US Cash Grain Outlook: US Corn Crop Starting Out Healthy

 
   By Debbie Carlson 
   Of DOW JONES NEWSWIRES 
 

CHICAGO (Dow Jones)--The U.S. corn crop is starting out the growing season in good shape and that's lending some pressure to grain prices Tuesday.

The U.S. Department of Agriculture said Monday in a highly anticipated report that nationwide 70% of the U.S. corn crop was in good-to-excellent condition as of Sunday, which was toward the high end of trade expectations. This was the first time USDA reported on the health of the crop. Last year at this time, 63% of the U.S. corn crop was in this state.

Most of the corn crop is also in the ground, with 93% seeded down from 94% last year and the average of 97%.

"Overall, I would say these numbers should be somewhat bearish. We do still have around 20% of the crop to plant in Illinois and Indiana which still warrants some premium as we come closer to losing acres to other commodities," said one Iowa-based cash grain merchant.

Soybean planting was 66% complete as of Sunday, compared with 67% last year and the average of 79%, the USDA said. That was toward the low end of trade expectations, which ranged from 65% to 75%. A week ago, 48% of the crop was planted.

In electronic trading Chicago Board of Trade grain and oilseed futures were lower, in part pressured by the USDA data and also seeing profit-taking on the back of strong gains Monday and losses in other commodity markets across the board. Offsetting some of the futures weakness is a continued weaker dollar, which makes it easier for foreign buyers to purchase grains.

After a spate of farmer selling on Monday because of the higher futures prices, basis levels slipped in the afternoon. Corn and soybean basis is steady to weak. Wheat basis is steady, although it fell at the Gulf. Illinois river barge terminal basis levels for corn and soybeans were mixed - steady weak south of Peoria and mixed north of Peoria. Weaker futures prices Tuesday should keep farmers out of the market.

In USDA's report, problems with the fungal disease fusarium head blight, or head scab, was reported again in soft red winter wheat states because of wet weather during the flowering stage. The soggy state of Illinois saw its SRW wheat rating drop 11 percentage points from last week, to 56% good to excellent because of head scab.

In other crop health news, drought in China's major soybean-producing Heilongjiang province continues to threaten crop development there. More than 45% of the cultivated land is affected, said the Office of State Flood Control and Drought Relief Headquarters Tuesday.

Meanwhile, Jilin province, another big soybean producing area, is also under drought threat. The production problems are raising local prices, Chinese analysts said, and there are thoughts that the government might release state soybean reserves.

 
   Crop Weather 
 

DTN Meteorologix said the western corn belt could see rain and thunderstorms - 0.25-1.25 inch and locally heavier - from central Iowa and central Nebraska southward into Missouri Tuesday into Tuesday evening. Skies turn drier Wednesday and Thursday. Temperatures are seen cooler during this period. By Friday and Saturday there is a chance for a few showers. By Sunday, heavier showers or rain favor the south and east areas. During this time temperatures average below normal.

In the eastern corn belt, there's a chance for showers or light rain Tuesday, favoring the north half of the region. Tuesday night into Wednesday brings a chance for showers and thundershowers to the southern and eastern areas. Temperatures are seen averaging below normal north and above normal south Tuesday, near to below normal Wednesday and below normal Thursday. It's expected to be mainly dry Thursday and Friday, with the possibility of showers Saturday into Sunday. Temperatures average below normal during this period.

The six- to 10-day outlook calls for cool temperatures and above normal rain.

-By Debbie Carlson, Dow Jones Newswires; 312-750-4072 debbie.carlson@dowjones.com

(Tom Polansek and Zheng Xiaolu contributed to this story.)

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(END) Dow Jones Newswires

June 02, 2009 09:52 ET (13:52 GMT)


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