Harvest advances, prices rise

Farm Forum

10/21/14 — As harvest is advancing on this record large corn and soybean yielding crop, prices are actually rising as South American weather is not conducive to getting the crop planted up to this point.

Corn harvest is now 31% harvested, advancing 7% last week but still well behind normal development which is 53% harvested. The slow harvest seems to be the result of a slow developing crop that farmers are waiting to dry in the field. With nice weather across most of the Corn Belt this coming week (warm and dry), that drying process should accelerate and allow harvest to pick up as well. Soybean harvest advanced 13% last week to 53% complete, still behind the average pace of 66% complete for this time of year. Soybean harvest should accelerate this week as well with excellent warm/dry harvest weather forecast the coming week. But for now, we remain slightly behind normal development in soybeans.

Soybeans dropping leaves has advanced to 95%, just slightly behind the average of 97% so that it appears that most soybeans have reached maturity without any damaging frost across the Corn Belt (other than northern areas during mid-September). Soybean crop conditions remain very high at 73% rated G/E, unchanged for the third week in a row. They still are the highest rated soybean crop since 1994!

Corn development is similar to soybeans, with 93% now mature vs. 94% normal, and indicating that most corn was allowed to reach maturity as well in spite of late development. Fortunately, October has been a warm month with little additional threat of frost (other than northern areas that were no longer at risk after some mid-September frost events). Overall, this crop was allowed to reach maturity for the most part in the Corn Belt, and that means the high yield potential of this crop did materialize. Now the problem is getting the record large yields out of the field during harvest the rest of October and November. Weather so far is cooperative, with warm and dry weather across the western Corn Belt allowing drying of crops in the fields. Corn conditions also remain highly rated at 74% G/E, unchanged as well during the last 3 weeks. That leaves corn the highest rated crop since 1974 as well.

Other crops are also developing well, with sorghum at 85% mature vs. 83% normally this time of year, and 48% harvested vs. 51% normally at this time. Sorghum conditions also are unchanged at 57% rated G/E, also unchanged this week. Sugarbeets are 79% harvested nationally vs. 64% normally, as the harvest has gone about perfect in the northwest (N.D. and Minn.), which are virtually complete with sugar beet harvest for one of the cleanest harvests ever. Sunflowers are 11% harvested, advancing 6% last week but still well behind the 30% normally harvested this time of year. Winter wheat is 76% planted vs. 77% normally (advancing 8% last week), with 56% emerged vs. 50% normally at this time. So winter wheat planting and germination is going well.

South American weather (specifically, Brazil) has received the attention of the market recently as spring rains are arriving late, keeping planting progress well behind normal in the northern Brazil region. That may change this week, though, as cooler and wetter weather is forecast for northern and central Brazil. Support for grains has emerged with this crop problem beginning in Brazil, and much of the next few weeks price direction will be determined by how things develop in Brazil going forward.

As we’ve said before, we expect the Nov. and final Jan. report to show hikes in corn and soybean yields as “large crops get bigger” as our Pro Ag yield models and harvest yields suggest they will. As long as crop sizes continue to go higher and Brazil rain arrives, 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.