AM markets: corn, soy struggle despite US crop deterioration
Corn and soybean futures got bruised in a bit of a data collision.
There was every reason to think that prices of both crops would make a strong start to trading on Tuesday, after the US Department of Agriculture overnight showed that both crops were suffering more from adverse weather than had been expected.
In a weekly report, the USDA cut by 2 points to 62% the proportion of the domestic soybean crop rated in "good" or "excellent" condition, more than the 1-point downgrade that investors had expected.
It is also well below the average of 68% for the previous three years, for this week (although more than 20 points above the comparative reading for the disaster year of 2012).
'Lowest in nine years'
For corn, the proportion of the US crop rated good or excellent was cut by 3 points to 65% - compared with market expectations of only a 1-point drop.
"Taking away the disaster year of 2012, this is the lowest condition rating for this week in nine years," said Joe Lardy at CHS Hedging.
The three-year average rating for this time of year is 73%.
Of particular note to investors, conditions declined in Iowa (-1 point) and Illinois (-2 points) – two of the three so-called "I states" which produce a large proportion of both US corn and soybean crops – while in the third, Indiana, although the rating rose by 1 point, it was to a lowly 48%.
For soybeans, the rating dropped in all three I states – by 1 point in Indiana, 4 points in Illinois and 5 points in Iowa.
And "the seasonal trend is for further declines into harvest", Mr Lardy said – a concept only gaining credibility with the prospect of heat ahead for parts of the US Corn Belt.
At Commonwealth Bank of Australia, Tobin Gorey said that "the hot, dry pattern that has harmed spring wheat crops" in the northern US Plains and parts of Canada's Prairies "continues to creep further east and south where it can have a material impact on corn yields....MORE