheat crop reached 85 percent, up from 69 percent last week. However, the harvest was 96 percent complete the same time last year, and the five-year average was 96 percent. Analysts had anticipated US spring wheat harvesting progress to be 77 percent complete.

 

North Dakota continues to lag behind in harvest progress, with 77 percent harvested, down from its five-year average of 95 percent.

 

The North Dakota harvest is late, but in line with the delays seen in spring plantings, Citigroup's Balletto said.

 

Overall, the spring wheat harvest is catching up, and that should continue based on current weather forecasts, Balletto said.

 

The USDA reported 24 percent of the winter wheat crop was planted as of Sunday, up from 13 percent last week, and just shy of the five-year average at 25 percent. Traders expected US winter wheat planting progress to be 25 percent complete.

 

Winter wheat plantings are moving along nicely, with rains moving through the region not a problem, as they provide good moisture for plants, Balletto added.