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Grain Markets Can’t Shake USDA Numbers, Analyst Says
As harvest grinds forward, grains are struggling a bit after the bullish USDA report in October.
In that report, soybean yields were reduced more than expected, and that supported the market. Since then, prices drifted lower last week for all grains, giving back some of the gains made after the report.
However, grains started on a good note this week, with 6¢ gains in corn and 10¢ gains in wheat. Soybeans struggled a bit more, gaining only 3¢ Monday in spite of much bigger gains in corn and wheat. But soybeans are struggling more with a fairly rapid harvest in the U.S., with 21% of the nation’s crop harvested last week, taking soybeans to 70% harvested. Also, soybeans have to deal with weather forecasts in South America, and that forecast seems to be improving with more rain forecast long-term in central and northern Brazil.
The harvest has fallen behind for many fall U.S. crops, since the crop development fell behind normal. Basically, the crops were behind all year, after about normal planting progress for the crop. A relatively cool August and early September led to that slow development, but also probably contributed to the relatively good yield potential we have for U.S. crops. Although there were too many obstacles this year to have a huge bumper crop, it still looks like it will be an above-average late-season crop, with corn and soybean yields currently projected to be slightly above trend (and we would agree with that assessment).
Harvest will continue to proceed, with weather mostly cooperative in the U.S. this fall. The seven-day forecast for the U.S. is below-normal temps for the next 14 days, the most intense cold coming in the next seven days for the Corn Belt. Precip is forecast below normal the next seven days (so still good harvest weather), but then turns a bit wetter in the eight- to 14-day forecast, with some above-normal precip forecast for the upper Plains states and mostly normal for the Corn Belt, with some below-normal precip as well.
South American forecasts continue to increase the precip for central and northern Brazil in the eight- to 14-day forecast, with precip normal and even above normal for some of these areas. The next seven days will bring mostly above normal temps for all of SAM, with above-normal precip for southern Brazil and Argentina, but below normal for central and northern Brazil. The dryness concerns will be somewhat abated for Brazil in the eight- to 14-day forecast, with mostly above-normal precip forecast for that period. Argentina, though, will be somewhat dry during the eight- to 14-day period. Brazil needs more rain to germinate the crop that is currently being planted, as it is the equivalent of late April for South America right now. Most of the SAM crop will get planted in the next six weeks. So, this becomes a fairly important time for them in the season.
Corn had a decent run higher higher Monday, 10/23, supported by commercial buying near the yearly lows. Weekly exports for corn were only 24.2 mb Monday, not enough to provide the spark we got in the market. Wheat exports were only 6.2 mb, and wheat was up 10¢! Soybean exports were a strong 94.2 mb, but soybeans barely moved following corn and wheat higher yesterday.
Crop progress numbers reported 10/23 showed corn harvest advancing 10% (to 38% complete), still 21% behind normal. Soybean harvest advanced to 21% to 70% complete, now only 3% behind normal as farmers concentrated on soybeans this past week. Corn conditions improved 1% to 66% rated G/E, now only 8% behind last year’s record-shattering crop. Cotton is 37% harvested, 2% ahead of normal while conditions were down 2% to 56% rated G/E. Sorghum is 47% harvested, 12% behind normal while conditions were steady at 65% rated G/E, the same as last year’s record-shattering crop.
Sugar beets are 74% harvested, just 2% behind normal while sunflowers are 30% harvested, 9% behind normal. Winter wheat is now 75% planted, 5% behind normal, with 52% emerged (also 5% behind normal). Topsoil moisture is rated 73% adequate/surplus, equal to last week and last year. Subsoil moisture improved 1% to 68% adequate/surplus, just 4% behind last year at this time. So soil moisture levels are good entering freeze-up in the U.S..
With soil moisture levels good for the U.S. soil this fall, that means we really are getting a relatively good start to the 2018 crop year. With winter wheat planted this fall, that’s the first crop affected by the soil moisture and weather for 2018. Ironically, winter wheat planting is slightly behind normal this fall, similar to basically almost all crop development for 2017 (behind or at normal levels). Usually, we hope for an early planting season for the next year (2018) because we usually have a chance for the best crop yields when the crop is planted early. Alas, that didn’t develop in 2017. Hopefully, things will be different next year.
Ray Grabanski can be reached at firstname.lastname@example.org.
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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