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Weather Remains a Market Concern, Analyst Says
It’s October. So far, producers have dodged the frost bullet for now, an extremely positive development for northern growers but also a bearish development for the market.
Crops will likely mature or get close to it in many northern areas, at least most of the crop in North Dakota, South Dakota, and Minnesota.
However, questions remain about the size of the 2019 crop given the late planting and late development so far.
For example, an Illinois grower who planted his corn on June 5 already harvested it, and the yield was about 50 bu/acre below his expected 225-bu yield. So the switch to an early variety cost him the 50 bu, not from frost damage. There were certainly many producers who switched away from longer day varieties to shorter ones, and that was where a lot of yield loss will occur in 2019.
Weather remains in flux, with yesterday afternoon’s NWS forecast warm and wet for the six- to 10-day and eight- to 14-day forecast. However, this morning’s weather runs have turned quite a bit cooler and drier for the eight- to 14-day forecast. That would represent a complete change in the outlook for the late developing grains in the U.S., especially in areas that are susceptible to frost damage.
It’s raining today in a band from New Mexico to Wisconsin, including the states of New Mexico, Texas, Okahoma, Kansas, Nebraska, South Dakota, Minnesota, and Wisconsin. Many northern areas have become extremely wet, while the southeast is starting to bake in unusually dry conditions for them. Northern Corn Belt areas
will now have difficulty harvesting as soils are extremely satured/underwater in areas.
Yesterday, 9/30 the stocks report indicated a much reduced stocks number from those expected, meaning the U.S. has less corn/soybeans on hand than we thought (bullish). In corn we lost 322 mb from expectations at 2.114 billion stocks, and soybeans lost 67 mb from expectations at 913 mb. That’s a 7.3% reduction in soy stocks and 15% reduction in corn. What is more astounding is that USDA is revising 2018 soybean production down 116 mb by dropping planted/harvested acres and yields 1 bushel – a year after these numbers were supposedly done. Planted acres was dropped only 33,000 acres, but harvested was dropped 506,000 acres.
Even worse, USDA hiked HRS wheat production to 600 mb (15 mb more than expected) when we still don’t have 10% of the crop harvested. We likely either lost that 10%, or it will certainly be feed wheat in the best-case scenario (as is much of the HRS harvested in September). Pro Ag estimates that from 15% to 25% of all HRS wheat is feed wheat and will not be able to be used to make bread. That is quite bullish for HRS wheat prices!
Crop conditions/progress was out yesterday afternoon 9/30, with continued indications of a very late developing crop with corn 88% dented (10% behind normal), 43% mature (30% behind normal), and 11% harvested (8% behind). Corn conditions were steady at 57% rated G/E, but the yield model dropped its largest of the year to 173 bu/acre, down 2.3 bu/acre from last week. Soybeans are also behind at 55% dropping leaves (21% behind normal), and 7% harvested (13% behind normal). Conditions are rated 55% G/E (up 1%), but the soybean yield model declined slightly to 47.82 bu/acre (vs. 47.9 USDA).
Other crops show cotton 77% bolls opening (10% ahead of normal), and cotton 16% harvested (2% ahead), and conditions are 40% G/E (up 1%).
Sorghum is behind normal development like corn/beans, with 95% coloring (equal to normal), 54% mature (9% behind), and 30% harvested (5% behind) with conditions 65% G/E (same as last week). Sugar beets are 16% harvested (4% behind), barley harvest 96% (4% behind), and HRS wheat 90% (9% behind). With the recent rains and previous quality issues, the remaining 4% barley and 10% HRS wheat will be feed quality if harvested at all as the wet disaster continues to play out in muddy fields. Winter wheat is 39% planted (1% ahead), and 11% emerged (2% behind).
More and more bullish news continues to come out of the grain complex, as we pursue harvest. That makes us happy, as Progressive Ag recommended customers buy back up to the past three years’ production on Sept 9 – basically near the lows of all grains. Markets have rallied ever since! It will be an interesting fall.
China’s big 70th year celebration of their move to Communism in 1949 is today, 10/1.
Ray can be reached at email@example.com.
Ray is President of Progressive Ag Marketing, Inc., a top Ranked
marketing firm in the country.
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