Yesterday’s crop progress report shows that US fields are enjoying a very good start to the 2018 growing season, and that’s weighing on grain prices.
“One can never produce anything as terrible and impressive as one can awesomely hint about.” – H. P. Lovecraft (US author)
American Crop Progress Shows Impressive Start
Grain prices this morning are mostly in the green while oilseeds are slightly red as the market tries to rebound from yesterday’s sell-off amidst a neutral crop progress report.
In the regular Grain Markets Today column, our Garrett Baldwin walked us through why trade war tantrums tanked soybean prices. The oilseed dropped nearly 2% at the Chicago Board of Trade as the lack of progress in trade talks between China, and the US is making the market jittery. Canola prices followed suit, losing more than 1%, but that also had to do with the heavy rains that Western Canada received on the weekend.
Corn prices dropped more than 2% as similarly healthy rains in the Midwest was well-received (more on this later in the crop progress). Winter wheat prices dropped more than 3% while spring wheat prices lost almost 2%.
Drew Lerner of World Weather Inc. says “that the western Corn Belt and Great Plains will continue with some of the driest and warmest bias this summer.”  As you go more east though, the cooler and wetter it will get.
Ultimately, the movement by managed money in the futures market is seemingly driving grain prices. Fundamental factors like crop conditions and the weather are taking a bit of a back yesterday (and maybe the rest of this week!).
USDA Crop Progress Still Showing Hot Start
Yesterday afternoon, the USDA’s crop progress report showed us that US crops continue to track ahead of schedule. 
For corn and soybeans, Plant 2018 is finished with 97% and 87% of the crops respectively in the ground. From a crop condition standpoint, 78% of the US corn crop is rated good-to-excellent (G/E), down 1-point week-over-week but still 10 points better than this time a year ago.
The portion of the US soybean crop rated G/E came in at 75%, slightly above trade estimates. However, this a record percentage of the crop rated G/E to start the growing season (and ties the same number that we saw start the 2018 crop year).
Pro tip: the US corn and soybean crops are not made in June.
In the wheat market, winter wheat G/E ratings fell by 1 point week-over-week to 37% and are now 6 points behind the 5-year average of 43%. Also, 9% of the US winter wheat harvest is in the bin, compared to the five-year average of 4%.
The portion of the US spring wheat crop rated G/E started out at 70%.
Speaking of crop conditions, in Europe and the Black Sea, there have been some persistently drier conditions. Without rain, there’s more risk to the wheat crop as it’s coming off a “damp, chilly start to spring.”  Similarly, the hot, dry weather in Eastern Europe combined with a below-average area planted with corn in France means some production concerns for the EU maize crop. 
Soybean Prices and Exports Slowdown?
Garrett also noted in yesterday’s Grain Markets Today that the USDA report soybean export inspections yesterday of 20.5 million bushels (557, 733 MT). That figure was down from last week, but 94% higher than the same period in 2017.
So far in 2017/18, there have been 2.038 billion bushels sold (or 55.47 million tonnes if you convert bushels into metric tonnes). This would be 99% of the USDA target. However, the key word here is “sold” as some of those are shipments to China and could be canceled, pending some of these edgy trade talks.
In Brazil, May’s soybean exports were a record 12.35 million tonnes, up 13% year-over-year. Brazilian soybeans “sold” marketing-year-to-date are now sitting at 48.2 million tonnes, up nearly 5 million tonnes from the same point a year ago. It’s also a new record.
But Brazilian farmers have slowed their sales down as they’re hoping for a weaker currency to continue to prop up their local soybean prices. Presidential elections are coming up in Brazil and in any national election in any country, the currency of said nation will usually weaken ahead of the vote.
Side note: everyone and their mother woke up to the realization that Paraguay is going to export more soybeans than Argentina in 2017/18 and that garnered a lot of headlines.  The problem is, this was known three weeks ago on May 10 when we did our live recap of the May WASDE report release