Scouts sample Corn Belt crops
The Farm Journal Midwest Crop Tour (formerly ProFarmer) is an annual event that grabs the agricultural commodity market's attention as crop scouts sample fields all across the Corn Belt for a first-hand look at the soybean and corn crops. Scouts come from all backgrounds (journalists, farmers, traders, exporters, etc.) and from all over the U.S. (as well as Canada, South America, Europe and Asia) to participate. There are two legs, covering the Eastern and Western Corn Belt, and they converge in Minnesota on the final evening. Each night, the day's results are put together for a state yield estimate for corn and a pod count for soybeans, leading to a final day overall yield estimate for both crops. The tour is positioned to be between the U.S. Department of Agriculture's August and September Supply & Demand reports to give the market a look at what yields appear to be. While accuracy of the tour's final yield estimates is widely discussed, one cannot deny the market's following of the tour.
This year, the market was excited to follow along with the scouts' findings, comments, tweets and interviews. Weather was too hot and dry for most of July before turning to be very favorable in August. But scouts found mostly good crops (with expected variability) and some surprisingly high yield potential in states thought to be hit harder by poor weather earlier in the growing season. In the end, the tour did not give the market any longer-term outlook that it did not already have: The soybean crop will be huge and corn will be a good, but not incredible, crop. Other agricultural commodities followed these markets, all week.
Wheat markets have been on the defensive. A lot has been pulling on prices: Corn prices are falling with an outlook for a good crop, funds and speculators are exiting their long positions, and globally, there is plenty of wheat. The Minneapolis wheat market has taken back over half of the gains seen earlier in the summer. Support is still there as lower production is known given the hot, dry weather in the Northern Plains. But it is difficult to rally much with Chicago and Kansas City making new lows. Spring wheat harvest in the U.S. remains ahead of the normal pace, with the USDA showing 58 percent completion compared to 51 percent for the five-year average.
Durum prices also have faltered. The market has dipped on spillover pressure from wheat. The market knows that there will be less durum available given the weather, but continued support was not sustainable given overall commodity pressure.
Despite some strength in soybean oil, the canola oil market has been mostly flat. The market is waiting to see just how big the crop is, but tight old crop supplies will limit much downside. Harvest is getting going in Saskatchewan, with 18 percent swathed (but only two percent combined). News this week that the U.S. will put tariffs on biodiesel imports from Argentina and Indonesia was supportive to soybean oil, as more biodiesel will have to be produced domestically. Look for stronger oil demand in the coming months, which should have some spillover support impact on canola.
Peas and Lentils
The Indian government continues to add to the list of restricted pulse imports. Moong beans and urad (black maple) were added this week. This is added to previously restricted pigeon peas. Now, 300,000 metric tons of these items can be brought in, including previous shipments back to April 1. This means that most of the quotas have been filled, so future shipments of outstanding sales will not be permitted. These restrictions are a result of the Indian government looking to support domestic producers who have expanded planted area for pulses significantly in the last year. In a recent estimate, all pulse production is expected to reach 22.95 million metric tons (9.43 million metric tons for the kharif crop and 13.52 million metric tons for the rabi crop) versus last year's 16.35 million metric ton crop.
Domestically, harvest of pulses is progressing quickly. While yields in the U.S. and more southern portions of the Canadian Prairies are lower and likely will not exceed the five-year average, harvest efforts are moving things along at a good clip. This alleviates fears of a supply crunch in the short-term as the old crop marketing year comes to a close.
Mustard seed export clearances are roughly on pace with a year ago, as the Canadian Grains Commission reported 800 metric tons compared to 700 metric tons a year ago.
Barley harvest is well ahead of normal and is in its final weeks. The USDA reported 70 percent of the crop done compared to 52 percent a week ago and 58 percent for the five-year average.