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The bulk of the bad news regarding the 2012 crops should be in by now, according to Tim Brusnahan with Brock & Associates Inc. Brusnahan, together with Dr. Chris Hurt of Purdue University, was a speaker at WATT’s August 13 webinar, “August Crop Report: Analysis and Implications.”
Brusnahan noted that with corn at $8.00 per bushel, there has been a shifting to alternatives such as feed wheat. Unfortunately, there is not enough feed wheat available to significantly impact corn demand. “So overall, we still have a fairly tight supply around the world,” he said.
Brusnahan also observed that erratic rainfall throughout the Midwest still leaves some volatility in the soybean sector, as final yields may come in lower than U.S. Department of Agriculture estimates. This will also provide opportunities for South America to plant large crops and take advantage of high prices.
He summarized that in regard to money flow, the large speculator remains long corn, soybeans, soybean meal, wheat, cattle, hogs and Class III milk. As to U.S. corn and soybeans, corn prices indicate zero carry and soybeans have a large inverse that should cause producers to move their crop to market at harvest. For ethanol, margins have improved and remain in a state of rebalancing. For DDGS, supplies and use are a little uncertain until more is known of Midwest corn quality.
Hurt, a professor of agricultural economics at Purdue, noted that the current drought will most likely end up being the second or perhaps third largest natural disaster in the U.S. in the last 30 years, after Hurricane Katrina and the 1988 Midwestern drought. “Bottom line, there’s not going to be enough corn to go around,” Hurt said.
For the animal industry, Hurt described conditions in the short run as being “very bleak.” He indicated that there will be losses for all species across the board for the next 12 to 14 months. “This will result in some liquidation of herds, it’s going to reduce supplies, and over time it’s going to bring up retail prices of those animal products and, therefore, the wholesale prices and the farm-level prices.”
However, Hurt said this will ultimately give cause for some long-term profits in late 2013 and into 2014 and 2015. The challenge, he noted, will be getting through the next 12 to 14 months.

USDA August crop reports this week
Attention on USDA’s first survey-based look
at the corn and soybean crops is greater than
normal as traders wait to see how low USDA
will go with its initial crop estimates.
Persistent drought conditions have greatly
trimmed yields. But yield is only one factor in
the total production equation. Another key is
how much USDA reduces harvested acres. In
June, USDA estimated harvested corn acres
at 88.851 million. That figure will be lower,
some feel significantly lower. In June, USDA
estimated harvested soybean acres at 75.315
million acres. USDA surveyed both planted
and harvested bean acres for August.
What NASS does with its Aug. 1 corn and
soybean crop estimates will largely determine
how aggressive the World Board must get
when cutting 2012-13 usage projections for
corn and soybeans.
No change in report times anticipated
The public comment period USDA sought
on report release times is closed. USDA
could change the time it releases key report
data, but our contacts signal that is not likely
ahead of the Aug. 10 reports.

AgResource producer sources suggest that US corn and soy conditions/yield potential have dramatically declined this week with corn not unfurling in the overnight cooling and ears that have no silks to be pollinated. Soybeans have stopped growing and are wilting under the afternoon heat. Another 3-5% decline in corn/soy GD/EX ratings is forecast for Monday with US corn yield potential now under last year’s 147 BPA. ARC argues that US 2012 soybean yield potential is under 40 BPA – and in fast retreat as larger share of the soy crop blooms.
The Central US forecast is little changed from prior days with the searing heat to relent across the Midwest on Sunday. Unfortunately, the chances for a soaking rain are poor over the next 10 days. A “ring of fire” weather/rain pattern will prevail for the next 3-4 days with showers arcing over the top if a high pressure Ridge. Rains are slated for the W and N Plains, MN, WI and MI and southeast through the Ohio Valley. Totals will range from .25-1.00”.
To the south (vast majority of the Midwest) rainfall totals are estimated in a range of .1-.6” with the frontal pass – with coverage pegged at 60-65% of
the area on Sunday/Monday. Such rain falls well short of crop needs or the ability to restore soil moisture.
Next week’s forecast calls for seasonal temps with highs ranging from the
80’s to the lower 90’s. Little or no rainfall is forecast for the Midwest as a front will be stalled across the lower Delta and the Gulf States with rainfall potential of .4-1.50”. A dry flow will persist across the Midwest into July 17
The Indian monsoon will continue to sputter for the next 10 days which is harming the soybean and ground nut crops. Crop worry is on the rise.
Without a soaking rain, any break in CBOT prices will be short lived/shallow.

DTN Early Word Grains 07/02 06:08
Grains Stage Solid Rally to Start July
Corn futures are higher on the electronic session at 6 a.m. CDT; soybeans
futures higher; wheat higher.
By Darin Newsom
DTN Senior Analyst
6:00 a.m. CME Globex: Corn 19 1/2 higher (Dec), Soybeans 14 1/2 higher (Nov),
Wheat 8 1/2 higher (Chi Sep).
CME Globex Recap: Grain contracts broke from the opening gate strong Sunday
evening with December corn moving almost 30-cents higher while November
soybeans jumped 28-cents higher. However, within a couple of hours both
contracts had given back about half of the opening rally. Support came from
weekend rains over parts of the Midwest that were less than needed and
forecasts for continued hot and dry conditions. Tight supplies are reflected in
no deliveries reported for corn, soybeans, or Chicago wheat.
OUTSIDE MARKETS: The Dow Jones Industrial Average closed 277.83 points higher
Friday at 12,880.09. The overnight session saw the Dow Jones futures trade 5
points higher, indicating the market could see continued buying interest
Monday. Asian markets were mostly higher though the Nikkei was down 3.30 points
at 9,003.48. European markets were higher. The overnight crude oil market was
$1.67 lower at $83.29 while Brent crude was $2.28 lower at $95.52. The August
gold contract was $13.20 lower at $1,591.00 while the U.S. dollar index is
0.133 higher at 81.760. Soybeans at the Dalian exchange were higher while
Malaysian palm oil futures were also higher.

The U.S. Senate in a 64 to 35 vote passed the 2012 Farm Bill (S. 3240) today, June 21, 2012. The National Cattlemen’s Beef Association (NCBA) commended the passage of the legislation. NCBA Vice President of Government Affairs Colin Woodall issued the following statement.

“Like many of us who have a vested interest in this legislation (S. 3240), I was pleasantly surprised by the bipartisan efforts made to move this bill through the Senate very efficiently and without much partisan rhetoric. Both Chairwoman Debbie Stabenow (D-Mich.) and Minority Leader Pat Roberts (R-Kan.) should be commended for their leadership on this very important piece of legislation. Their transparency and willingness to listen to all vested interests was very refreshing for the National Cattlemen’s Beef Association and other like-minded organizations. NCBA stands firm in our commitment to support this legislation.

“Although the amendment process was certainly concerning in its early stages, all is well for cattlemen and women thanks to their outspoken grassroots advocacy. This legislation, as written, incorporates all NCBA priorities. Bottom-line, there is no livestock title, conversation programs – specifically EQIP (Environmental Quality Incentives Program) – are maintained and the research title is sustained. All this is done with more than $20 billion in savings to the American taxpayer.

“We support this legislation and will continue working with the House to ensure amendments that would interject the federal government into production agriculture are left out of the legislation or soundly defeated. As we focus our efforts on working with the House Committee on Agriculture to ensure another version of this legislation that is positive for cattlemen, I must stress the importance of family farmers and ranchers being engaged in this process.”