Large crops get bigger!
09/16/14 — The old adage that “large crops get bigger” seems to be holding true this fall, as the already record large crop got even bigger last week as crop conditions were unchanged, but Pro Ag yield models swung even higher to 177.5 bu/acre corn and 48.14 bu/acre soybeans – which would be record shattering large yields! Ironically, though, while the crop size keeps getting larger, prices are seeing a few day rise as cold temps continue to dominate the eastern Corn Belt, making for some nail biting nights as temps test the freezing mark. We are actually building a freeze premium into the market now, and could quite honestly see price pressure if the freeze doesn’t occur next week.
Temps once again overnight dodged the freeze bullet for the most part, with mostly temps in the mid to upper 30’s across the northeastern Corn Belt and Iowa this morning 9/16, with only isolated freezing temps in northern Wisconsin overnight. This follows a week last week and weekend where temps threatened to push into freeze territory all week, but for the most part the Corn Belt proper did not see many freezing temps.
But weather remains cooler than normal across the eastern Corn Belt, and will remain that way for the next 7 days and also in the 8-14 day forecast that is somewhat concerning to traders. The maturity of the crop is also somewhat behind normal so that an early frost across the eastern Corn Belt would do some damage. Corn is 4% harvested as of yesterday vs. 9% normally, with 82% dented vs. 85% normally and 27% mature vs. 39% normally. Corn would have the most damage to it from an early frost, and thus the strong performance in corn overnight. Soybeans are 24% dropping leaves vs. 32% normally, so soybeans are also slightly behind normal development (although both corn and soybeans are more advanced than last year). But temps last year were forecast above average as we entered the freeze time frame, and this year the eastern Corn Belt is forecast to have cooler than normal temps to end September.
Crop conditions were unchanged at 72% G/E soybeans and 74% G/E corn, but the Pro Ag yield models continued to rise with corn up 2.06 bu/acre to 177.5 bu, while soybeans rose 0.28 bu/acre to 48.14 bu/acre (corn lost the data year 1988 though in the models). Overall, in spite of isolated frost last week, the crop got bigger again! The most bearish of these numbers is soybeans, which are fast approaching a point where frost no longer will be a concern for yield loss. These current yield estimates are still significantly larger than the USDA report Thursday that hiked yields to 171.7 bu/acre corn and 46.6 bu/acre soybeans. Overall, we expect the Oct., Nov., and final Jan. report to also show hikes in yields as “large crops get bigger” as our Pro Ag yield models suggest they will. As long as crop sizes continue to go higher as they did again yesterday, prices will need to go lower to stimulate demand.
Other crops are developing more normally, with cotton 51% bolls opening vs. 49% normally, and 6% harvested vs. 7% normally (cotton conditions were unchanged for the week). Sorghum is 79% coloring vs. 75% normally, with 45% mature (vs. 37% normally) and 28% harvested (vs. 27% normally). Sorghum conditions are unchanged at 57% G/E (vs. 54% last year). Oats are 92% harvested vs. 99% normally, with barley 91% harvested vs. 90% normally. HRS wheat harvested is ‘catching up’ to normal with 74% harvested vs. 86% normally, and winter wheat is 12% planted vs. 11% normally. Pasture conditions improved 2% to 50% G/E, up considerably from last year’s 34% rated G/E.
We remain 100% hedged for multiple years as the trend is down and we are going to have record shattering, mammoth large yields of grains in 2014. Lets revise lower our objectives of expected lows to $8.40 soybeans and $3.05 corn for lows as frost is staying away this fall so far.