BY and large, prospects for U.S. farmers to produce a bumper corn and soybean crop are holding steady, which led to a fairly stiff sell-off in both commodities last week.
A pair of industry crop tours last week gave traders no indication that the crops were anything other than what they had expected.
Crops in Iowa are largely viewed as heading for an average yield if they get timely rain over the next few weeks, and yields in Nebraska could actually be better than anticipated.
The U.S. Department of Agriculture's weekly crop progress report found that, as of July 22, 63% of the corn crop is rated in good-to-excellent condition, while soybeans are 64% good to excellent.
Forty-three percent of the corn crop is now pollinating, so weather over the next week or two will remain critical. For the most part, forecasts appear fairly benign.
Commodity Weather Group, a forecasting firm, last week projected an average corn yield of 159.5 bu. per acre, significantly larger than the current USDA forecast of 156.5 bu. Commodity Weather based its initial forecast on "extremely good" crop prospects in much of the Corn Belt due to the lack of heat during pollination.
Moisture shortfalls (Map) in parts of Minnesota, Iowa, Missouri and Kansas, however, could lead to below-average yields, depending on when the crop reaches pollination.
"Based on the forecast through early August, Iowa and Minnesota likely have the greatest potential for variability," the group said in an update. "If projected rains do occur, national yield potential could still lift slightly higher, given the lack of any significant heat."
Downside risk still exists, of course, if those timely rains do not materialize.
University of Illinois crop specialist Emerson Nafziger largely agreed, noting last week that a recent spike of above-average daytime temperatures in Illinois was not much of a concern given available moisture.
"Planting (in Illinois) was concentrated in the third week of May this year, so pollination is also occurring relatively quickly," he explained. "That's a week or so later than normal."
The return to cooler nighttime temperatures, coupled with soil water availability, has likely facilitated good kernel set. Soil moisture is starting to become a concern in some parts of the state, Nafziger noted, as July rainfall has been below average in some parts of Illinois.
According to the National Oceanic & Atmospheric Administration, June was the 15th warmest and 13th wettest on record, with the average temperature being 2.0 degrees F hotter than the 20th-century average. Rainfall, meanwhile, was 0.54 in. more than the average.
Aside from yields, the biggest question remaining for this crop is how many acres farmers actually got planted. Given the late start to planting this year, the market openly questioned USDA's June acreage data, which noted stronger corn and soybean seedings than anticipated.
Solid production prospects and farmer soybean selling sparked a major sell-off last week, and soybean prices saw double-digit declines in three consecutive sessions.
"Concerns that end users have filled the pipeline through the beginning of harvest has sellers trying to get beans out of inventory before prices drop and the opportunity to sell $14(/bu.) cash beans disappears, possibly for an extended time period," Farm Futures senior editor Bryce Knorr explained. "New-crop acreage and yield remain uncertain, but the overall tone of the market is supported by tight old-crop supplies. That should be enough to keep the market together unless weather turns overtly destructive or beneficial."
Prices stabilized for both corn and soybeans in overnight trading through last Friday morning.