Expectations for an early harvest grow, analyst says
This week’s USDA Weekly Crop Progress report indicates that both corn and soybeans are highly rated for this time of year, and even ahead of schedule.
Corn silking was at 92% vs. a five-year average of 87%. In terms of days, figure about seven to 10 days ahead of a normal growing season. Last year for the same time period, only 72% was in the silk stage.
The weekly crop ratings indicated that 72% of the crop is rated as good or excellent, ahead of last year’s 57%. Soybeans setting pods is at 59% vs. a five-year average of 54%, also suggesting seven to 10 days ahead of normal.
Ratings indicated 73% of the crop as good or excellent compared with 57% last year. A drier spring allowed for a rapid start to the planting season. Timely rains and moderate temperatures have made for a good growing season.
With both crops ahead of schedule, expectations are for an early start to the harvest season. Private crop estimators this week are implying higher yield in both corn and soybeans compared with last month’s USDA report, which estimated corn yield at 178 bushels per acre and soybeans at 49.6.
Is it safe to say 2020 crops are in the homestretch? It depends who you ask. In areas of adequate rain and where crops are ahead of schedule, probably so. In regions that remain on the dry side, both the corn and beans will need timely rains to avoid a late-season slide in yield potential.
The western Corn Belt, as well as Indiana, Michigan, and Ohio have remained what we term “pesky” dry. The most recent forecast suggests drying in the western half of the Midwest with temperatures expected to climb over the weekend, staying above normal for an extended period. Lack of moisture may suggest these crops could dry down faster than expected and top end yield could be lost. Only time will tell.
This week’s selling pressure in the futures market was tied to higher ratings and expectations for record yield. Most corn producers are one rain away from a crop that will be “made.”
For the most part, the corn crop is in its homestretch. Bean producers are probably not as confident, as weather in August can make or break a crop. From a marketing perspective, corn prices are low enough that forward selling probably does not make a lot of sense. The futures and cash markets are both well below the cost of production and are likely close to a seasonal low price, already factoring in a great crop. Soybeans, however, have downside price risk. Because weather is still a major factor, soybeans are not in their home stretch.
Consider purchasing puts to establish a price floor while leaving the top side open for price advance. If forward selling, consider buying call options to retain ownership.
If you have comments, questions or suggestions, contact Bryan Doherty at Total Farm Marketing. You can reach him at 1-800-TOP-FARM, extension 444.
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.