Farm Business, Small Grains, Corn, Wheat
Progressive Ag has been saying all spring and early summer that $6+ corn sales were a gift - not just for 2008 crops but for 2009, 2010, and 2011 as well. We hedged up a good share of 4 years crops at $6+ levels! Many people scoffed at that remark and our sales recommendations when December 2008 corn hit $8 futures in June but it didn't take long for that to change.
Today, December 2008 corn is trading below $5.50 and other crop years are close behind. While everyone was bullish on the June rain delays/flooding damage, Pro Ag correctly recognized that $6-$8 corn was a sales opportunity, especially with improving yield potential since mid-June. While our yield models suggested 40.9 bu soybeans June 18 and 144 bu corn June 11, today our yield models suggest 42.75 bu soybeans (vs. 42.4 bu 'trend') and 157 bu corn (vs. 154 trend.) We have above average crops and growing and we may reach record corn and soybean yields with a normal frost or later!
Frost risk is the battle cry of bulls today! Today's lead DTN story is the risk of frost for the corn belt, with some bold predictions of crop-damaging frost occurring in the northern Midwest. Since Progressive Ag is located in the northern most part of that discussion, North Dakota, we want to highlight just how much frost risk might be present for growers so we can make intelligent marketing decisions. While we recognize that crops nationwide are about 7-10 days behind normal, the most northern crop areas might not be as susceptible to frost as the national numbers would suggest.
In North Dakota, for example, 67% corn is silking vs. 83% average and 1% is dough vs. 13% average. Statewide we are about 5-7 days behind average, less than the national statistics and if you break that down inside the state, the northern crop areas are the most advanced. Drier weather early meant earlier planting in the north than the south. in fact they likely are at average pace or better. The north has the most advanced crops where the worst frost risk is present.
Progressive Ag wonders about these national predictions of frost risk. States most behind normal progress are MO (30% dough vs. 69% average,) ILL (27% dough vs. 54% average,) IND (8% dough vs. 35% average) and OH (9% dough vs. 23% average.) While they are most behind vs. their own state averages, they are also the states most advanced in maturity across the corn belt. This means they are more advanced than Iowa, Minnesota, North Dakota, South Dakota and Wisconsin in raw maturity.
This is deceiving! Progressive Ag suggests there is little to no risk of early frost causing any crop damage to corn in MO which typically is mature in Aug and harvested in Sept. It also suggests there is very little risk in ILL, IND or OH. These states traditionally do not participate in frost damage much since cold temperatures move northwest across the corn belt. It typically takes a lot for weather to move Canadian cold fronts all the way across the US and into the eastern corn belt where crops are most behind average. If you look at the crop progress numbers, most of these crops will be mature by the time frost risk occurs in the northwestern corn belt.