The condition of US soybeans recovered to its best since
late July as rains refreshed drought-hit crops, fuelling thoughts that a key
crop report on Wednesday may turn out less downbeat than investors have
The proportion of the US soybean crop in "good" or "excellent"
condition rose two points to 32% as of Sunday, the US Department of Agriculture
said in a weekly report.
The revival - while helped by slight recoveries in crops in Illinois
and Iowa, the top soybean producing - states, also included a four-point jump
to 24% in the proportion of the Indiana crop rated good or excellent, boosted
by rains including those which followed Hurricane Isaac.
USDA officials in Indiana, reporting "rain showers across
most of the state", said that "topsoil moisture has been recharged in many
areas", if noting that "the subsoil remains mostly dry as field tiles are still
'New glimmer of hope'
The recovery in condition comes ahead of the USDA's latest
monthly Wasde crop report in which investors on average expect a slight cut to
35.8 bushels per acre, from 36.1 bushels per acre, in the government forecast
for the domestic soybean yield.
However, many brokers, including ADM Investor Services, FCStone
and Jeffries Bache, have forecast that the yield figure could be raised.
And, indeed, the latest national condition rating, at 32%
good or excellent, is three points ahead of that before the July Wasde report.
Commerzbank analysts on Tuesday called the condition
improvement a "new glimmer of hope for the US soybean crop".
"This could strengthen the voices of those who are confident
of a larger US soybean crop than previously anticipated, after rainfall in
recent weeks improved the supply of moisture."
Their cause has been given further support by reports from
the early harvest, which has shown that "yields in the northern plains have
been surprisingly good", according to Benson Quinn Commodities, part of the ADM
While many producers were "concerned that hot and dry
conditions in mid-August had hurt the crop, the early August rains seemed to
have helped the crop with early yield reports average to above - mid-30s bushels
per acre to low 40s".
Reports from the corn harvest too have shown improvement
from a dismal start, with Benson Quinn Commodities reporting that "some
encouraging yield reports were seen from the weekend".
At RJ O'Brien, Richard Feltes said that the "expected
better-yielding western/northern states are just getting started [with harvest],
with trade anxiously awaiting increased flow of yield reports to either affirm
or undermine current USDA forecast".
However, the corn harvest has also revealed "some reports of
aflatoxin and other moulds in the corn crop", USDA official in Indiana said, highlighting
a broader concern.
Aflatoxin, a toxic residue from fungal infection, "is
presenting itself as a problem in new crop receipts", Brian Henry at Benson Quinn
"If this proves to be a widespread issue it will be
interesting to see how the price reacts to consumption of poor quality of
stocks," he added, foreseeing a potential narrowing of the discount of forward
contracts to distribute more evenly higher quality supplies.