Content ID

332152

August weather critical for harvest yields

There is an argument that this year’s corn crop, due to above-normal temperatures, is getting close to being caught up to a more normal growing season. Significant planting delays reminded many of 2019, the latest planted crop on record. In this week’s USDA Crop Progress report, the silking stage is 90% versus a 5-year average of 93%; corn in the dough stage is 45% versus 49%; denting is at 6% versus a 5-year average of 9%.  Still, the crop is estimated to be 5 to 10 days behind normal.

The implication is two-fold: 1) It will take a bit longer for the crop to mature; 2) weather is still critically important for ear-filling and maturity. In some parts of the Midwest, rains this past week may put the crop over the top. Unfortunately, the key description here is “some” of the crop. Crops in late-planted areas will need additional moisture to reach full maturity. Soybeans are also behind schedule, and it may be argued that August weather is more critical for this crop than for corn. Plants setting pods are at 61% versus 66%.

Perhaps a telling sign that this year’s crop will have difficulty reaching the July USDA corn estimates of 177 bpa yield and bean estimate of 51.5 bpa yield is the amount of crop that is rated as poor or very poor. This past week’s USDA crop ratings indicated that 16% of corn acres are poor to very poor. Last year at this same time, these two categories were 11%. Yield for 2021 crop was 177 bpa. In 2020, a dry August led to a final yield of 171.4. Soybean yield in 2021 was 51.4; in 2020, 51 bpa. Current crop ratings indicate the poor to very poor category at 11%. A year ago, the soybean crop was rated 13% poor to very poor. August rain totals this year will be ultra-critical to sustain the 51.5 bpa estimate.

The bottom line is that the crops are late, beneficial weather is required to hold yield projections, and price volatility remains high. This past week, export sales announcements have surfaced. This is a potential indicator that importing countries believe the crop size may have maximized and, therefore, prices have limited downside. Limited world inventories, due to a variety of reasons, now suggest having patience when making selling decisions. If you are behind on sales and wish to get more current, consider doing one of two things: 1) sell and buy calls to re-own, or 2) buy puts to protect downside price action and set target points at higher levels to sell.

Whatever your strategy, make sure you are prepared for any scenario to unfold. Talk to a professional to learn about pricing tools that will best suit your operation.

If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.

Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.

About the Author: With the wisdom of 30 years at Total Farm Marketing and a following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of brokerage solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the tools and markets, listens, and communicates with intent and clarity to ensure clients are comfortable with the decisions.

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