China trade talks continue; harvest uncertain

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Harvest

The big tease that is the China trade talks has jerked markets around again recently.

Traders mostly discount news of an agreement, with the occasional twitch up or down on daily news. The president announces a “Phase One” agreement, the market goes up. China says they need to talk more, nothing has been signed, and the market goes down.

Questionable harvest

While this disgusting but intriguing mess is going on, the harvest picture is still murky. The corn and soybean harvest is way behind historical standards, which we have expected all year. Unlike last year, when we had a late start, but great catch-up weather, the crops lagged all this summer. Now the nation is reported by USDA to be officially late as of Oct. 20 reporting.

Ohio soybeans

The Ohio soybean crop is now close to normal after a good week. We have 55% harvested, up from just 36% the week before. Last year at this time we had 56% off, but the average is actually 65%. The U.S. is at 46%, up from 26% percent. However, last year we were at 51% now, and the average is 64%. Soybean yields in some areas are surprisingly good, but it is hard to get a feel for the trend.

Northeast Ohio is actually the best part of Ohio this year, and some reports of yields are good. A Trumbull County farmer told me he was harvesting beans in the 50s that he had finished planted in June and replanted three times. There are a lot of short, but high-yielding early beans near me, also. However, I see late beans that I would expect to yield 35 to 40 bpa.

Nationally, I hear everything, but most observers admit to being disappointed with the crop. Many on our conference call Oct. 21 said yields were 10 bushels below what they expected, and they expected a crop worse than last year. Some analysts are still talking about a final official yield of 45 bpa or less, significantly off the current USDA estimate of 46.9 bpa. While the soybean harvest is approaching normal, current general rains will not help progress.

Late corn crop

Meanwhile, the corn crop is way late, and talk in general that we will be doing a lot of harvesting in the spring. Some of that crop will be lost if that is true. The Dakotas are wet, with some areas actually flooded. A couple of feet of wet snow will ruin the soybeans and leave the corn for late harvest. Farmers are reporting slow dry-down, although most will start on wet corn when they get the beans done.

In Ohio, only 26% of the corn is off, up from 1 percent last week. Last year we were at 45%, and 41% is the average. The U.S. is at 30% harvested, up from 22% last week. Last year was 48%, a tick above the 47% average. Reported yields for corn are all over.

Remember that much of the Corn Belt does not get as much rain as we do in Ohio. Consequently, where the fields were planted on time and had good stands, the yields were better than normal, as hard as that is to take. Most places, however, see yields off by 15 or 20%, although it is hard to get a trend.

That reduction is not reflected in current USDA numbers, which expect 168.4 bpa, only eight bpa below last year. I continue to think that number is very high.

Prices are seeing a bump Oct. 22, probably as a reflection of disappointment in harvest progress. December corn futures have been up over 4 cents, at 3.92, and November soybeans are up over a dime, to 9.431⁄2. Our high Oct. 22 was 9.451⁄4. December corn was 4.021⁄2 Oct. 14. November soybeans were 9.451⁄2 the same day. This means Oct. 22 gets us back to the recent high. That is very close to the March high and the June high.

Report released soon

The U.S. Supply and Demand Report will be released Nov. 8 at noon Eastern Standard Time. It is reflected to finally include reductions for crop and yield losses, and may be what the market has been waiting for to re-define price expectations.

Remember, traders are almost forced to believe USDA numbers, so prices have lagged what many observers expected, this observer included. Chicago wheat futures rallied this week, but still from pathetic levels. I am seeing wheat planted after some of the early beans, but I anticipate that the wheat acres in the Eastern Corn Belt will continue to decline on late planting and poor price outlook.

December wheat futures have traded near the recent high overnight, at 5.321⁄4. In early September, we got as low as 4.501⁄2.

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