Lower yields, crop progress send corn past $5
What a difference a year can make.
Monday's USDA-NASS Crop Progress report revealed over half of the U.S. corn crop is mature. That's 40% higher than last year's figure for this week and 20% ahead of the previous 5-year average. And, 11% of the crop has been harvested, up from 3% a year ago and the previous average of 6%.
But, yields are generally disappointing for many farmers, and the market is taking note, sending corn futures above the $5-per-bushel mark in Tuesday trading.
In central Illinois, yields are ranging widely -- in some spots, from 120 to 190 bushels per acre. "This is disappointing for this area. One field was reading 165 bushels per acre, and just one mile away, a farmer harvested corn at 190 bushels per acre," says Agriculture.com Chicago Markets Bureau Chief Mike McGinnis. "The corn is dry and that will make for a smaller grain-drying bill. But, the yields are disappointing, especially when this area was considered the 'garden spot' of the Midwest for much of the growing season."
Doug Martin's about 20% done with harvest on his farm near Mt. Pulaski in central Illinois. He shares a similar story on yields: They're not the best, and they're widely varied.
"We have had yields from 100 to 220 bushels per acre. The difference is basically the amount of water damage in each field. If it is flat black ground with no drainage, it has been yielding 120-150 and if it is on hill or has some roll to it, yields are a lot better. So, if you have ever been in our area you know that are not a lot of high spots, which means that yields will probably be 20-30% below average when we are done."
It's not a total sob story, though. Martin's pleased with early progress -- with both harvest and grain drying -- and is looking forward to an early wrap-up to this year's harvest, especially compared to last year. "The corn is also drying down nicely. It is almost too fast since it is only early September. This week, we had moisture levels get down to 14% to 18%," he says.
Despite the corn harvest progress -- and equally quick clip in the soybean crop's advancement toward maturity -- the markets zeroed in on a slight decline in crop conditions reported by USDA and lower yields reported by farmers, adding some upside momentum to the trade Tuesday. By the middle of the day's trading session, the March, May and July corn futures contracts passed the $5-per-bushel level.
"The overnight market opened higher, pricing in the crop condition report released after the Monday's close of trading. The report showed another 1% decline in the good-excellent condition in corn and beans. But, selling entered the market and carried over a lower opening for Tuesday's start," one market analyst told Agriculture.com's McGinnis Tuesday morning. "Traders and funds are heavily long with profitable positions. Traders are aware of the fund pattern of taking profits ahead of month-end, yet the quick harvest in the corn market and farm talk of poor yields keep speculators buying dips in corn."