Lanworth, citing crop damage from hot and dry weather, cut its estimate for the US corn production, and Societe Generale cautioned over a downgrade too, although the caution failed to prevent prices losing ground in Chicago.
Lanworth downgraded its forecast for the US corn harvest by 265m bushels (5.0m tonnes) to 13.668m bushels, after “temperatures during much of the last two weeks exceeded forecast levels across US production areas, while precipitation fell 50-90% below normal”.
“Relatively dry conditions are expected to continue in Iowa, Kansas, much of Missouri, and Nebraska through much of the next one to two weeks,” the consultancy said.
“Without above-average precipitation during the final week of the month, precipitation this July could approach the historically low levels set last year.”
Indeed, the group cautioned over the potential for further downgrades in many largely westerly Midwest areas, including Iowa, the top corn-producing state.
“Initial field observations in central and northern Iowa indicate potentially significant yield losses due to poor planting conditions and establishment problems,” Lanworth said.
Separately, Gail Martell, at Martell Crop Projections, said that “delayed planting dates, shallow rooting from a wet spring, and irregular development from a strung out planting campaign argue for a reduced yield in corn and soybeans”.
The comments follow a caution from Societe Generale that it might lower its estimate for the US corn crop to 13.4m bushels, from a forecast made last month of 13.9m bushels.
The US Department of Agriculture, whose data set market benchmarks, pegs the crop at 13.950bn bushels.
“We continue to hear reports of significant problems in portions of Iowa,” SocGen analyst Christopher Narayanan said.
Respected crop scout Michael Cordonnier reported after a Midwest tour that wet conditions had actually proved the biggest problems in Iowa, in preventing sowings.
“I saw hundreds of fields along the highway that were not planted to any crop due to the wet conditions,” he said, adding that USDA assessments of crop area on the state were “not accurate”.
“I can tell you from personal observations that there are hundreds of thousands of acres in north eastern Iowa and southeast Minnesota with no crops whatsoever.”
Key pricing point
Nonetheless, Dr Cordonnier added that “Outside of the super-saturated areas, the corn looks healthy, is dark green in colour and actually looks pretty good.
“If there is not an early frost, most of the corn in Iowa could produce an average crop.”
And Mr Narayanan cautioned over betting on price falls despite the potential for a crop far lower than the USDA has pencilled in.
Crop condition “remains above average and lacks any indication of last year’s precipitous drop”, he said.
While the market was “rightly concerned” over the weather threat, “especially in light of currently tight inventories, we see no serious threats yet to the US crop prospects and recommend selling any rallies.
“In our view, any production level above 13.0bn bushels will be bearish to prices.”
‘Average that counts’
Another US broker said that “while there are areas that are worse than others, every year we can expect to get those sore thumbs somewhere.
“It is the average that counts.”
And Iowa-based US Commodities flagged that “the weather maps continued to turn cooler and wetter as the new runs were released”, meaning less threatening weather for the heat-sensitive corn pollination process.
(Source – http://www.blackseagrain.net/about-ukragroconsult/news-bsg/us-corn-harvest-estimates-fall-but-so-do-prices)