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2017 Crop Year Ended Better Than It Started

Price patience will be a virtue in 2018.

It's the Christmas season.

A blessed holiday when we can reflect on what has happened the past year, thank God for the blessings of the past year, and look forward to next year and what might be brought forward to us. 

For grain producers, 2017 started out as anything but perfect, as planting was somewhat delayed. It certainly wasn’t 2016, when everything went quite well for the year as planting was early, and weather seemed to cooperate with most areas almost all year. The result in 2016 was a record-shattering corn and soybean crop, and a very good wheat yielding crop, as well. The year of 2017 didn’t seem the same, as planting was a bit behind schedule most of the spring, and the crop seemed to fall further behind, as the 2017 season progressed.  

By September 1, it seemed almost a certainty that the relatively cool summer would end badly for Northern areas, as a normal frost date was likely to sharply reduce yields in many areas (especially those with a wet early growing season that stunted crops).  

However, weather turned considerably warmer in early September, and instead of a frost-damaged crop, we essentially got an extra month or so of frost-free weather since the frost date was three to four weeks later than normal. That allowed almost all crops to reach maturity before the first frost date, and therefore national yields of corn actually broke last year’s record. It was a shocker to growers, as crop conditions in corn and soybeans were roughly 10% below the 2016 year – yet corn yields were actually higher. If not for white mold in some soybean fields this year (which sharply reduced yields in wet states), soybeans may have come close to last year’s record-shattering yield. Instead, soybeans finished with the second highest yield in 2017 (and well below 2016), as the white mold problem seemed to be a big issue in soybeans (while corn had little disease).  

So, we ended up with a record-large corn yield in 2017 and the second largest soybean yield. Wheat yields were disappointing, and that means wheat carryout will be reduced – but it’s still over 900 million bushels (mb), a large carryout. Soybeans are over 400 mb, and corn is near 2.5 billion bushels so we have adequate carryout in virtually all the grain crops. Prices reflect that, too, as we are at the lower levels of corn and wheat prices, and soybeans are also lackluster. But hope springs eternal, and next year is a new crop year and prices are likely to move higher as spring approaches. At least, that is the Christmas wish of most farmers. But patience will be a virtue this year, as prices are not likely to move much for the next few months. If you want to capture good prices in the coming year, they likely will come in May or later as the 2018 season heats up.  

In current market news, the growing crop in South America is the only news on the planet for now, along with export pace of grains (which is currently slow).  

If SAM would have a weather problem, prices have a chance to move some this winter. However, South American weather turned much more favorable in yesterday’s forecasts (12/18), but this morning there is a slight shift to the more bullish side in that Argentine temps in the eight- to 14-day forecast are turned back up to well above normal. That could spell trouble for Argentina if the hot forecast verifies in the 2x/day updates as it could stress growing Argentine crops. It is surprising to see such a shift from yesterday, when the temp forecast has been cooling all this time (probably in the past seven to eight days). Is this just a glitch? Or is it a pattern that will continue?

Currently, the next seven days bring normal to above-normal precip to both Argentina and Brazil, so that is favorable along with the eight- to 14-day precip forecast, which is for normal to above-normal precip, as well. But the temp forecast the next seven days is for normal temps for Brazil and above normal for Argentina. The eight- to 14-day temp forecast for Brazil calls for normal temps, but for Argentina is now calling for much above normal temps, which is an extreme that a person doesn’t want to see at this time of year. This could support the soybean market today if that verifies in the midday weather update.  

The market is starting to get more quiet in front of the U.S. Christmas holiday, as trade seems to be slowing down and market news seems on the slim side. Last week markets all seemed to sag lower (led by soybeans), so it so far has not been a Merry Christmas season for farmers. But there is always hope, it’s just that the best hope for a Merry Christmas in grain markets is to have the wherewithal to have patience into at least early summer 2018.

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Mark Your Calendars for upcoming “Opportunities In The Rough” Marketing Seminars Monday, January 15 - Marketing 101 for Beginners - Fargo, ND - 9:00 a.m.
Monday, February 19 - Market Outlook - Fargo, ND - 9:00 a.m.
Call the office at 800-450-1404 for more details.
Ray Grabanski can be reached at raygrabanski@progressiveag.com.  
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Ray Grabanski is President of Progressive Ag Marketing, Inc., the top Ranked marketing firm in the country the past 8 years. 

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