Rains may have helped the drought-stricken areas, but there are still plenty of unknowns in the growing season.
“We are in the process of determining the supply side of the market,” said Don Roose, market analyst with U.S. Commodities in Des Moines. “It’s about what our production is going to be, and the only way for trade to really gauge production is by using the good-to-excellent ratings.”
Roose said ratings increases were expected in places like Iowa that received beneficial rainfall on the weekends of June 17 and June 24. He expects those to continue if weather patterns hold.
If production does hold strong, the South American price will start being a target point for crop markets.
“They are probably going to be under us in price for corn and beans until about Sept. 1,” Roose said. “As their harvest kicks into gear around the first of July, look for more competition from Brazil on corn exports.”
He also noted that Chinese demand on soybeans “may have peaked out” at the moment as their aggressive buying has slowed.
“They’ve changed some of the rations on soybean meal, so they are using less meal in their hog operations,” Roose said.
As the crop enters July and pollination begins, Roose said markets historically “march down to harvest.” If conditions remain positive, the market will take the weather premium out of the crop and prices will decline. After a drier start to the season, the crop may hold on a little longer to that weather premium, but continued good weather will see it quickly erased.
“Weather patterns change often around this time,” he said. “The crop ratings are really the only good way to get an idea of what’s going on.”
