Evening Report | June 28, 2021

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Corn condition ratings continue to slide… Corn condition ratings moved in the opposite direction traders were anticipating, dropping one percentage point to 64% “good” to “excellent” (G/E). On average, analysts polled by Reuters had expected a one-point rise. The amount of top-rated crop is now nine points under year-ago. Also of note, the amount of corn rated “poor” to “very poor” (P/VP) climbed two percentage points the week ending June 27 to 8%.

Continued drying in northern and western regions of the Midwest paired with an excess of rain in some southern and eastern states resulted in an ongoing slide in ratings. Of note, condition ratings did improve in top-producing Iowa and Illinois, but they dropped sharply in Minnesota.

Four percent of the U.S. corn crop was silking as of Sunday, which lags the five-year average by two percentage points.

Soybean condition rating holds steady; analysts had expected a one-point rise… USDA once again rated 60% of the U.S. soybean crop G/E, though that did mask a one-point uptick in the amount of crop USDA rates “excellent.” Analysts on average had expected a one-point increase in USDA’s G/E rating. The department continues to rate 9% of the crop P/VP.

As of Sunday, USDA reports 96% of the U.S. soybean crop had emerged (92% on average) and 14% of it is blooming (11% on average).

Steady G/E rating for cotton… USDA continues to rate 52% of the U.S. cotton crop G/E, steady with its assessment last week and well ahead of 41% G/E last year at this time. Much of top-producing Texas is free of drought, which has lifted crop prospects. The amount of crop rated P/VP did inch a point higher to 7%, but that’s well shy of last year when 24% of the crop fell in the bottom two categories.

Thirty-two percent of the U.S. cotton crop was squaring as of Sunday and 7% of it was setting bolls, which compares to 34% and 8% for the respective five-year averages. Texas has 10% of its cotton crop setting bolls, in line with the average. Georgia has 4% of the crop setting bolls, just behind the five-year average of 6% at this point in the season.

Another dive for drought-stricken spring wheat crop… After another dry weak for spring wheat country, analysts expected a decline in condition ratings, but the two-point dip they expected was well short of the seven-point dive USDA reported. It now rates just 20% of the crop G/E, nearing the 1988 low. Also of note, the amount of crop rated P/VP climbed another two percentage points to 39%. Of note, just 21% of top-producing North Dakota’s crop is rated G/E.

Winter wheat harvest pace nearly doubles… Winter wheat harvest nearly doubled over the past week to 33% complete, which was a bit more advanced than the 30% harvested tally analysts surveyed by Reuters expected on average. Progress still lags the five-year average by seven percentage points, however. USDA lowered the amount of winter wheat rated G/E a percentage point to 48%, but traders are more focused on harvest progress.

Corn and soybean acres expected to climb, but how much is unclear… USDA’s Prospective plantings numbers for corn and soybeans were met with skepticism, but the market had to wait until the department’s June 30 Acreage Report for a survey-based update on plantings. Corn acres are expected to rise notably from March intentions, but there’s more uncertainty regarding how much (if any) rise in planted acreage is likely for soybeans.

The following expectations are generated by survey work by Reuters.

June 1 grain stocks will be down sharply, but there could be surprises… June 1 stocks of corn, soybeans and wheat are all expected to tighten dramatically compared with year-ago levels. But this is a report traders have struggled to peg, especially corn stocks.

StatsCan expected to raise canola acres… Statistics Canada will update its planted acreage estimates at 7:30 a.m. CT Tuesday. Analysts surveyed by Reuters expect the stats agency to report the following.

TPA will lapse at month’s end… Trade Promotion Authority (TPA) that enables “fast-tracking” passage of a trade agreement negotiated by the administration by putting the deal to an up-or-down vote without amendment is slated to expire Thursday. The Biden administration has shown no interest in seeking renewal of TPA.

FCIC alters small grains crop provisions… The Federal Crop Insurance Corporation has amended the small grains crop provisions for 2022 and succeeding crop years, with revisions allowing for additional unit divisions for wheat and to make discretionary changes to clarify provisions for counties with spring-planted acreage, fall-planted acreage or both. FCIC is inviting stakeholders to submit comments through Aug. 24, 2021.

Supreme Court denies meat industry petition seeking review of California's Prop 12… "We are disappointed our petition for cert was denied. We will be considering other options to protect consumers and producers from Proposition 12, which will cost both millions of dollars, according to economists and the state of California’s own analysis,” North American Meat Institute Spokesperson Sarah Little said in a statement.

Proposition 12, set to begin implementation on Jan. 1, 2022, imposes what opponents claim is arbitrary animal housing standards that reach far outside of California's borders to farms across the country, and bans the sale of pork that does not meet those standards.

Prop 12 is also the subject of separate litigation from the National Pork Producers Council and the American Farm Bureau Federation. The Ninth Circuit heard oral arguments on that case in April and has not yet rendered a decision.

Panama Canal to unveil a $2 billion infrastructure plan… Panama Canal authorities, facing diminishing levels of rainwater, plan to unveil a $2 billion plan to build infrastructure to manage and preserve freshwater reserves.

Chart Trend… Daily, weekly and monthly charts for cotton are all pointed higher. Find updates to our short-term, intermediate- and long-term trends for commodity and key outside markets here.