Record crops likely for 2006 corn/beans?
The months of June and July were very stressful on the 2006 crop, with almost the entire western Corn Belt locked in an extreme drought situation. Plus, crops under very hot temps and little soil moisture felt further pressure. Many areas were devastated by this weather in early summer, with some crops virtually wiped out on light soils.
However, August and September so far have been ideal for crops to recover from this severe stress, with soybeans having the perfect timing weatherwise to still produce a record large crop in 2006. What a huge turnaround this has been, and one which is likely once again to catch the market off guard!
Many producers are still bullish due to the crop stress that occurred in June and July. However, the improving crop since Aug 1 is impressive! Pro Ag now believes that we could yet produce a record large 2006 corn and soybean crop (or at least record large in beans and the second largest in corn) due to the ideal weather nationwide since Aug 1.
Of course, the world won't know this for sure until the final Jan report from USDA, but mark our words-you heard it here first. It's likely, the 2006 crop will be very close in the Jan report to 160 bu/acre corn and 43.5-44 bu/acre soybeans! This is a shocking revelation to many producers and crop reporters after the stressful June and July experienced by much of the nation. But that weather turned around quickly in August, and as marketing guru's we've got to recognize that change.
Want data to support our view? Crop conditions this Monday improved 2% in corn and were unchanged in soybeans, but the Pro Ag yield model was up in both commodities with corn gaining a large 2.48 bu/acre (to 153.53 bu) and soybeans gaining a large 0.45 bu/acre (to 43.07 bu/acre). These are the highest yield estimates of the year, so it's likely corn and soybeans will slide to new lows in the coming few weeks on the vastly improving crop conditions and yield potential of the 2006 crop.
Given the huge week to week improvements since Aug. 1, it's likely now that soybeans will have a record large yield in 2006, with corn also close to or near a record large yield due to the ideal weather since Aug 1 for most of the country.
Pro Ag estimates the Sept. corn yield by USDA to report a crop above 155 bu/acre for corn (by adding in 3-5 bu for improving technology of the triple stacked corn) to our 151 bu/acre yield estimate on Sept. 1. This yield will improve again in the October report as the crop has already made a great stride in yield potential the first week in Sept (2.5 bu hike this week). So, with ideal weather forecasts to finish out the crop (and soil moisture already available to all areas to finish the crop nicely) it's likely we'll eventually approach the 160 bu/acre yield which was our previous record.
Pro Ag finds it amusing that some analysts actually believe USDA will lower the corn yield in the Sept. report. We had one of the biggest month-to-month improvements in the crop this August that we have ever seen. How could the crop have declined in yield potential in August with ideal weather nearly everywhere? Especially, since USDA hiked the yield in July with adverse weather nearly everywhere in July!!! It's an absurdity that we find in markets occasionally, but is usually an opportunity to trade profitably. Is it time to sell Dec corn and take advantage of a ridiculous idea by some traders that the crop actually declined during August? In contrast, Pro Ag has hardly ever seen a crop improve more in August than the 2006 corn crop.