Content ID

276405

Yields, Elections And China Are Hot Topics This Fall, Analyst Says

Wet soils could make harvest activity come to a screeching halt.

We're now into fall, and for farmers that means harvest of fall crops, with the corn and soybean harvest now well underway across the Midwest. 

Yields, so far, have been good to outstanding, with some areas incredulous over the yields, and others somewhat disappointed after all the talk about record yields.  But as always, there are some winners and some losers in the weather roulette game.  

Weather forecasts remain cool for the northern third of the U.S., and above normal temps for the southern 2/3's for the coming 2 weeks.  Precip is still forecast above normal for the entire 14 day period in the U.S., and could cause more problems with the harvest of a very good crop.

How good?  Corn keeps improving in the Pro Ag yield model, with corn now at 179.7 bu/acre, up 0.6 bu/acre this week (USDA is at 181.3) on a 1% improvement in conditions to 69% rated G/E.  The company's soybean yield estimate improved 0.20 bu/acre to 49.93 bu/acre (vs. USDA at 52.8 bu) also on a 1% improvement in conditions to 68% rated G/E.  

Crop development marches forward, with corn 97% dented (4% ahead of normal), and 72% mature (19% ahead), and 16% harvested (5% ahead). 

Soybeans are 71% dropping leaves (14% ahead), and 14% harvested (6% ahead). 

Cotton bolls are 58% opening (1% ahead), 16% harvested (7% ahead), and conditions were the same at 39% rated G/E (down from 60% last year). 

Sorghum is 94% coloring (4% ahead), 50% mature (3% behind), and 30% harvested (2% behind).  Sorghum conditions are 55% rated G/E, up 2% but still well below last year's 64% rating. 

Sugarbeets are 16% harvested (4% ahead), and winter wheat 28% planted (2% ahead). 

Topsoil moisture improved to 74% rated adequate/surplus (up 2%) vs. only 56% adequate/surplus last year, and subsoil was 70% rated adequate/surplus (up 1%), also well above 54% rated adequate/surplus last year. 

So soils are very wet this year to start harvest, and with the wet weather forecast this could become a problem for some more areas (it is a problem for some already).   

There are only about 6 weeks left before another U.S. election, so the "silly" season is upon us.  Media love this time, as they make lots of money on political ads that get progressively worse and more desperate as we go forward.  
Brochures show up in the mail distorting a good person's record his whole life.  

It weakens our country, and does affect the U.S. in the world's eyes.  Which is bad when we are trying to negotiate trade deals, or to sell our products into another market.  Or re-establish trade ties with a country we've had a dispute with. 

There is none more important than China, who has a lot at stake in this election, too.  They are counting on the Republican party to lose seats and then limit Pres. Trumps ability to do virtually anything the coming 2 years. 

Then they feel they can wait us out and eventually win the trade dispute we are having with them.  Essentially, they more or less have openly stated this is their strategy and are lobbying hard officially to help it happen

For now, the U.S. and China have added $200 billion and $60 billion, respectively, to the tariff amounts this week (with negotiations cancelled), and the U.S. is planning on going ahead with another $267 billion (it takes the U.S. 3 months to get this done legally as opponents threaten to sue the government if we don't follow 'procedure'.  China does it in a day). 

China only has about $15-25 billion left to tariff from the U.S., so they are waging a lot bigger war of words now since they got nothing left in their tariff gunpowder anymore.  So get ready for a barrage of lobbying from the Chinese government, financed by tariffs on U.S. products including soybeans.

I noted last week that Apple products were one of the 300 products exempted from the new $200 billion, 10% U.S. tariffs on Chinese products started Monday.  Apple makes everything, everything, for the IPhone in China and ships it everywhere in the world (the Iphone is 2/3's of Apples' revenue, the world's largest company).  

Its profit margin is about 40%, so the 10% tariff on Chinese products would cut it to 30% profit margin on the IPhone.  In contrast, our U.S. soybeans had a profit margin of about 3% to U.S. farmers, and now that prices have dropped 20% on the Chinese tariff, the profit margin is now -17% - not just for soybeans sold to China - but all soybeans produced!  

Something doesn't seem right in that scenario!!!  Especially when the dispute with China is mostly on intellectual property rights.  With the Iphone only about 10 years old, it's probably safe to say there are more intellectual property rights in jeopardy with the Iphone than there are with soybeans.


Ray Grabanski can be reached at raygrabanski@progressiveag.com.  
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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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