News

We won’t make too “much” of the rains that fell May 30-31 across
the Corn Belt… or of the May 25-26 storms that gave the northern
Corn Belt another drink of water. But, some of the driest areas of
Iowa, Missouri, Illinois and Indiana saw much-needed relief. Only
about half of Iowa received more than a half-inch of rain and very
few locations saw an inch. With rain still falling in Illinois Thursday,
some locations were just crossing the half-inch level.

Rain will sustain the corn crop, but it’s still far from ‘made’ —
May 30-31 rains will only sustain the corn crop and will do very little
to recharge soil moisture levels in Iowa and Illinois. In fact, the rain
may have been even more beneficial for the bean crop — the moisture
will encourage germination of some seed that’s been sitting in dry dirt
for a week (or longer). It will also help erase some of the soybean seedling
problems, such as “leafing” underground, as young plants should
now find the strength to poke through a softened crust.
And even the light shower in southern Corn Belt locations will be
encouragement for soft red winter (SRW) wheat producers to follow
harvest with a double-crop of soybeans.

Still a lot of rain needed to get soil moisture back to ‘normal’ —
The map below is one most haven’t seen before. It shows how many
inches of rain are needed to completely recharge top- and subsoil
moisture and to meet the moisture needs of all vegetation. Corn and
soybean crops could perform very well with rainfall totals below the
amounts needed to return conditions to normal, but it does an excellent
job of illustrating how these crops will rely on timely rains all season.

Despite dry conditions, corn still mostly ‘good’ to ‘excellent’
The first PF Crop Condition
Index (CCI) of the year for corn
promised a strong start. The second
update of the CCI erased
much of that early start and the
CCI is already below 2010 levels.
But as the last two growing seasons
proved, the key will be the
mid-summer trend. Rains last
week set the stage for at least a
slight recovery in the CCI for
corn in the week ended June 3.

Two large factors provided market direction yesterday. They were 1. July
liquidation and 2. cooler and wetter forecasts. No doubt that dryness has
started to stress newly planted bean crops and older planted corn. After
starting with historically high ratings, the corn ratings dropped by 5% to 72%
good/excellent, bringing it in line with last year’s crop. Kansas and Kentucky
reported the worst conditions for corn. Soybean planting progress is about
2 weeks ahead of normal at 89% planted and 61% emerged, while winter
wheat conditions dipped slightly.

The macro picture continues to weigh on commodities across the board,
brining its fair share of weight to Ags as well. When combining a good weather
forecast with risk -off the table, the path of least resistance quickly becomes lower.
This morning commodities are lower with crude oil under $90 /barrel and gold
off as well. Concerns over the EU and China continue to hit the market in
episodes, driving money out of the commodities sphere. Last night was one
of those events, with Chinese agencies denying that they would add any
stimulus to their economy. China demand is synonymous with strong commodities,
hence any worries over this powerful economy can certainly provide a risk off pattern.
And adding to economic world worries was the fact that Spain’s credit ratings was
reduced to BB from a B ratings, with the Eurodollar at the lowest point for the year.

The trend towards the open for the pit session is lower for soy and wheat, steady
for corn which responded to lower than expected crop ratings:

beans: 5-9 lower
meal: 3.00-3.50 lower
oil: 20-25 lower
corn: 1/2-1 higher
wheat: 5-7 lower

Wheat futures may regain its previous bear -leg status from improving forecasts
in the Black Sea, and the fact that the enormous and quick short-covering rally
took prices to levels that were simply not world competitive.

• Quick Editorial: the bulls were finally able to put their foot down overnight,
at least temporarily, following an ugly week for that camp; it will be tough for
them to add momentum going forward, though, in the face of much-improved
growing conditions for most U.S. crop areas for the holiday-shortened week.
• A branch of Taiwan’s BSPA is looking for two bean cargoes totaling 120,000
tonnes, in a tender closing tomorrow; shipment will be set for Aug-Sep. A
separate branch of the BSPA bought 120k tonnes of Brazil soy today as well,
for July-Aug shipment, against the Nov contract at $578/580 per tonne.
• Japan’s Ag Ministry bought 32,000 tonnes of feed wheat and 89,000 tonnes
of feed barley today, while seeking another 120k tonnes of feed wheat and
200k tonnes of feed barley, all for shipment by August. They also took 153k
tonnes as scheduled in their weekly milling wheat tender, including a combined104k
tonnes from the United States, and 49k from Canada.
• The Russian Grain Union expects the 2012/13 grain harvest to “at least”
match last year’s 94 million tonnes, despite some dryness in southern regions
as of late; wheat production is expected at “at least” 56 MMT, with barley at
17-18 MMT. Total grain exports are seen falling from 26-27 to 20 MMT.
• The HGCA expects United Kingdom wheat exports to drop in ‘11/12, down a
200k tonnes to 2.45 MMT, as shipments slowed in March and will continue to
slow in coming months; the country’s wheat feed use is seen at 6.54 MMT,
up from 6.14 MMT in ‘10/11 and up from the previous HGCA forecast.
• The U.N. FAO sees Morocco’s 2012 wheat crop at just 2.7 MMT, down from
6.02 MMT in 2011 due to a Dec-March drought, while barley output is also
expected to drop sharply, from 2.34 MMT last year to 900k tonnes in 2012.
2012/13 grain imports are likely to rise from last year’s 5.5 MMT; the USDA
expects Morocco’s wheat imports to rise over 50% in ‘12/13, to 5.0 MMT.
• Export Sales Estimates (000 tonnes): Estimate Range / Last Week
Corn: 900-2000 / 865.1 Beans: 700-1100 / 673.3 Wheat: 400-800 / 711.4
Meal: 75-200 / 195.6 Oil: 10-30 / 48.1
WEATHER UPDATE:
• The NW belt saw impressive rains overnight, with widespread 0.5-2.0” rains
expected but lots of local numbers looking higher than that; southern crop
areas will remain on the hot and dry side as the northern corn belt sees the
best rains over the weekend. However, forecasts are still calling for a pattern
breakdown and cooler and wetter conditions reaching south next week. The
Southern Plains still looks like the problem, at least for 7-10 days, as temps
and rains revert back closer to normal for most others.

Seldom is the price outlook for markets “crystal clear.” Most of the time the outlook is at least somewhat clouded. But that may be even more the case now, as there are a lot of uncertainties that could swing prices sharply up, or down.

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May 10, 2012

CommonGround, a volunteer group of farm women dedicated to creating conversations around farming and food, wants to help provide moms with facts around some of the biggest food myths that exist in America.

Recently, CommonGround commissioned the Gate-to-Plate Survey to gain insights into how U.S. moms feel and think about their food and the food choices they make for their families.

More than 70 percent of moms surveyed admitted to having questions or concerns about how their food is grown or raised – a number that CommonGround volunteers […]