Crop maturing, yield potential high

Farm Forum

09/23/14 — Crops are slowly maturing, with another warm extended fall across most of the Corn Belt that is allowing crops to get closer to maturity. That is occurring while crops are continuing to be highly rated, with yield models still well above current USDA estimates.

Weather remains nearly ideal, with above normal temps forecast the next 2 weeks along with little precip that are perfect to mature the crop and start harvest. The next 7 days especially will feature dry and warm weather, and thereafter the temps will cool seasonally and precip amounts will become closer to normal in the central Corn Belt and above normal in the eastern Corn Belt. There is no frost forecast for the next 7 days in the Corn Belt, but thereafter temps will cool in the west such that some frost threats will occur after October 1. But crops may reach into maturity by then, or close enough that frost will not have much influence on prices.

Weekly crop progress yesterday showed soybeans were 45% dropping leaves, just slightly behind the average of 53% dropping leaves. 3% of soybeans have been harvested vs. 8% normally at this time, with crop conditions dropping 1% to 71% G/E (a surprise drop), with the Pro Ag yield models also dropping .6 bu/acre to 47.5 bu/acre, a fairly significant drop that is supporting soybean prices overnight (but we lost the 1988 data year in the model).

Corn is 90% dented vs. 92% normally, with 42% mature vs. 54% normally at this time. 7% of the corn is harvested vs. 15% normally, with corn conditions steady at 74% G/E vs. only 55% last year at this time. The corn yield model rose a small 0.5 bu/acre to 178 bu/acre this week. The current USDA estimate of 171.7 corn and 46.6 soybeans are still both well above the current yield models, so it likely crop sizes will get even larger in future reports. Crops will get even larger if there is no frost on the horizon for another 2 weeks or more. As harvest has begun in corn, yields are coming in for the south at these levels or higher, and we are starting to harvest into the main part of the Corn Belt (Ill. and Mo.).

Other crops are still developing nicely, with cotton 8% harvested vs. 9% normally, and conditions at 48% G/E, down 1% from last week but above year ago levels at 44%. Sorghum is 87% coloring vs. 83% normally, and 51% mature vs. 44% normally, with 30% harvested vs. 29% normally. Sorghum conditions remain high at 57% G/E, unchanged from last week and vs. 54% last year. Sugarbeets are 10% harvested vs. 8% normally, with rice 46% harvested vs. 53% normally with rice ratings 74% G/E, unchanged from last week and vs. 71% G/E last year. Oats are 96% harvested vs. 100% last year and average, and barley is 95% harvested, equal to normal. HRS wheat is 86% harvested, still catching up to normal at 92%. Winter wheat is 25% planted vs. 22% normally, so we are slightly ahead of schedule here. Pasture conditions continue to improve with 51% rated G/E, up 1% from last week and vs. only 34% rated G/E last year.

Overall, we expect the Oct., Nov., and final Jan. report to also show hikes in corn and soybean yields as “large crops get bigger” as our Pro Ag yield models suggest they will. As long as crop sizes continue to go higher, prices will need to go lower to stimulate demand. 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. Our targets for removing hedges remains $8.40 soybeans and $3.05 corn. We have quickly hit the support levels of $3.35 corn and $9.40 soybeans, and actually fell through them yesterday. It’s likely we’ll get at least a small bounce from here, but look for the downtrend to resume after a small recovery.