Heat-pressed US crops 'to deteriorate further'

19th Jun 2012, by Agrimoney
The condition of US corn and soybean crops, which suffered an unexpectedly large dip last week, is expected to deteriorate further thanks to hot and dry weather which is prompting some ranchers to start culling livestock.

Updated weather outlook maps from the US Climate Prediction Center showed, in the six-to-10-day timespan, "a huge area of above-normal temperatures stretching from the western Rockies into the the southeast states and as far east as Indiana", WxRisk.com said.

"Embedded in that region is large areas of much-above-normal temperatures over eastern Colorado, South Dakota, North Dakota, Kansas, Missouri, northern Oklahoma and northern Arkansas."

Already, some areas are reporting record mid-June heat, with Denver, Colorado seeing temperatures top 100 degrees Fahrenheit on Monday for a second successive day.

'Worse than market expectations'

The forecasts were seen by analysts as implying further deterioration in US corn crops whose rating, in terms of the proportion seen in "good" or "excellent" health, fell three points to 63% in the week to Sunday.

"The three-percentage-points slide is worse than market expectations of a two-percentage-points drop, and more decline is expected this week," Phillip Futures analyst Lynette Tan said.
The condition of US soybeans fell by four points to 56% rated good or excellent.

"This was a bigger decline than trade was anticipating with ratings dropping in 13 of 18 major producing states," Kim Rugel at Benson Quinn Commodities said.

Pasture condition eased one point to 40% good or excellent, below 53% a year before.

'Hardly tenable'

The data helped Chicago crop futures off to a firm start to Tuesday, in stoking doubts over a US Department of Agriculture estimate that American growers will achieve a record corn yield of 166 bushels per acre this year, and raising expectations of nerves among consumers.

"The global end user doesn't appear ready to rush in and cover additional old crop and or large tonnage of new crop yet," Jon Michalscheck at Benson Quinn Commodities said, noting a spree of soft US corn export data.

"A few more weeks of hot and dry weather in the heartland of the Corn Belt could possibly change their attitude."

Commerzbank said: "The USDA's optimistic prediction of a record average crop yield of 166 bushels per acre would appear hardly tenable any more."

Dry conditions would, however, be a negative for cattle prices, in encouraging ranchers to sell or slaughter animals rather than bear the cost of topping up feed.

Indeed, the USDA on Monday, citing deteriorating pasture, said that cattle prices may have peaked for now.

'Culling has begun'

The USDA reports highlighted the emergence of particular concerns over crops in states, such as Indiana, Nebraska and Ohio, which are typically among higher-yielding areas.

In Nebraska, "above-normal temperatures, coupled with little or no precipitation across northern and western areas, continued to stress crops and pastures", USDA official said.
Indeed, on livestock farms, "culling has begun in some areas due to poor pastures" – a reversal of last year, when the state's well-watered ranches were able to pick up animals cheaply from the drought-stressed South.

In Ohio, "heat hampered growth of corn, soybeans, and hay", besides "putting significant stress on livestock", USDA staff said.

And in Indiana, where the proportion of soybeans rated good or excellent plunged 13 points to 32%, "spider mites are beginning to appear in drought-stressed soybean fields".

"The dry weather has reduced yields in second hay cuttings and pasture condition is rapidly declining… Livestock were under stress most of the week."

'Concern is well-grounded'

At Purdue University, agronomy professor Bob Nielsen said: "It remains to be determined whether the 2012 drought will achieve a lofty position in the Drought Hall of Fame for Indiana corn growers alongside some of the previous 'great' droughts like those of 1983, 1988, and 1991."

Farmers were, rightly, worried -"given the drought or near-drought status of much of the state" - over the imminent arrival of the corn pollination period, which is crucial to yields and vulnerable to hot weather.

"That concern is well-grounded because success or failure of the important flowering period for the corn crop greatly impacts the potential for yield at harvest," Professor Nielsen said.