US soybean crop condition rating expected to fall further: sources

New Delhi — The US soybean crop condition rating is expected to fall further amid dry weather conditions in the western part of the Midwest, market sources said Aug 28.

The market expects the soybean crop rating for the good-to-excellent category to fall by 2 percentage points on the week to 67% in the US Department of Agriculture's upcoming crop progress report due on Aug. 31, sources said.

A declining US soybean crop rating is seen as a boost to already accelerating soybean prices.

S&P Global Platts assessed SOYBEX FOB New Orleans for October loading at $383.97/mt on Aug. 27, up 4% month on month.

Dry weather in a majority of the Midwest is expected to lower the soybean crop quality, which means a lower yield and a decrease in supply in the 2020-21 marketing year, which begins on Sept. 1.

The shortage of top soil moisture in many parts of the Midwest was in the 70% bracket as of Aug. 23, which is not conducive to soybean crop development, a market source said.

According to the latest US drought monitor report, approximately 13% of the Midwest is experiencing drought.

Over 60% of Iowa -– second-largest soybean producer in the US – is currently experiencing drought, which is set to impact overall crop quality for the country, a market source said.

The soybean crop condition rating in Iowa fell to 56% good to excellent, the lowest level so far this season, according to the Aug. 23 crop progress report.

The soy crop rating in Iowa and the west of the Midwest is expected to fall further as the drought area expands in coming days, a market source said.

The dryness remains most severe in Iowa and soil moisture levels are now slightly lower than they were at this point in the growing season during 2012 and 2013, weather agency Maxar said Aug. 27.

Dry weather forecast in the coming days hints at additional pressure on already stressed out soybean crops in the Midwest.

The forecast has trended notably drier across eastern Nebraska, Iowa, and northern Illinois Aug. 28, and soil moisture is expected to decline further over the next week, maintaining stress on corn filling and soybean growth, Maxar said.

Although the USDA forecast 120.42 million mt production of US soybeans in 2020-21, up 26% year on year, the market is still uncertain.

If the dry weather continues unabated in the Midwest for the next three weeks, US soybean productivity could fall drastically, a market source said. So the coming weeks are very crucial for US soybean farmers, he added.