With weather being such a background factor in the markets right now, and with China being a huge player, of course, I wanted to take a look at the moisture and weather situation in China this morning. While weather conditions there (China), will probably not have a major short term impact in prices, obviously, in the more medium term picture, any crop failure or below trend line yields, could have an impact later (economy, etc. aside), on the demand side of the equation for corn, cotton and soybeans.

The weather forecast will turn more bearish again for corn and soybeans later this week with warmer weather and importnt rains, but China may be a wildcard, later.

With respect to cotton, I have not heard anything earth shattering with regards to any major crop problems right now. Cotton is a dry weather crop and some heat and dryness will probably only affect 20% or so of the crop, while other areas have benefited. However, some stress to as much as 20-30% of the corn crop and 30-40% of the beans is likely over the next 2 weeks due to some hotter-drier weather. However, I want to put this into a little more perspective. If you look at the soil maps, etc. below, most of the northernregions, where dry-hot weather is forecasted in the next 10 days (see circle), have generally normal to good soil moisture. If this area was dry for the last month, it could havebeen a major deal. Then again, some of the northern regions in Jilin and Heilongjiang had a very cool, wet spring that slowed plantings and may have had some impact on yields.

Further south, soil moisture is not as favorable and some minor stress is likely. All in all, I am not looking at a disaster in yields, but the odds of yields being as good as last year in most corn and soybean regions, which I believe had near record crops, is unlikely. This is something that needs to be monitored in the coming weeks, as it is possible that yields for either corn and/or soybeans, could be slightly below trend line.