ProFarmer tour to survey crop situation

The ProFarmer US crop tour is going ahead this coming week, with reports set to come in from Monday to Thursday, and with a final report to be published on Friday. No doubt it will create some excitement in the press, but will also provide another benchmarking of crop situations including row-crop damage from storms a week ago.

Corn beans evolving story

Friday’s markets again were reacting to the storm across Iowa and parts of the western corn belt.  Production impact ideas continue to vary widely, but talk is of 5-8 million acres with “significant” impacts for corn and ground comments are suggesting that some of the corn plants that were initially expected to recover partially have shown more “pinch” damage and may not rebound.  Soybean talk is less widespread but ideas are of up to 5 million acres with potentially similar damage.  We’ll see how this story evolves into this week, but it’s definitely kept the bulls more optimistic. Bulls are also drawing support from the FSA acreage story/discussion.  In a market otherwise starved for optimistic price news in row crops, the counter view would be that this rally has mostly proven a short term excuse to exit prior shorts.  This week’s weather outlooks are fairly dry and warm for the western corn belt though, and word on the ground is that they could definitely use a rain in many areas.

Dry in Argentina, France and Black Sea region

Globally, we continue to watch the drought in Argentina. Weather outlooks remain dry as a bone for most of the wheat area through the next two weeks and private crop ideas continue to trend lower.  Corn crop ideas in the Black Sea region and parts of the EU are also continuing to slip amid confirmation of lost crops, disked under in some cases.  France’s government pegged crop conditions down 9pc there late last week, about as most had expected but drawing pundit comments in the news.  Some support to farmer bids has managed to drag out more farmer sales in the Black Sea region in locations not so affected by the dry. There’s no real moisture on the forecast in Ukraine, so dryness will likely remain a topic of concern.

Macro

The planned US/China review of the trade deal that was scheduled for this Saturday ended up postponed – apparently to “allow more time” for China to fulfill obligations.  We guess the can has been kicked down the road – will there be more attemps to keep up appearances with more purchases in the coming weeks?  Time is definitely running out if they are going to meet the agreement levels.

Australia

Rain has continued to fall. WA figures are starting to look impressive with many parts of the wheatbelt receiving at least >20-30 mm.  Local markets found some stable ground on Friday with support from the global price action and some increased liquidity as buyers stepped in for bits of both old crop and new crop.  New crop grains remain largely at export parity for most port zones, helping support the bid. Few sellers are keen to deal below current cash levels despite the improved crop conditions.