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'Perfect' Weather Fuels Growing Crop Expectations
Almost perfect weather to finish off corn and soybean crops in 2014 is occurring this fall, with warmer than normal temps and intermittent rain showers that are bringing above normal precip to finish off the season. This is a recipe for a monster crop, not just a record large crop, as this crop is now growing to levels that might not be topped for a decade or more.
Pro Ag yield estimates keep rising, with our corn yield as of last week August 26 nearing 174 bu/acre and soybeans 47 bu/acre (and still climbing), massive crops that will be decades before we shatter previous yield records by such a massive amount!
The past week weather was nearly ideal, with rain across most of the Midwest (including the dry south) and temps that were above normal (and further eliminating the possibility of frost damage on this crop). Its likely that this afternoon's crop progress and conditions report (released a day late due to the Labor Day Holiday) will show another aggressive hike in yield potential for corn and soybeans. Is it possible that corn would rise another 2 bu/acre (to 176 bu/acre) and soybeans another 0.5 bu/acre (to 47.5 bu/acre)?
Weather forecasts remain mostly favorable, with above normal temps and normal to above normal rainfall forecast for the next 2 weeks that will take many grains away from being threatened by frost. We also have a perfect forecast to fill out remaining crops, and this is going to be a record shattering yield. Its likely that yield models will rise again in this afternoons crop progress report and the next 2 weeks crops progress reports, as conditions likely will improve once again as weather was mostly perfect last week as is the forecast for the next 2 weeks. Could we eventually get a yield model of 180 bu/acre corn and 48.5 bu/acre soybeans? If we get this massive of a crop, Pro Ag projected lows of $8.40 Nov. soybeans and $3.05 Dec corn will not only be likely, but they might even be high!
Pro Ag remains bearish as the Pro Ag corn yield model rose 2.3 bushels/acre to 173.8 bu/acre, with the soybean yield model rising 0.41 bu/acre to 47 bu/acre in the past week in August, and are likely to keep rising this fall with perfect weather forecast. There are those who think prices are low enough right now and markets should rally from here.
But the crop has improved so much the past few weeks that yield estimates made from Pro Farmer even just a few weeks ago (at record levels) are already being surpassed in a big way. Pro Ag looks for the markets to break out lower in the next few days, and remain under pressure through harvest of corn and soybeans as it will be a record shattering large crop.
The one market that may rally is HRS wheat, as harvest delaying rains have continued to plague this harvest. HRS wheat producers will probably have to resort to harvesting the grain wet and drying it as waiting much longer for fields to dry to 14% moisture or less might mean leaving it out in even more rain.
We have rehedged all grains recently, remaining 100% hedged for multiple years as the trend is down and we are going to have record shattering, mammoth large yields of grains in 2014. Lets revise lower our objectives of expected lows to $8.40 soybeans and $3.05 corn for lows if we keep adding bushels to this year's crop, and frost stays away this fall until crop maturity.
They are surprisingly low prices we are forecasting at $8.40 Nov. soybeans and $3.05 Dec corn for the lows (likely around the January final crop report), but we need to take prices low enough to attract demand to get rid of this mammoth crop, and limit supply increases in 2015 with very low prices until spring planting is completed. Its likely we will make multiple year lows (like for the next 3 years) this winter and into spring. It should be long, slow low formed after this massive crop, with corn and soybean prices likely to form a bowl bottom on the 3 year lows made this late fall/winter. There will be plenty of time to buy it at or near the lows, as it could take 3 months or more to form the bottom. There will be a lot of lamenting how low prices will get this coming year, especially among those who did not hedge heavily. This will be a great time for buyers of grains to buy up multiple years of grain sometime from January to April 2015.
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