Market analyst: Warm weather to the rescue
09/17/19 — Today as I write this column it’s 84 degrees at noon in Fargo — a very nice summer day. When you consider it’s Sept. 17 and we have a very delayed maturity corn and soybean crop in the field, it’s an absolute hallelujah day! We couldn’t have asked for better weather up and down the Corn Belt than hot weather for mid-September. It serves a dual purpose of providing growing degree days while also staving off any threat of an early frost. There will not be an early frost in Fargo as our average frost is Sept. 23 — and there is no sign of a frost in the next 6 days. Thank God that so far we have dodged a frost bullet. We still do need a lot of growing degree days to bring this crop to maturity, but then again almost no one expected all crop to reach maturity —after all, a lot of corn was planted in June. But at least we’ll have something to harvest, and if this heat can last a while, maybe even a decent crop to harvest.
Weather forecasts have been warmed up the past few days and included more rain for the next two weeks. Temps are forecast to be warm for all of the Corn Belt the next two weeks, which will take us beyond the normal frost date for northern regions. That is great news for producers who are in susceptible areas with late developing crops (most northern and eastern areas), but it also will mean more bushels for the market. We could see some price pressure from the favorable weather in the next two weeks.
Crop conditions out yesterday afternoon were little changed, with corn unchanged at 55% rated G/E, with our yield model up slightly to 173.4 bu/acre (up 0.28 bu). Soybean conditions declined 1% to 54% rated G/E, with the yield model declining as well to 47.7 bu/acre (down 0.39 bu). That is a relatively large yield decline in one week, and puts our yield estimate below USDA’s recently revised downward yield of 47.9 bu/acre on Sept. 12.
Development is still well behind normal with soybeans 95% setting pods (5% behind normal) and only 15% dropping leaves (23% behind normal). Corn is 93% in the dough stage (5% behind normal) with 68% dented (19% behind normal) and 18% mature (21% behind normal). Corn harvest is 4% complete, 3% behind normal. This is still quite late, and the Corn Belt states of Illinois, Indiana, and Ohio seem to be lagging the most in maturity. They may need a frost-free month of September and October to reach full maturity (which seems unlikely). But this recent heat surge in the weather has to be encouraging for those producers.
Other crops are faring similar, with sorghum 79% coloring (5% behind normal), and 34% mature (10% behind) and 24% harvested (3% behind normal). Sorghum conditions dropped 3% this week but is still highly rated at 65% G/E (vs. last year’s 53%). HRS wheat is 76% harvested, 17% behind normal while barley is 87% harvested (9% behind normal). Oats is 92% harvested, 5% behind normal but is nearing completion. Probably the worst situation is the HRS wheat, which has horrible falling numbers after a late, wet year that apparently reduced the available milling quality wheat. Sugarbeets are 8% harvested, 1% behind normal. It is a very late crop in development in almost all areas, so it’s a great blessing to have warm weather to end the season. We just might avoid a catastrophe yet!
There is still too much rain in the forecast, with some extremely heavy rains recently reported. Some producers are looking at a difficult time to get the harvest out of the field, with some fields too wet to support heavy equipment. Sugarbeet and potato farmers could have especially difficult times if things don’t dry out a bit during their harvest. Combines and heavy trucks are also difficult to maneuver in soft fields, so things could get dicey during harvest 2019.
But considering the horrible start this year had, weather has been almost perfect from late June until now. Thankfully, weather has been cooperative so far in bringing relatively warm weather. Now we need that to be accompanied by dry weather, as well, to make this harvest a relatively pleasant one.
It has been encouraging to say the least to see progress between China and the U.S. regarding trade. Hopefully, both sides can see the benefit of solving at least some of the trade problems when they meet in early October with high-level officials. Chinese lower level delegations are in the U.S. this week trying to make some logistical breakthroughs in the negotiations. China would like to break the issues into three categories, one that can be settled quickly, one that will take more extended negotiations, and one that may never get resolved. Fortunately, agricultural trade is in the first category, which is optimistic because that means a settlement could be reached relatively quickly if both sides agree to that structure.
Pro Ag can see a bullish side to the markets developing this fall. We just need to get past this excellent fall weather that is likely adding bushels to the U.S. production total.