Increasing dryness in the U.S. Midwest and a bullish U.S. Department of Agriculture report sparked a crop price rally last week.
And when expected weekend rain failed to materialize, markets on Aug. 19 soared, with nearby canola posting the strongest one-day percentage gain in 2 1/2 years.
November canola at the close Aug. 19 was again comfortably above $500 per tonne at $517.80, after falling as low as $472.40 on Aug. 6.
USDA’s weekly crop progress and conditions report on Aug. 19 rated the corn crop as 61 percent good-to-excellent as of Aug. 18, a three percentage-point decline from the week before because of dry conditions.
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Soybean ratings were down two percentage points to 62 percent good-to-excellent, according to the report.
Before the report, analysts had expected that both corn and soybeans would be 63 percent good to excellent.
The rally was the first significant price increase this summer, which has been characterized by falling grain and oilseed prices due to generally favourable growing weather in the U.S. Midwest, Canadian Prairies and Europe.
The canola market could be rattled by the Statistics Canada crop production forecast, which was due for release Aug. 21, after The Western Producer’s deadline.
Look for coverage of the StatsCan report at Producer.com and in our Twitter feeds.
Crops across the Prairies look good.
The good weather this summer had caused commodity funds and speculators to bet that prices would continue to fall. They built a large net short position but had to scramble to cover those shorts as the weather turned dry in the last couple of weeks.
The U.S. corn crop is in its kernel filling stage of development while the soybean crop is in its weather vulnerable pod-setting stage.
“Corn yields may be trimmed a little, and I would be surprised if we don’t cut soybean yields,” said John Dee, a meteorologist for Global Weather Monitoring. Damage will likely be limited by the lack of extreme hot temperatures.
The annual Pro Farmer industry tour of Midwest crops was taking place this week. It was expected to find potential bumper crops of corn and soybeans but also crop maturity that is behind normal.
With the harvest a few weeks away, the USDA last week forecast a corn crop of 13.763 billion bushels, up 28 percent from drought-hit 2012 but two percent smaller than traders expected.
Soybeans would total 3.255 billion bu., up eight percent from last year but more than two percent below trade expectations.
The USDA forecast U.S. stocks at the end of the 2013-14 marketing year next Aug. 31 at 1.837 billion bu. of corn and 220 million bu. for soybeans, both the largest since 2006.
However, analysts polled ahead of the report had expected corn stocks of 1.971 billion bu. and soybeans of 263 million bu.
