by Elaine Kub, DTN Contributing Analyst
After years of searching for an elusive beast, I finally spotted one in the wild last week: a USDA Crop Progress Survey Respondent. They do exist! Even this one wasn't particularly willing to admit to his role, especially after I had just made some not-so-complimentary comments about the inscrutability of corn condition ratings in recent weeks. But after Monday afternoon's report showed a continued stunning collapse in crop conditions across the nation, it seems the numbers are finally reflecting the weather, and the markets are listening.
Even the pasture and range condition ratings, which cover the entire lower 48 states, experienced a reduction of 6 percentage points in their combined good and excellent categories since last week's report. If you really want to see a set of numbers that reflect the nation's droughty conditions and the poor precipitation of the past few months, these do the job. A map of states with low percentages of good or excellent pasture conditions would match very well with an overlay of the U.S. Drought Monitor or the observed precipitation of the past 60 days. As they do for growing crops, USDA releases weekly summaries of observations* for pasture and range land, detailing what proportion of the fields could be considered very poor, poor, fair, good or excellent. Here are the official definitions of those ratings:
--Very poor: Complete or near crop failure.
--Poor: Heavy degree of loss to yield potential.
--Fair: Less than normal condition, with yield loss a possibility.
--Good: Normal yield prospects.
--Excellent: Little or no stress and above normal yield prospects.
That means anything other than "good" or "excellent" -- especially this early in the season! -- could experience some yield loss.
On this map, any state not colored in blue or green has more than half its pasture acres in danger of losing yield. (Map courtesy USDA)
Poor nationwide pasture conditions (32 fewer percentage points in the good or excellent categories than in 2010 at this time of year) have had a direct effect on the livestock markets. Last Friday's Cattle on Feed report showed that fed cattle inventories didn't experience their usual seasonal dip from May to June, because there just hasn't been the usual seasonal availability of pasture to receive some of those animals. Close examination of the data shows very light feeders coming into the feedlots in dry Southern Plains states, rather than being put on grass.
"Pasture" equals "grass," but guess what else is a grass? Corn. And wheat. Soybeans are a legume, but they, too, need water to grow. We're coming up on the timeframe when corn plants will need one-quarter inch of water (after evaporation) per day to support grain production. That's why, in addition to the high temperatures bearing down on the nation's corn as it starts to pollinate, crop observers might also cast a wary eye on pasture condition ratings, which may serve as an omen of things to come. The roots of a pasture that has been growing for many years or decades can stretch as deep as twelve feet into the soil, and in 2012, that soil wasn't adequately recharged by winter precipitation. That's one reason that pastures have been struggling -- a deep portion of the soil profile from which they're trying to draw moisture just isn't providing it. Row crop roots, on the other hand, have so far been much closer to the top of the soil and have used every drop of rain they've received this spring. Ultimately, corn root systems will tap two feet or more into the soil, but will they find any moisture that far down?
Without exception, every state with a set of corn condition ratings or soybean condition ratings shows those crops currently faring notably better than the state's pasture and range. On average, the nation's corn fields currently have 20 more percentage points rated good or excellent by USDA than the nation's pastures have. Notably, Colorado's corn is rated 51% good-to-excellent (14 fewer percentage points than last week) and its pastures are only rated 5% good-to-excellent (a 7-percentage-point drop). The wide discrepancy is most likely due to irrigation systems on crop acres. But the pattern persists even in rain-fed regions such as Iowa, where 68% of the corn is rated good-to-excellent and only 37% of the pasture is rated that well.
It's not unusual for the nation to have worse pasture-condition ratings than row-crop ratings; their respective good-to-excellent ratings are typically about 15 to 20 percentage points apart during any season in any year. However, 2012 is notable for just how poor our current pasture ratings are (66% very poor, poor, or fair and only 34% good or excellent) and how quickly the row-crop condition ratings have been falling over the past few weeks. Corn's good-to-excellent ratings have plummeted 16 percentage points over the past three weeks and are now 13 percentage points below the five-year average for this time of year. Soybeans' have dropped 12 percentage points during that timeframe and are now 11 percentage points below the 5-year average. Condition ratings tend to be better at the beginning of a growing season, when plants still have their full potential and haven't yet faced an entire season of threats, than they are near the end of a growing season.
Now the question is how quickly the effects of these present threats will become irreversible, and how efficiently they will be priced into the new-crop futures markets. As Darin Newsom pointed out in last Thursday's column, "Blanketing One's Donkey," USDA will be releasing fresh quarterly Grain Stocks numbers this Friday (which could theoretically imply bearish carryover numbers from the current marketing year) and a Planted Acreage report (which could theoretically find more ground on which to grow these highly challenged yields). Present and forecast reality may be one thing, but the market's perception of data can be another thing entirely.
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Posted with DTN Permission by Haylie Shipp