The mentality of producers right now is nearly universal. Get the crop off, try to fit it in the bins. Sell nothing.
The most noticeable feature of grain production this year is not just the growing perception that yields are higher than estimated so far, but that September is not half over, and crops are already drying down.
Near me are corn fields with dry stalks and husks. A few miles south of me the husks have been dry for a month. Some bean fields are turning color, and a few are already solid yellow.
Low prices make marketing decisions easy to defer, but the big, early crops mean most farmers will have some corn and soybeans that need to go to town.
I keep saying that a big, cheap crop is always better than a small, high-priced crop, but that does not alter the fact there are hard decisions to be made.
Fortunately, in the Midwest we rarely have to make decisions like our East Coast friends and relatives are making right now.
Our daughter and her family left this morning to come to Ohio after a mandatory evacuation order from the current hurricane bearing down on them. Right now, the storm track has the eye headed for Wilmington, N.C., but their area of Hampton, Virginia, is just a few feet above sea level and close to the shore. The worst of the storm will not hit until Friday morning, but they are already ordered out on their constricted road system.
Here in southern Ashtabula County, we are very close to the continental divide that separates surface water flow from Lake Erie and the Ohio River. We can get soggy, but we cannot flood, this high up. We never get a hurricane, although the remnants of a couple of them have ruined harvests. We have not had a forest fire since the early ’60s. The tornados are very local and usually miss (unless you live east of Williamsfield and got wiped out last summer).
So, we anticipate no weather disasters, except the ones all farmers face. Too wet. Too dry. Too hot. And this year a different disaster: too cheap.
Nothing has really changed in the last week. Not much has changed in the last month.
Soybean prices declined this summer as the perception of yields got better and the trade tensions with the Chinese got worse. Each week we get some encouraging work that the Chinese are ready to bend and we will work things out. Each week nothing actually happens.
Meanwhile, we wait an extra day for the USDA Supply and Demand Report that will give us the latest crop size estimates. The report that was due out yesterday is coming at noon today instead. “Technical difficulties” is given as the reason, whatever that means.
Corn watchers expect a yield that may be higher than 178 bpa, and will hurt prices. Of course, we have had private reports of high yields, so this yield may be already “in the market,” and we could see no reaction.
We are looking for the good news that our year’s exports exceed expectations of 2.4 billion bushels, and that would help prices as carryout is reduced.
The soybean part of the report is not expected to find good news. There we look for a yield over 52bpa. The increased acres this year would give us a carryout of 800 million bushels, when a half a billion would be what we hope to get back to some time.
Looking at prices, corn futures have been mostly sideways for a few days. December futures are trading at 3.67 1/4 this Tuesday morning, after a recent low the end of August at 3.55 1/4. Our contract low was the middle of July at 3.50 1/4, so at least we stayed about that on the last dip.
The high at 4.29 1/2 May 24th seems mythical today. It was high enough to trip a few targets, but few farmers have sold very much.
Soybeans prices are a worse mess, because of export issues. The November futures high was 10.60 1/2 back on May 29, then it plunged to 8.26 1/4 in the middle of July. Prices recovered to 9.22 1/4 the last day of July, then dropped to 8.28 3/4 the last day of August. We are trading 8.45 3/4 this morning.
Chicago wheat futures have been sharply lower since a month after harvest. The high for December futures came at 6.13 on Aug., after a month of talk about the world supply being reduced and our Plains crop being off. By Sept. 7, we were down to 5.07 1/2. Now we are erratic. Monday higher, Tuesday lower. Here on Tuesday morning we are down eight cents at 5.20 1/4.