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Yields Expand; More on Margin Protection
Yield estimates of corn and soybeans continue to run at or near the year's highs, with soybean yields expanding in Pro Ag yield models Monday to 46.66 bu/acre on a 2% improvement in conditions (to 63% rated G/E), the largest yield estimate of the year!
That means that prices should be at the lowest level of the year, but thus far prices are holding above the recent lows. Corn yield models Monday remained at the high level of 173.86, down just fractionally from 173.88 bu/acre last week as conditions remained steady this week at 68% rated G/E.
There is no question both corn and soybeans will be an above-average crop nationwide, the only question is whether it will be a record-large yield, or just near recent records in both corn and soybeans. Current USDA yield estimates are 47.1 bu/acre soybeans and 167.5 bu/acre corn, with corn actually lower than Pro Ag yield models by over 6 bu/acre, but soybeans above Pro Ag yield models by nearly 0.5 bu/acre.
With the warm and extended fall so far and forecasts for no frost risk for another two weeks, it looks like all the crop will reach maturity before a killing frost -- even for the crop that was planted in July. (Remember how late the last 5% of soybeans was planted due to wet
conditions in June?) Corn dented is at 94% vs. 93% normally, with mature corn at 53% vs. 56% normally. Corn is currently 10% harvested vs. 15% normally. Soybeans are 56% dropping leaves vs. 50% normally, with 7% harvested vs. 7% normally. But harvest is advancing rapidly now with warm/dry conditions - perfect harvest conditions!
In other crops, winter wheat is 19% planted vs. 20% normally planted, with HRS wheat and barley harvest progress no longer reported as we are over 95% complete (essentially finished with harvest). Cotton bolls are 57% opening vs. 61% normally, with 7% harvested vs. 9%
normally, with cotton conditions at 52% rated G/E, unchanged from last week but above the 48% last year at this time. Sorghum is 90% coloring vs. 83% normally with 52% mature vs. 45% normally, and 26% harvested vs. 28% normally. Sorghum conditions are 66% rated G/E,
down 1% from last week but well above last year's rating of 57%.
Sugar beets are 14% harvested vs. 9% normally, with rice 55% harvested vs. 54% normally and conditions 59% rated G/E, down 3% from last week. Pasture and range conditions were 46% rated G/E, down 1% from last week and down vs. 51% a year ago. Topsoil moisture nationwide remains high at 62% rated adequate/surplus, unchanged from last week and vs. 70% last year. Subsoil is rated 64% adequate/surplus, same as last week and equal to last year's rating.
Overall, it looks like a great start to harvest of what is a record- or near record-large crop. So far harvest yields have been about as expected, with near record- or record-large yields reported in many areas (as expected). With a warm/dry forecast ahead the next two weeks, harvest should rapidly expand such that the next two weeks could see a lot of progress made. By then, we should have enough harvest yields to get a handle on whether or not yields are good enough to support yield models, or they are much better or much worse. So far, they are coming in about as expected with record-large yields in some areas, and below records in others.
The new crop insurance pilot "margin protection" now has only one week left for farmers to sign up with a deadline of September 30. So far, Pro Ag hears of almost no activity by the Iowa corn and soybean producers (the only state the coverage is available for in corn and soybeans), and also little to no activity in the wheat areas approved (ND and parts of MN/SD). That is a shame, because Pro Ag sees the 70% level as a steal, and a great benefit to diversifying the farmer's risk-management program.
The 70% level in wheat provides the equivalent of 85% GRIP or ARP insurance at a premium of about the 70% to 75% level. It covers not only revenue (price times yield), but also covers any adverse movement in input costs (fertilizer, fuel, and interest rates). Pro Ag recommends that producers buy at least the 70% level in wheat at a cost of about $4 to $5 an acre. Then, to keep your premium about unchanged from last year, just drop your RP coverage by 5% or so. You will have diversified your risk management portfolio quite a bit (now covering inputs as well as a higher level of revenue coverage) for little or no cost! And you can collect on margin protection (if the county has a loss) even though your personal farm yields have no loss! And you can collect much more than the actual dollar amount of the protection (if margins go negative you collect that amount, too)! This should essentially double insurance indemnities for those farmers who farm the best land in the county, or simply are the best farmers in the county. If you fit that category, make sure you check out this program! If anyone has questions about margin protection, they can call our office at 800/450-1404 anytime.
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