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3 Big Things Today, Sept. 22

Corn, Soybeans Likely to Stay Lower

Futures fell overnight and likely will trader lower today after the U.S. Department of Agriculture raised its ratings for soybeans and left corn conditions unchanged.

About 63% of the U.S. soybean crop was rated good or excellent as of Sunday, up two percentage points from the prior week, the government said in a report yesterday. (http://usda.mannlib.cornell.edu/usda/current/CropProg/CropProg-09-21-201...)

Corn stood at 68% good or excellent. While that’s unchanged from a week earlier, some industry experts had expected the USDA to lower ratings due to heat in the Midwest.

The government has a lot of confidence that the crop in northern states is far better than what’s been harvested in Southern states and southern parts of Illinois and Indiana.

The USDA on September 11 forecast corn yield at 167.5 bushels an acre and bean yield at 47.1 bushels, both the second-highest ever behind only last year. Early results haven’t been so kind, however, as most growers are finding average or below-average crop. (http://www.usda.gov/oce/commodity/wasde/)

Still, most analysts and traders believe growers in Iowa and northern parts of Illinois and Indiana will see better yields than in most years as the harvest progresses.

Corn futures for December delivery fell 2 cents to $3.82 ½ a bushel on the Chicago Board of Trade in overnight trading.

Wheat for December delivery dropped 3 ½ cents to $4.93 ¼ a bushel on the CBOT.

November soybean futures declined 4 ¾ to $8.69 ½ a bushel in Chicago overnight. December soymeal futures fell 70 cents to $307.50 per short ton. December soyoil futures declined 0.22 cent to $26.49.
 

Yield Picture Should Clear as Harvest Rolls North

Yields will come more into focus as dry weather allows farmers to speed the harvest in Iowa, Illinois, and Indiana this week. (http://www.agriculture.com/weather)

Growers can expect warm, dry weather – perfect for harvest –throughout most of the week. Only short delays are expected in parts of the western Corn Belt, but those showers will benefit soybeans that are looking for one last rain for fill or late-planted corn.

Farmers have taken advantage of recent dry weather in the southern Plains, which is expected to continue into this week.

About 19% of the winter wheat crop is planted, up from 9% a week earlier and almost on par with the prior five-year average, according to the USDA.
 

Faith in Government Numbers Low

Oddly, Oklahoma growers reportedly only have 6% of their winter wheat in the ground.

Not only is that pretty far behind the five-year average of 16%, but if the USDA is to be believed, farmers didn’t start planting in the Sooner State.

“At least show 1% planted, because I know people who are planting in Oklahoma,” said Tom Leffler, the owner of Leffler Commodities in Augusta, Kansas. “Two weeks ago, I didn’t let it bother me, but last week I said, 'This is ridiculous.’”

Indeed, mistrust in the USDA is reaching a fever pitch. Whether it’s the yield and production estimates from the WASDE report to the weekly crop progress reports, farmers, analysts, and traders alike don’t seem to put a lot of faith in the agency’s numbers.

Don’t be so quick to judge, though, said Leffler, who went to the USDA lockup in Washington, D.C., a couple of months ago and went into the field with the government agents who do the surveys.

The methodology is sound, he said, and they do use uniform testing techniques similar to what is used in every crop tour conducted in the U.S.

Is it perfect? No, but it’s far better than any other government estimate in the world.

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