Talk to traders, talk to farmers, and the conversations are similar. How big is the corn crop?
The yields are surprising, and staying huge as the harvest goes on. There are spot concerns about test weight, maybe a result of the cool summer, but the yields keep coming. Farmers in northeast Ohio are discussing 200-bushel or close corn as if it is ordinary.
The yield talk has the market spooked, as traders wonder if they still have the crop underestimated. The harvest progress has caused harvest pressure on prices, and that pressure may not be over.
Awaiting the report
USDA will release their November Crop Production Report on Friday Nov. 8 into the vacuum caused by the canceled October report. While the government was furloughed, we missed the data. Now the fear is that the corn production number could be significantly improved, although there is some question of what the harvested acres will be.
Those acres should have been in the missing October report, and some observers think the acres could be reduced. If so, that would mitigate some of the effect of increasing yield results.
Amidst some significant rain events, the American farmer has succeeded in catching up with the historical averages for harvest after a late start.
Harvest on track
For the nation, the corn harvest is now at 73 percent, ahead of the five-year average of 71 percent.
Ohio is now at 64 percent, still just off the 68 that is normal. We made big gains for the week, however, as we are up from 49 percent last week. In the fast year of the last harvest, we were 73 percent by now.
The soybean harvest shows even more progress, according to Uncle Sam. The U.S. is at 86 percent, against a normal 85. But, Ohio is ahead of normal, with 91 percent done when 85 is the average for now. We gained 10 percent in the last week, even while running big chunks of corn acres.
As the harvest has progressed, the December corn futures have continued the slow slide toward the harvest low, still ahead of us somewhere.
Monday we made a new December futures low of 4.25 1/4. We bounced off that, but here on Tuesday morning, we are down 3/4 of a cent to 4.25 1/2.
This trend will continue until we have a surprise of some sort. The recent high was in late August at 5.08 1/4.
Soybeans have not had the long downtrend of corn. In fact, there was a rally based on late dry weather until the 13.12 3/4 of Oct. 23. Since then, we have gone down in stair-steps, hitting a recent low of 12.50 1/4 on Monday. We bounced off the low, and we are trading 12.59 1/4 this Tuesday morning, up two and three quarters.
Pre-guessing the report
Analysts think the Friday USDA Reports will bring changes in the numbers, but it remains to be seen what the impact will be on the market. Will higher production numbers be a shock, or are they already the reason we are still going lower?
We are looking for a record corn crop any way the numbers come out, but will it be 13.843 billion bushels like in the September report or will the trade be right? They are now guessing the crop at 14.003 billion bushels. That would lead to a carryout of 2.029 billion, well up from the 1.855 in the September report.
The market does not respond with high prices until we get back around 1 billion, so we could have a long, disappointing summer. Remember that the drought-reduced crop of last year that gave us high prices was only 10.78 billion bushels.
The soybeans are expected to come in at 3.221 billion bushels. The September report expected 3.015 billion, but the carry estimate may not go up as much as the crop size. The trade is estimating a carryout of 172 million bushels, up from 150 in the last report.