Commodity prices saw a rally this week. This can be attributed to expanding drought conditions and sharp declines in weekly crop ratings across the Midwest. In Illinois, 36% of corn and 33% of soybeans are rated Good/Excellent. Spring wheat ratings also decreased to 51% Good/ excellent. These ratings are on the low end of the 30-year average trend.

It is worth noting, if you look at the ratings for 2012, 2013, and 2021 that show up on this chart side by side average yields for those years were 123.1, 158.1, and 176.7 bushels per acre respectively. Long story short a lot can happen between now and harvest with this crop in the ground.

Trade will continue to focus on weather forecasts over thecoming weeks. Temperatures are expected to remain above average into theweekend. Chances of precipitation increase across much of the Midwest into nextweek and the end of June, although it is uncertain how much relief thesepotential rains will bring to areas experiencing drought conditions.

June 30th Quarterly Stocks Report:

Next week (Friday, June 30th) the USDA will release its quarterly stock report. This report will finalize planted acres as well as:

• Trade is expecting to see a 500k reduction in both the 92 million corn acre and 87.5 million soybean acre estimates from March. A reduction in acres would be positive for markets if these estimates are realized in the June report.
• Yield outlooks still depend on rain, and it is important to realize that we are still relatively early in the growing season. However, corn yields of 181.5 bu/ac are becoming increasingly unlikely. Some analysts are expecting a corn yield reduction to 178 bu/ac.

The seasonal rally that we historically get is here. Stay active in making marketing decisions throughout this rally. Historically the top for corn, beans and wheat is placed in June-July. In the drought of 2012, the market ran and topped out near the end of August. Currently, new crop corn has gained $1.25/bu., soybeans $2.50/bu. and wheat $1.60/bu from their May low.

Below is a snapshot of the corn and bean USDA spreadsheets with some “play on numbers” scenarios. For corn, there needs to be a massive reduction in production. Demand has struggled as of late and as long as yield does not drop below 172BPA U.S. corn stocks should remain adequate. The bean spreadsheet may be more concerning. A yield of 48 or lower would create demand rationing and the U.S. would need to significantly reduce bean exports. 

Corn:

Soybeans: