As of June 10, Tropical Storm Arlene was headed for the Gulf of Mexico, with landfall expected over the following weekend in New Orleans. The big question at the time was whether it would continue north and bring rain, rust or both to Midwest soybean fields.
According to Greg Soulje, agricultural meteorologist, U.S. Farm Report, Arlene was expected to stop short of giving the eastern Corn Belt a good soaking.
“We have Arlene tracking to the north and northwest with landfall sometime over the weekend in New Orleans,” said Soulje, speaking at a Chicago Board of Trade press briefing on USDA’s June 10 crop production and supply/demand estimates.
“Then we have it heading up toward Memphis, then making a right turn along the Ohio River bringing some beneficial rains, but staying south of Hwy. 70.”
Soulje adds that any storm from the south is a double-edged sword. “The big thing to watch for with Arlene is whether it could spread rust from the southern soybean-producing region,” Soulje said. “This could be a mechanism to see a north to northwestward push of the disease. We need to watch that.”
Greg Grow, analyst with Archer Financial Services says a continued lack of rainfall in the Corn Belt — about 25 percent is experiencing drought stress — will not likely push corn prices higher. One reason is that USDA is projecting ending stocks for new crop corn at 2.54 billion bushels, the second largest in history.
“It will take substantial weather issues to push the corn market through the recent highs in the market.
On the other hand, “we also see very good growing conditions, and perhaps too much moisture in the western Corn Belt.”
Soybean prices are much more likely to be affected by dry weather, according to Grow. “Global soybean supplies are still at record levels, but we see very strong soybean demand. The soybean market is much more sensitive to yield considerations. Any problems with U.S. soybean yields this summer will tighten our domestic supply appreciably and could create quite a bit of price strength.
“If the rains come back and we get the chance for high bean yields, the market will try to find resistance at the $7 level. Rust is a factor. We don’t know how it’s going to spread or how it’s going to impact us. The market will maintain a bit of a rust premium in the market until we get further along in the growing season.”
Grow noted the Brazilian soybean crop is starting to come into the world market and “we’ve started to see a slowdown in U.S. sales in the last few weeks. Yesterday’s export sales (June 9) were the lowest of the marketing year, suggesting that the Brazilians are starting to fill the need with our customers.
“At the same time, we also feel that some demand has slowed out of China. We’ve heard that they are postponing or trying to defer some of the purchases from South America. It could have something to do with very poor crush margins in China and concern over the bird flu situation in their poultry.”
Grow said USDA has dropped ending stocks for old crop soybeans by over 100 million bushels since the first of the year, “due to stronger-than-expected demand. This trend has been very positive for the market.”
In addition, new crop soybean ending stocks of 255 million bushels “is a little bit of an eyeopener. It certainly illustrates the need for good yields this summer. The market will be watching the weather closely, and we certainly see the need for some moisture, especially in parts of the Eastern Corn Belt.”