Harvest is here, prices are not

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I am having trouble coming to terms with the idea that we are still not to the last week of September and we are well into harvest, even here in the frozen north (Ashtabula County, Ohio, if you are not a regular reader).

The drought that blistered us late in the season pushed along the early maturity. One farmer reported to me a couple of days ago that he was running 17 percent moisture corn already.

Elevators struggle

This will be a year in Ohio when the elevators will struggle for two reasons. First, the smaller crop we expect will not fill the bins. The farmers will hold all they can. Also, harvest basis will be squeezed to get bushels to fill the elevators or to fill early sales. Second, the crops are drier than normal, so elevator drying income will be cut. If we have corn at 17 percent in September, we have many good drying days ahead to dry more of the crop before it goes to town, not just the early fields. Now is the time when we are trying to get a handle on just what the crop will be.

Crop projections

USDA has projected a large crop, with only two or three states hurt by the early heavy rain problems. In Ohio we had the worst possible combination of weather. We were too wet too early, then dry late.

Dry soil

Now that we are trying to harvest, I actually had nearly five inches of rain scattered slowly over three days. The ground was so dry that the only puddles I saw were in the potholes at the end of one field driveway. The soil just sucked it up. The ground was dry enough that I did not get enough runoff to re-fill my pond.

Private forecasts

Just when traders get convinced the big crop is here, we get market letters this week talking about private forecasts that predict fewer corn and bean acres than Uncle Sugar is claiming. Informa says the next USDA numbers will cut corn acres by 500,000 and bean acres by 1.4 million. That seems like a lot, but if the market is fixated on crop size, they may try to ignore the impact of fewer acres on crop size.

Early yields

Early yields are all over the map. Early talk from our North Central Ohio elevators is that the beans are off maybe eight bushels per acre. On the other hand, there is anecdotal evidence of fields of 20-bushel beans “in Northwest Ohio,” wherever that is. I hear locally of food grade beans in the 30’s (a lot of them grown around here and processed through the Schwartzes in Trumbull County), but some beans now coming off in the 50’s.

That is still a long way from the 70’s of a lot of fields in the last three years.

No consistency

Corn yields are spotty, and have no consistency. One farmer told me “80 to 200.” That about sums up the year. Some farmers will have both yields in the same field. While the harvest is getting going, we have seen some bounces in prices.

Prices

On Monday, December corn futures were up seven cents and a little better. November soybeans were up seven cents. The December wheat was up a dime. This came with good exports, although with the warning that we have not been competitive for the Chinese corn and bean business.

A lot of that may just be from our strong dollar. China bought corn last month, but three-fourths of that come from Ukraine, of all places. China also bought soybeans last month, but almost all come from South America.

Futures

However, as of early Tuesday, traders are giving back the gains from yesterday. Corn is down a nickel, beans are down eight cents and the wheat is off six cents.

December corn futures had the low on the fourth, at 3.60-1/2. The 15th we touched 3.95, a nice gain. Now we are back to 3.79-1/2, just in the middle of that recent range. November soybeans made a contract low on Sept. 11, at 8.53-1/4. The November contract rallied to a high of 8.94-1/2 in just four days, but now we are trading 8.66-1/4.

Hedging

The good news is that there may not be as much harvest hedge pressure as normal this year. That comes as elevators sell futures to hedge purchases. The bad news is that the prices are not high enough to get exciting.

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Marlin Clark is an associate of Russell Consulting Group, with a local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.

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