Let's All Be Thankful, Analyst Says
While producers in the Upper Midwest continue to struggle with harvest in a wet/cold fall, prices of most commodities are doing almost nothing other than crude oil – which just keeps going down.
Crude has gone from $77 a barrel to $54 a barrel in just a little over a month, with the October 3 high at $76.365 and today’s low of $53.65.
The formula for dropping one-third of the net price in six weeks apparently is for the Saudis and friends to increase oil production in expectation of Iranian oil sanctions. And for the U.S. to allow eight countries to violate those sanctions by buying Iranian oil (effectively opening up Iranian production).
Since then, prices of oil have plummeted – and Saudi Arabia is not happy about the situation that caused it. It feels a bit manipulated to drive the oil price down, and unfortunately things have deteriorated over the news about the journalist killed there recently and the public outcry of many nations.
U.S., Brazil Weather
Weather in the U.S. shows the next seven days are forecast to have above-normal precip in a good share of the eastern half of the U.S., with near-normal precip in the western half. Temps will average near normal, with some areas slightly above and some slightly below normal. The eight- to 14-day temp forecast is for mostly normal temps in the U.S., which is a fairly benign forecast to finish out November.
South American weather is fairly stable in forecasting mostly above normal precip in Brazil and western Argentina over the next 14 days, but mostly below normal precip in eastern Argentina. Temps will average near normal (with some fluctuations on both sides), which moderates the wet forecast a bit for many areas and makes it less of a threat to planting progress.
U.S. Crop Progress
Crop progress in the U.S. is showing corn at 90% harvested (3% behind normal), with soybeans 91% harvested (5% behind normal). It has been a struggle since mid-September to harvest soybeans, and snow cover in Northern states is making it questionable that all the soybeans will get harvested.
North Dakota is 93% harvested (normally 100% by this time), with Minnesota 98% (2% behind normal), Wisconsin 91% (5% behind), and Michigan 83% done (11% behind).
Ironically, with a huge basis and crop insurance guarantees at CBOT prices ($8.60 harvest price and $10.16 base price), many might be financially better off if it snows 2 feet now and ends the remaining harvest. The U.S. has such a glut of soybeans at nearly 1-billion-bushel carryout that we really don’t need the remaining soybeans, either. And the market is telling us that.
Cotton is 59% harvested (10% behind), with sorghum 80% harvested (also 10% behind). Sunflowers are 69% harvested (15% behind), with winter wheat 93% planted (4% behind normal) and 81% emerged (7% behind normal). Winter wheat conditions improved 2% to 56% G/E this week as it dried out a bit in winter wheat country.
Topsoil moisture conditions improved 1% to 90% adequate/surplus (which is extremely high for November), with subsoil 85% rated adequate/surplus (up 1% as well) and also extremely wet for November. Next spring could be an extraordinarily late spring under the right temperatures and precip amounts.
As always, there are some areas that struggled this year to get the harvest in. But overall, we still have a record large or nearly record large yield of corn and soybeans in many states, and U.S. agriculture also had a relatively good growing season from about May 1 to about mid-September.
Before May 1, almost nothing got planted this year (unusually late start), but once we got going, we got almost everything planted in three weeks!
With the growing season, it was quite good with good moisture and sunshine (warm summer) that produced a good crop. But once mid-September began, it seemed like the sun stopped shining, it started to rain all the time, and by mid-October it already was so cold it seemed like winter in many areas.
That turned out to be a tough harvest, and as harvest ends we find ourselves behind normal in almost all crops, some by 10% or more.
Yes, every year is different, but as we reflect on Thanksgiving Day about the blessings the good Lord has bestowed upon us, we have to look at the good and the bad of 2018 and recognize what was good. We probably should be thankful that things aren’t always easy, that we have some adversity at times because it makes us stronger.
My daughter is in Brazil right now on a study abroad program, and while Brazil should be seeing great gains this year due to the current trade disputes, instead all we can see are problems. For instance, Brazil is fraught with crime, with one of the highest murder rates of any developed country. Kidnapping, mugging, and those types of crimes are extremely high in Brazil compared with the United States. Yes, there is opportunity in Brazil, as many U.S. farmers have already discovered. But not all is rosy there, either.
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.
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