The perception of big crops continues to drive corn prices lower on the Chicago Board of Trade. Corn futures have made five consecutive new contract lows so far. I say “so far” because the last one was overnight as I write this on Tuesday morning, Aug. 29. Soybeans are trending lower, but are not yet near the contract lows.
I was prepared for the Pro Farmer Crop Tour to find fewer bushels and help prices, but so far that has not happened. Their results have been widely disseminated, and do show lower crop size, especially for the corn. However, the trade seems focused on the perception of good weather, and the history that the production numbers for a good crop keep getting better as the summer progresses.
In fact, the weather does not seem all that good to me. We have been consistently too cool, although that does mean that the western crop has not been heat stressed. Maybe the slow maturity here is offset by lack of stress in the west.
Current forecasts supposedly have traders concerned, as they show cool temperatures and not enough rain. Those ideas do not show in prices so far.
The corn and soybean numbers
Let’s compare USDA and Pro Farmer. The last USDA production numbers came out Aug. 10. The corn crop was expected to be 14.2 billion bushels, with a 169.5 bpa yield. That in itself is a 7 percent reduction from last year. Pro Farmer says the crop is only 13.953 billion bushels, with a 167.1 bpa yield.
USDA predicted the soybeans to return 4.38 billion bushels at a 49.4 bpa yield. Pro Farmers is close, at 4.33 billion bushels on a 48.5 bpa yield. Pro Farmer thinks there are more soybean acres than USDA is taking in account, but still has the crop smaller.
The 2017 grain market
The market could have seen some support from Pro Farmer’s corn results, and the bean results would not predict any real move. In fact, the corn has gone down and the beans have modestly improved in price.
Corn prices have declined in the last week, while soybeans have recovered from a 9.21 recent low on the 16th to trade at 9.35 this Tuesday morning. We were over 9.41 1/4 at the close last night!
I must conclude that the market is trading USDA numbers until the harvest proves them wrong. That is not encouraging to farmers still holding some grain, and farmers who had only one brief selling opportunity this summer. That opportunity was mostly missed.
To complete the trifecta, the soft red winter wheat futures traded in Chicago have been mostly lower since the 5.92 1/4 December futures high back on July 2. We made the high on dry weather hurting the spring wheat crop. Since then we have fallen to the new low this morning of 4.25 1/4.
Do the math. That is a loss of $1.67.
If there is good news in all this, it has to be that we may be making the harvest lows on negative news ahead of the actual harvest.
By the time you read this we will be finishing August, and corn harvest will begin in the early areas in September. We can hope that Pro Farmer is right, and look for some correction as the early harvest comes off to help with our hard marketing decisions ahead.
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