You are here
Frost Likely to End September, Yield Losses Seen, Analyst Says
There’s been a dramatic change in the weather forecast for the last week of September and to start October, with much cooler-than-normal temps now forecast for this time period.
For the last few weeks, we’ve had above-normal temps, which are just perfect for us in September since crops in northern areas are a bit behind normal in crop development.
However, while the next week is still forecast to remain above normal and warm, the eight- to 14-day forecast has turned to a cooler forecast. That means it’s likely some areas will see frost before the month ends. However, with crops getting some critical warm weather in September, it’s not likely to have much impact on soybeans. Even on corn, the impact on yield might be limited.
Markets seem locked in this current price range, after absorbing the USDA report last week, and dealing with recent hurricanes (which didn’t have much effect on grains).
Weekly crop progress reports out yesterday, also were fairly benign, with corn conditions unchanged from last week at 61% rated G/E. The Pro Ag yield model was little changed at 171.43 bushels per acre, up just 0.20 bushel per acre from last week. That is a bit higher than the USDA September estimate of 169.9 bushels.
Soybean conditions dropped 1% from good to fair, resulting in a 59% G/E rating (down 1% from last week). The Pro Ag yield model was still stable at 47.36 bushels per acre, up 0.04 bushel per acre from last week. Crop progress is moving slowly along, with 86% corn dented now (4% behind normal), up from 75% last week. Notably, northern states are lagging the most from average (Wisconsin behind 10%, South Dakota -12%, North Dakota - 7%, Minnesota -5%).
These states are still susceptible to some yield loss from a freeze, and it looks like they will get one to end September or start October (cooler weather on the way). That will be near a normal frost, but with crops a bit behind, that will still trim yields a bit.
Corn is 34% mature, 13% behind normal and vs. 21% last week (about one week behind). Corn is 7% harvested, 4% behind normal. Soybeans are faring a bit better in crop development, with 41% dropping leaves (2% behind normal) vs. 22% last week. Soybeans are 4% harvested, 1% behind normal.
Cotton has 44% of bolls opening (7% behind normal), but harvested is at 11% (5% ahead of normal). Cotton conditions dropped 25 this week to 61% rated G/E, still well above last year’s 45% rating. Sugar beets are 10% harvested, 1% ahead of normal. Sorghum is 84% coloring (1% ahead of normal), and 43% mature (3% behind normal), with 29% harvested (equal to average). Sorghum conditions dropped 1% to 65% rated G/E, still only 1% below last year’s record-shattering crop. Winter wheat is 13% planted, 2% behind normal. With wetter conditions on the way next week, winter wheat could fall further behind normal planting.
Topsoil moisture ratings were steady this week at 55% rated adequate/surplus (vs. 76% last year), and subsoil ratings were only down 2% this week to 55% rated adequate/surplus (vs. 75% last year).
Weather continues to cool the eight- to 14-day forecast, which now calls for below-normal temps in most of the Corn Belt (still above normal for the southeast U.S. and far eastern Corn Belt). It is likely that the northern and western Corn Belt will see a freeze to end September (about a normal frost date). But with crops behind normal in development in many northern areas, there will be a slight yield loss in these areas (and perhaps even moderate loss for late developing crops).
The next week, however, will be warm as the seven-day forecast still has above-normal temps in it for virtually all of the Corn Belt. But the cold air will be in the western U.S. and Pacific Northwest in the coming week, and slowly move its way into the Corn Belt in days eight through 14. Precip the next seven days is above normal for the western and central Corn Belt, and below normal in the eastern Corn Belt. The eight- to 14-day precip forecast is for normal to above-normal precip in virtually all of the Corn Belt.
Soybean prices have continued to gain on corn the past few weeks. We now have a 2.78 soybean/corn price ratio, which is very high favoring soybeans (typically the range is 2.0 to 2.6). For some reason, traders are very optimistic soybeans, either believing USDA will have to drop soybean yields from 1 to 1.5 bushels per acre, or that soybean demand will be much higher than currently projected (or a combination of both). With a 475 mb-soybean carryout projected, we are quite overpriced soybeans. Instead, we are currently trading something like a 325- to 375-mb carryout, so the market is much more optimistic than USDA at this time. To be trading near $9.80, November soybeans might be a gift to those who haven’t yet made any soybean sales, as this is a decent spot to make some catch-up sales or sell what will need to be priced before harvest.
Ray Grabanski can be reached at email@example.com.
Ray Grabanski is President of Progressive Ag Marketing, Inc., the top Ranked marketing firm in the country the past 8 years. See http://www.progressiveag.com for rankings.
This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that advice we give will result in profitable trades.