US Crop Conditions Report
The corn crop was rated in 65% good to excellent condition as of July 18, unchanged from a week earlier.
The average estimate was that the corn crop condition would improve by 1%.
56% of the corn crop is silking compared to 26% last week and 52% average.
Soybeans conditions were rated 60% good to excellent, up from 59% a week earlier and in line with the average trade estimate.
Spring wheat crop ratings fell 5 points to just 11% good to excellent, the worst for this point of the crop year since 1988 at 7%.
Winter wheat harvest was 73% complete, slightly above expectations and in line with a year ago.
Cotton condition ratings improved to 60% good to excellent from 56% last week, and are above 47% seen last year.
FBN’s Take On What It Means: The most recent USDA forecast was for a record corn harvest this season, although its likely large yields will be needed in the eastern Corn Belt and South to offset drought-hit crop losses in the north and northwest regions. Tightening grain supplies in the US and poor weather in Brazil have left little room in the supply/demand balance for further crop problems. We expect prices will continue to be supported as the markets add premium on continued production risk.
New Argentina Biodiesel Law May Increase Exports
Argentina has passed a law allowing a decrease in the amount of soy-based biofuel to be blended into domestic diesel fuel.
The measure foresees a minimum use of biodiesel of 5%, which could drop to 3%, in diesel for sale to the public, from the previous 10%.
With the blend at 10%, Argentina has consumed about 1 million tonnes of biodiesel annually.
Argentina exported 5.36 million tonnes of soyoil last year, mostly to India, along with China and Bangladesh.
With another 500,000 tonnes available, Argentina’s soyoil exports will likely rise and weigh on international prices.
Argentine soyoil averaged $1,191 per tonne last month versus $1,233 in Brazil and $1,608 in the US.
FBN’s Take On What It Means: The US crop condition ratings again slipped this week, approaching the 1988 crop ratings. All key-producing spring wheat states are reporting conditions below the bottom of the 15-year range. Already USDA printed a small crop but that will likely be reduced in subsequent reports given that weather has remained dry and hot. There will be a shortage of high-protein spring wheat this crop year.
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