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Farm Markets Defy Bearish Pressure

As corn and soybean harvests march toward completion, it has been surprising that prices have held recent lows while we are harvesting record yields of both corn and soybeans. For soybeans especially, where yields are at least 5% over and above the previous record large yield, prices are holding up surprisingly well. Exports of soybeans to China have been outstanding, and the hope is that no matter how big the U.S. crop, China will buy it anyway because it needs soybeans. The last few years that has been the case, as USDA would originally project a large carryout. But exports were strong all year, and by the end of the year, U.S. carryout was reduced to under 200 mb many of the past few years. This year, USDA has upped exports every time it has increased yield in the last few reports, keeping stocks at more manageable levels despite record-shattering yields.  

Weather forecasts for the next seven days are consistent with recent forecasts, which include rain only for the Lakes States (MN, WI, and MI), with still warm temperatures (especially in the western U.S.) that will push harvest in most of the Corn Belt. However, the eight- to 14-day forecast shifts rain into pretty much all of the Midwest, and these wet conditions will delay the harvest that is left. So its become a mixed forecast – good for harvest the next week but then turning much wetter for the eight- to 14-day forecast, which will cause harvest delays.    

Monday’s Crop Progress Report showed corn harvest at 61% complete vs. 62% normally, with soybean harvest at 76% complete (equal to normal). So the harvest is slowly catching up to near normal for both crops in spite of excellent harvest weather. Yields remain outstanding, with the time needed to haul away the massive corn crop taking extra time for harvest.  

Cotton harvest is at 39% complete vs. 37% normally, and sorghum is at 67% harvested vs. 58% normally at this time. Sugar beets are 78% harvested (equal to normal), while sunflowers are 46% harvested, ahead of the 40% normally done. Winter wheat is 79% planted vs. 82% normally, with 60% emerged vs. 58% normally. The first winter wheat condition rating of the year came out with 59% rated G/E, well above last year’s 47% rating. That goes to show that the moisture conditions are much better than last year at this time. Topsoil moisture conditions are rated 73% adequate/surplus, well above last year’s 58% rating. ubsoil is rated 72% adequate/surplus vs. 59% last year. So the winter wheat is off to a good start.  

As we’ve said before, with the recent market rally and the continued strength into the heart of harvest, we will probably abandon our low targets of $9 soybeans and $2.90 corn to buy back hedges made last June. Instead, it may be that more reasonable targets would be the old low in corn at about $3.15 December and $9.40 November beans. Corn especially looks like it has unusual strength for harvest. We'll see if that can continue through the end of harvest, when a lot of corn could come to market. Soybeans rallied through the previous resistance of $9.80. We'll see if it can hold that level. There were outstanding export shipments of soybeans in yesterday’s weekly announcement at over 100 million bushels! If that continues for 20 weeks, we will have met our export projection for the year. Those are outstanding shipments of soybeans, so large that they are unlikely to continue, but it is encouraging to see once in a while. So we sit here at an impasse, with from two thirds to three fourths of the harvest complete, and prices actually pushing slowly higher since the beginning of harvest. While yields are record large, the exports of grain (especially soybeans) have been so outstanding that the market is actually pushing higher while we are harvesting a record-shattering yield. Can we hold these gains all the way through harvest? With only a few weeks left, that might be the question to answer for the rest of October and into November.  

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