September 17, 2008


US corn, soy conditions hold steady



US corn and soy condition ratings held steady for at least the second week in a row, according to the US Department of Agriculture's weekly crop progress report released Monday (September 15).


The late-maturing crop had shown signs of seasonal deterioration moving into September, but showed some resilience after recent rains.


The crops remain vulnerable to early frosts, as development continues to lag the normal pace, analysts said.


The USDA said 61 percent of corn was in good-to-excellent condition as of Sunday, unchanged from last week. Traders had expected the rating to decline as much as two percentage points, but some analysts predicted the unchanged rating.


"I think the rains from remnants of Gustav definitely helped out corn crop across the Midwest," said Terry Reilly, a Futures Perspective analyst at Citigroup.


Reilly was surprised to see the crop in the western corn belt increase by an average of 0.1 percent while the eastern corn belt declined 0.8 percent, but, he added, "overall, across the heart of corn belt, (the rains) helped improve prospects a little."


While the nation's good-to-excellent rating remained unchanged since the week prior and even crept up by two percentage points to 63 percent in Iowa, major corn growing states of Illinois and Indiana saw quality decline.


The decline in Illinois was most severe with the category sliding 6 percentage points to 66 percent in the good-to-excellent category.


"The corn crop progress was as expected, but we were surprised to see Illinois decrease," Reilly said.


Development continues to lag behind normal with 96 percent of the crop in the dough stage of development, down from 100 percent in the same week last year and the five-year average of 98 percent, according to the USDA. In Iowa, 92 percent of the crop was in the dough stage, down from 99 percent average.


The crop was 78 percent dented, down from 95 percent last year and the average of 89 percent, according to the USDA. In Iowa, 71 percent of the crop was dented, trailing last year's 95 percent rate and the average of 92 percent.


USDA reported 19 percent of the crop was mature, far short of last year's 58 percent maturity and the five-year average of 44 percent.


Reilly said the USDA failed to note harvest progress because less than 20 percent of the crop was mature. But, he said, "we know there's good harvesting activity in the Delta, Texas and in parts of the southern Midwest."


Based on a weighted average based on 11 years of crop progress report data, Reilly said he expected US corn yields to average 154 bushels per acre compared to the USDA's current estimate of 152.3.


The USDA left the soy crop's good-to-excellent rating unchanged at 57 percent for the third week in a row. Traders had expected the rating to stay steady or drop as much as two percentage points.


The report "was pretty much as expected, but there was a notable decline in the combined ratings for the eastern corn belt, which did not reflect any improvement from the recent rains," said analyst Mario Balletto, also with Citigroup's Futures Perspective, noting the Illinois slide "was a bit of a surprise."


Illinois' soy crop slipped along with its corn. The crop was rated 63 percent good to excellent, a 4 percentage-point drop from last week. Indiana's good-to-excellent rating was up one percentage point to 47 percent.


"It will be interesting to see if there's any response to rains in subsequent crop ratings," Balletto said.


Aside from Iowa, which remained flat from the week prior at 60 percent good to excellent, Balletto noted some improvements in Minnesota, Nebraska and Kansas.


The USDA said 21 percent of the crop was dropping leaves, down from 48 percent last year and the average of 41 percent. Sixteen percent of Iowa's crop was dropping leaves, trailing the 46 percent rate in 2007 and the average of 44 percent. Seven percent of soy in Illinois are dropping leaves, compared to 52 percent last year and the five-year average of 39 percent.


Despite the delayed maturity, a better-than-average crop index suggests exceptional yield potential, Balletto said.


"It's just a matter of how long of a growing season we have," he added, noting he hadn't seen any significant weather threats forecast for the next couple weeks.


The US spring wheat harvest was 92 percent complete, down from 99 percent complete in 2007 and the 94 percent average.


North Dakota's harvest was 91 percent complete, up from 87 percent last week and lagging the average of 99 percent. South Dakota's crop was completely cut as of last week's report.


The US winter wheat crop was 11 percent planted, near the 2007 rate of 12 percent, but dragging the average planting progress of 16 percent.


"For wheat, we're hearing good planting progress is occurring in the lower states, but with rains in Texas and Oklahoma last weekend, maybe it wasn't dry enough for the field work," Reilly said.


Texas is 8 percent planted, ahead of the 7 percent achieved in 2007, but trailing the 20 percent average. Oklahoma was 11 percent planted, ahead of last year's 10 percent, but behind the 17 percent average.

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