Corn, soy crops still face challenges - Macquarie


Macquarie cautioned against overoptimism on US corn and soybean yields, even as prices of the row crops showed signs of a less dismal end to a week which has looked like being the worst in the oilseed for four years.

The bank, following a survey of Midwest farmers and crop insurance agents, reported an upbeat mood on 2013 crop prospects, and "promise that we could be heading for a big crop".

However, "yields appear to be getting closer to, but not quite hitting, historical trend levels yet", Macquarie analyst Chris Gadd.

The bank foresaw a corn yield below the 159 bushels per acre suggested by US Department of Agriculture crop condition data, and a soybean result beneath the USDA's 44.5-bushels-per-acre figure.

East vs west

The assessment reflected observations that while eastern areas were "in generally better condition in terms of soil moisture, pockets in the west need more rains".

In Iowa, in the top corn and soybean producing state, situated in the western Corn Belt, crops got off to a poor start, "with some early planted corn stressing", thanks to heat and dryness early in the month.

"Weekend rains have provided some optimism," Mr Gadd said.

Further north, "soybeans are growing slowly, and are below desired height", comments which tally with those from respected crop scout Michael Cordonnier last week that "there are so many soybeans in Iowa that look pathetic - a few inches tall, yellowish green, very slow growing or stunted, and obviously in dire condition".

Winners and losers

In Nebraska, soybeans "will need more rains, as the height is lower than average right now", Mr Gadd said, while further east in Michigan soybeans have been "hurt" by heavy rains and "may struggle to reach average yield.

In Ohio too, "the soybean crop is suffering from too much water", although corn fields "look good", and neighbouring Indiana has a "very optimistic outlook", with yields potentially reaching 220 bushels per acre.

Macquarie forecast the soybean yield at 42.2 bushels per acre, above last year's 39.6 bushels per acre, but beneath the USDA's forecast of a record 44.5 bushels per acre.

For corn, Macquarie pegged the yield at 156.8 bushels per acre, a little above the 156.5 bushels per acre which the USDA has pencilled in, but below some more upbeat recent forecasts.

Commodity Weather Group this week estimated the yield at 159.5 bushels per acre, adding that "If projected rains do occur, national yield potential could still lift slightly higher, given the lack of any significant heat".

Price recovery

The Macquarie data came as some Chicago crop futures staged recovery from declines this week which have dragged December corn to its lowest since November 2010, and put soybeans on course, in early deals, for a fall of 12.5% this week.

That would have been the worst weekly performance for a spot contract since a 15% tumble in September 2009.

August soybeans stood at $13.48 ѕ a bushel in late deals, down 0.5% on the day but well above an intraday low of $13.30 Ѕ a bushel.

Among soymeal lots, the best-traded December contract stood up 1.2% at $370.00 a short ton, limiting its losses for the week to 3.7%.

But August soymeal, on a topsy turvy day which has seen it swing from 4.5% losses to 1.5% gains, stood down 4.2% at $429.00 a short ton.

Corn for December stood down 0.2% down at $4.77 ѕ a bushel.