September 28, 2009

Heavy rains in southern US growing areas have raised the stakes in the soy market, as delayed harvesting and potential quality issues increased pressure on depleted old crop supplies.

 

Early soy harvests in the southern US have historically buffered the transition of supplies from old crop to new crop, but in a year where old crop supplies are at a bare minimum, harvest delays have further tightened the cash pipeline.

 

The US Department of Agriculture in its September 12 crop report estimated US soy supplies as of Sept. 1 totalled 110 million bushels.

 

Heavy rains stalled harvest operations in the Delta, resulting in a disruption of supplies to export locations at the Gulf of Mexico, said Joe Victor, analyst with Allendale Inc., a research and advisory firm in McHenry, Ill.

 

Exporters at the Gulf of Mexico are in great need of supplies. The cash basis bid for September-delivered supplies are 80 cents above Chicago Board of Trade November futures and offers for November delivery are 90 cents above CBOT November soy futures, Victor said.

 

Soy supplies from the southern Midwest and US Delta historically would have made their way into export channels by mid-September. Not only have the rains stymied the cutting pace and stalled the shipments, they are also raising some quality issues for the crop.

 

In Arkansas, less than 10 percent of the state's soy crop has been harvested as a result of heavy rains as well as a crop that has lagged behind by 2 weeks to 3 weeks all year due to delayed plantings in the spring, said Jeremy Ross, extension agronomist with the University of Arkansas.

 

Some areas of the state received more than 6 inches of rain in the past week, Ross said. Before the rains hit, about 75 percent to 80 percent of the Arkansas crop was ready for harvest, Ross said.

 

Depending on when the rains stop, areas with sand-based soils will need on average 4 days to get back in the fields, while clay based soils will need at least 7-10 days before they can resume combining, he added.

 

Widespread quality issues have not crept into Arkansas'; crop yet, but the longer the crop stands in soggy fields the greater the potential for disease issues to surface.

 

"We are starting to hear mould popping up, with seed sprouting and split pods reported in about 1 percent to 2 percent of the state's crop," Ross said. The quality issues are more of an individual farm issue, but the longer rain continues, the more pod spitting and grain loss will emerge, he added.

 

"The recent rains have definitely taken a toll on a lot of the soy crop across Mississippi," Trey Koger, soy extension specialist with Mississippi State University said in a crop update.

 

Fortunately, the flooding has only been widespread in a few portions of the mid-to north-central delta. Crops within this area of the delta have been damaged extensively with the heavy rains, Koger said.

 

"We are picking up a lot of pod splitting and seed sprouting in the pods in a lot of fields across the state. This is especially the case where plants are in the late reproductive growth stages and in fields where the crop is either ready to harvest or has been ready to harvest for several days," Koger wrote.

 

The seed in these pods are often rotted or sprouted by time the field is harvested and will cause yield loss ranging from slight to extensive, depending on the extent of seed rot and sprouting, Koger said.

 

"There are really no options to prevent or slow pod splitting and/or sprouting in the pods. It is a function of adverse weather, a lot of adverse weather in the case of the past two weeks, coming when soy are reaching maturity leaving them vulnerable to these types of seed rot / sprouting issues," Koger said in the report.

 

The southern US conditions will remain in focus during a tight stock scenario, placing increased importance on Delta crops to ease the supply concern of end users before the heart of the soy belt harvest supplies in a few weeks.

 

Soy in the bountiful Midwestern producing states were planted late and further delayed by cool summer temperatures, extending the time of maturity.