What to make of surprisingly low US crop ratings: Braun
Meanwhile, U.S. spring wheat is experiencing its second-worst start to the growing season in history after this year's plantings dropped to a 55-year low.
What might these early figures mean for the growing season overall? How do they compare with past years? And where are the problem spots and near-term prospects for improvement?
The U.S. Department of Agriculture on Tuesday afternoon rated 68% of the U.S. corn crop in good-to-excellent (GE) condition in this season's initial rating, marking the lowest starting health since 2019.
That was well below analysts' average estimate of 73% GE, though initial condition reports from the Crop Watch producers, opens new tab over the weekend averaged out to a six-year low, at least.
A 68% GE is not all that bad. On average over the last three years, the initial U.S. corn score comes in around 72%. Additionally, the slower start may be explainable.
The unanimous feedback from the Crop Watch producers was that it has been too cold, cloudy and rainy, and the plants are not growing quickly. Hail, frosts, wind, rain and even a period of excessive heat recently stressed crops in the western Corn Belt, which was reported by Crop Watchers.
This showed up in USDA's data on Tuesday. Averaging initial corn conditions by state over the past three years, North Dakota and Ohio stand out. North Dakota at 48% GE is 24 percentage points below average and Ohio's 41% is 37 points below.
Conditions in top producer Iowa are 4 percentage points ahead of normal, Illinois is 7 points behind, South Dakota is down 16 points, Nebraska is down 2 points and Minnesota is 4 points behind.
Three factors may help ease any concerns about current U.S. corn crop health.
The corn crop is only two-thirds emerged nationally, a lower-than-usual portion to coincide with the first condition scores. This allows for some play in the near-term figures, as newly emerged crops, if in good shape, could boost the overall score next week.
Although not necessarily unusual, less than 40% of corn in Ohio and North Dakota was emerged as of Sunday, possibly allowing for future improvement.
All Crop Watch producers last weekend expressed the dire need for heat and sun, and that should start arriving over the weekend after this week finishes out on the cooler, cloudy side.
The pattern might not necessarily be long-lasting, but even a short, warm, sunny spell in early June can go a long way for early crop growth.
U.S. corn was initially rated 65% GE in 2017, and calculations at the time pointed to near or below-trend yield probabilities. This caused the market to misjudge the crop potential all year, and the 2017 corn crop achieved a new record yield.
The 2017 crop was rated 60% GE by the end of July, not too huge of a change from the initial. So even though 60% would not be considered stellar by itself, the lack of large rating swings that season may have been telling.
U.S. spring wheat was rated 45% GE as of Sunday, tied with 2021 as the second-lowest initial rating over the 40-year history. The worst was 34% in 1988.
Those two years are bad company, as they featured well-below-trend U.S. spring wheat yields as both seasons included drought. The 2025 crop is already starting in the hole as U.S. farmers intend to plant their smallest spring wheat area since 1970.
Some 60% of U.S. spring wheat was emerged by Sunday, comparable to 66% on the same date in 2021.
North Dakota, which produces half of the U.S. spring wheat crop, must remain on watch as only 37% of the wheat there is GE and 26% is considered poor or very poor. Recent cold and wet weather has battered the young wheat crop, so the coming flip to better weather may offer improvement opportunities.
Market analysts had expected the initial spring wheat conditions to come in at 71% GE, so the result was much more shocking than the one for corn.
But the lighter figures for both certainly set up the potential for market scares this summer if an unfavorable weather pattern were to set in.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
4 minutes ago
- Reuters
India sees Asia's biggest earnings downgrades as US tariffs loom
Aug 21 (Reuters) - Indian companies have seen the steepest earnings downgrades in Asia, with analysts slashing forecasts as steep U.S. tariffs heighten risks to growth even if proposed domestic tax cuts help cushion the impact. According to LSEG IBES data, forward 12-month earnings estimates for India's large and mid-cap firms have been cut by 1.2% in the past two weeks, the sharpest in Asia. The cuts follow a lacklustre season of quarterly earnings reports extending a bout of weakness among listed firms which kicked off last year and has hurt benchmark equity indexes. India's economy is largely domestic and firms which are part of the Nifty 50 index (.NSEI), opens new tab earn only 9% of revenue from the U.S. but the tariff hike to as high as 50% on exports to the world's largest economy presents a risk to economic growth. Analysis by MUFG indicates that a sustained 50% tariff could cut India's GDP growth by 1 percentage point over time, with the biggest hit to employment-sensitive sectors such as textiles. Looking to buoy domestic consumption, Indian Prime Minister Narendra Modi recently announced sweeping tax reforms to boost the economy in the face of a trade conflict with Washington. "It's a little bit of an interesting time given what's happened with the tariffs that have been imposed on India," said Raisah Rasid, global market strategist at J.P. Morgan Asset Management. Valuations are still elevated and "we could potentially see the tariff triggering a broad valuation re-rating downwards and make some of the domestic oriented stocks attractive," she said. Earnings growth for Indian companies has been in single-digit percentages for five consecutive quarters, below the 15%–25% growth seen between 2020–21 and 2023–24. Following the April-June earnings announcements, forward 12-month net income forecasts for automobiles and components, capital goods, food and beverages, and consumer durables sectors saw the deepest cuts in earnings estimates, each down about 1% or more, the data showed. The government's plans to lower consumption taxes are also expected to boost the country's GDP growth. Economists at Standard Chartered pencil in a boost of 0.35-0.45 percentage points in the fiscal year ending in March 2027. India's real GDP growth averaged 8.8% between fiscal 2022 and 2024, the highest in Asia-Pacific. It is projected to grow at 6.8% annually over the next three years. Bank of America's latest fund manager survey shows that India has tumbled from the most-favoured to the least-preferred Asian equity market in just two months. "After disappointing earnings growth of only 6% in 2024, the pace of recovery remains sluggish in 2025, as indicated by both the economic growth parameters and corporate earnings," said Rajat Agarwal, Asia equity strategist at Societe Generale.
The Independent
33 minutes ago
- The Independent
Asian shares are mostly higher after a mixed finish on Wall Street
Asian shares were mostly higher on Thursday after a mixed finish on Wall Street, where shares in Nvidia, Palantir and other superstar stocks pared their earlier steep losses. Traders are looking ahead for cues about U.S. monetary policy from a meeting of central bankers that begins later in the day in Jackson Hole, Wyoming. Federal Reserve chair Jerome Powell is due to speak to the conference on Friday. The Fed has kept its main interest rate steady this year, primarily because of the fear of the possibility that President Donald Trump's tariffs could push inflation higher. But a surprisingly weak report on job growth across the U.S. may be superseding that. In Tokyo, the Nikkei 225 fell 0.6% to 42,636.74 after a survey showed Japan's factory activity remained in contraction for the second month in August. The S&P Global flash Japan Manufacturing Purchasing Managers' Index (PMI) increased to 49.9 in August from 48.9 in July, just below the 50 level that delineates between growth and decline. Regional manufacturers have been feeling pressure from Trump's higher tariffs on exports to the United States. In Chinese markets, Hong Kong's Hang Seng index edged 0.1% lower to 25,135.09, while the Shanghai composite index rose 0.4% to 3,779.52. South Korea's Kospi jumped 1% to 3,161.74, while Australia's S&P ASX 200 index added 1% to 9,005.00. Taiwan's TAIEX climbed 1.2%, while India's Sensex added 0.1%. 'Asian markets walked into Thursday like a card room still heavy with last night's smoke — muted, watchful, waiting for the next cue out of Jackson Hole,' Stephen Innes of SPI Asset Management said in a commentary. On Wednesday, the S&P 500 dipped 0.2% to 6,395.78 after trimming a 1.1% loss earlier in the day. It is still near its all-time high set last week. The Dow Jones Industrial Average added less than 0.1% to 44,938.31. The Nasdaq composite fell 0.7% to 21,172.86. The day's action centered again around stocks caught up in the mania around artificial-intelligence technology. Nvidia, whose chips are powering much of the world's move into AI, sank as much as 3.9% during the morning and was on track to be the heaviest weight on Wall Street following its 3.5% fall on Tuesday. But it clawed back nearly all of Wednesday's drop and finished with a dip of just 0.1%. As it pared its loss, so did broad market indexes because Nvidia is Wall Street's most influential stock by being its most valuable. Palantir Technologies, another AI darling, fell 1.1% to add to its 9.4% loss from the day before, but it had been down as much as 9.8% Wednesday morning. One possible contributor to the swoon was a study from MIT's Nanda Initiative that warned that most corporations are not yet seeing any measurable return from their generative AI investments, according to Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management. But the larger factor may be the simple criticism that prices for such stock have simply shot too high, too fast amid the furor around AI and became too expensive. In other dealings early Thursday, US. benchmark crude gained 30 cents to $63.01 per barrel. Brent crude, the international standard added 26 cents to $67.10 per barrel. The U.S. dollar rose to 147.37 Japanese yen, from 147.29 yen. The euro slid to $1.1648 from $1.1659. ___ AP Business Writer Stan Choe contributed.
Reuters
33 minutes ago
- Reuters
Currencies steady as investors ponder Fed independence, await Powell speech
SINGAPORE, Aug 21 (Reuters) - The U.S. dollar drifted on Thursday as investors fretted about the Federal Reserve's independence after yet another attack from President Donald Trump ahead of remarks from Chair Jerome Powell later this week that could influence the outlook for rates. Trump called on Fed Governor Lisa Cook to resign on the basis of allegations made by one of his political allies about mortgages she holds in Michigan and Georgia, intensifying his effort to gain influence over the U.S. central bank. Cook said she had "no intention of being bullied to step down" from her position at the central bank. Trump has also told aides he is considering trying to fire Cook, the Wall Street Journal reported on Wednesday. "It has the potential to raise questions around the Fed's oversight and regulatory functions but it has little to no near-term monetary policy implications," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. That explained the relatively subdued reaction in the currency markets to the news as the dollar initially dipped but was mostly calm in listless trading in Asian hours. The Japanese yen held onto gains made in previous sessions and was little changed at 147.36 per dollar, while the euro was steady at $1.1646. The dollar index , which measures the U.S. currency against six other peers, was steady at 98.301, on course for a 0.4% rise this week. Sterling last fetched $1.3454, hovering near a one-week low. Data on Wednesday showed inflation hit its highest in 18 months in July, with markets not fully pricing the next rate cut until well into next year. Trump has repeatedly criticised Powell for being too slow to cut rates, stoking investor worries about the central bank's independence and its credibility. Investors expect Trump will replace Powell with a more dovish appointment when his term ends in May. Trump earlier this month said he would nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a vacant Fed seat after Adriana Kugler unexpectedly resigned. Kristina Clifton, a senior economist at the Commonwealth Bank of Australia in Sydney, said if Cook resigns it would create another opening for Trump to appoint a Fed Governor who will vote to lower interest rates. "Perceived political interference in the Federal Reserve can undermine its independence, steepening the yield curve and denting the dollar's safe haven status." The main focus this week has been on whether Powell will push back against market expectations for a rate cut at the Fed's September 16-17 meeting when he speaks on Friday at the Jackson Hole meeting, following a weak jobs report for July. "Markets are adamant that recent labour market data necessitates some policy calibration and are expecting Chair Powell to tip his hat in that direction," TD's Newnaha said. The benchmark U.S. 10-year yield was steady 4.291% , while the two-year yield, which is more sensitive to the monetary policy, was at 3.749% . The gap between 2- and 10-year yields was at 54 bps . However, the curve's steepening trend remained intact as the market expects the Fed to resume its rate-cutting cycle as soon as the September meeting. Traders are pricing in an 82% chance of a 25-basis-point rate cut next month, CME FedWatch tool showed. While the odds have lowered from last week after hotter than expected producer price inflation tempered expectations, investors are still pricing in over 50 bps of easing this year. Some analysts cautioned that markets could end up being disappointed by Powell's speech, noting that the impact of Trump's tariffs on inflation remains unclear. In other currencies, the New Zealand dollar was nursing steep overnight losses at $0.58205 after diving 1.2% to its lowest level since April. New Zealand's central bank cut interest rates on Wednesday as expected but left the door wide open to yet more easing if needed. The Australian dollar eased 0.13% to $0.64245, hovering near a two-week low.
