The maize yields, the beans rise; uncertain markets

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With the grain harvest fast approaching, the United States Department of Agriculture and private companies involved in the grain trade are trying to determine what kind of yields and overall harvests farmers will bring. These average yields and harvested acres will all be… important in influencing the market price of corn and soybeans.

Throughout the growing season, the USDA collects weekly crop status information from farmers in the 18 states where the majority of US corn is grown. Grain marketing experts – in private companies and public universities – have looked at this data and tried to use it to estimate what the final grain yields will be at harvest.

These final grain yields and average production figures will help determine how much grain will be available for sale in the market, for livestock feed and for ethanol production, as well as how much can be carried forward. These two factors have a significant impact on the price. At the beginning of the growing season, markets are affected by factors such as late planting or failure to plant due to too much rain.

Later in the season, cereal markets are affected by rain or lack thereof in the main cereal-growing regions of the country. This year more than ever, the markets have also been affected by geopolitical factors, in particular the war in Ukraine, a country which is an important producing region of grains and oilseeds. It is also a major shipping point for grain from its own territory and neighboring regions of Russia where the grain is produced.

The 18 corn-growing states where data is collected are where farmers planted 92% of the corn last year. Gregg Ibendahl, an agricultural economist at the University of Illinois, published a report on farmdoc.daily explaining how several models have been used and verified over the past 30 years to use weekly crop condition reports from the farm. USDA to estimate the potential yields of these crops.

The report showed Wisconsin had expected corn yields of 181.3 bushels per acre — slightly ahead of the actual 180 bushels per acre from last year’s actual crop. Illinois, with 202 bushels per acre, and Iowa, with 205 bushels per acre, were the two highest estimates in the report.

The analysis also showed that corn is likely to be harvested (in those 18 states) on 75.658 million acres – based on weekly crop condition reports. This would represent a decrease of approximately 4.9% compared to last year. The report estimated that Wisconsin would have 2.976 million acres of corn harvested.

Multiplying the estimated acreage of corn harvested for those states by the estimated yield per acre, the economist got a total of 14.261 billion bushels, with a range of 13.6 to 14.8 billion bushels. The report noted that early growing season estimates generally tend to overestimate yields and that appears to have been true this summer.

Ibendahl noted that this model’s 30-year history has been fairly close to reality, although it tends to overestimate returns in a very bad year – this was true in 2012, when much of the corn belt has experienced a severe drought.

Private sources working on their estimates included Pro Farmer which in late August estimated the US corn crop to be 15.116 billion bushels with an average yield of 177 bushels per acre. They also predicted the US soybean crop to be 4.436 billion bushels with an average yield of 51.2 bushels per acre.

Their expected yield and eventual harvest totals are a bit higher than those from the USDA. The agency estimated corn would yield 174.6 bushels per acre as the national average with a total of 14.4 billion bushels harvested.

Revealing Crop Tour

A crop tour, during which market analysts visited agricultural fields in various regions – from Ohio to Nebraska – was part of Pro Farmer’s analysis, along with other factors such as crop maturity crops, acreage adjustments, crop tour data comparisons to final USDA yields and outside areas. those sampled during the tour.

Pro Farmer analysts said they believe Iowa’s corn yield will be around 198 bushels per acre, with bad acres holding up the good acres they saw on the tour. They predicted that Illinois would see “pockets of excellence” with the state’s yield that could end up at 212 bushels per acre – just a few ticks below the USDA state estimate of 214 bushels per acre.

They set Nebraska at 190 bushels per acre and Indiana at 200 bushels per acre.

In their soybean yield estimates for the major producing states, they had Iowa at 57 bushels per acre, Illinois at 66 bushels per acre, Nebraska at 58 bushels per acre, Minnesota at 46 bushels per acre and the ‘Indiana at 62 bushels per acre.

In its grain forecast released Aug. 12, the USDA forecast corn production to be down 5% from 2021 — to 14.4 billion bushels — and soybean production to rise 2% from 2021. last year to reach 4.53 billion bushels.

That was based on corn yields per acre expected to be down 1.6 bushels from last year, with soybean crops expected to be half a bushel per acre higher than 2021. The USDA said based its production and yield estimates on interviews it conducted with 15,350 growers across the country.

The agency’s National Agricultural Statistics Survey is gearing up to conduct its September survey during the first weeks of the month.

Bean price down

On Friday, September 2, December hard red winter wheat futures fell 4¼ cents to $8.77 a bushel and December corn prices rose 1½ cents to $6.65 a bushel. . November soybean futures fell 40¾ cents to close at $14.20½, in part on news that U.S. farmers may be bracing for a much larger bean harvest.

Explaining some of what analysts saw on the Crop Tour, Zaner Ag Hedge market analyst Ted Seifried said that in the eight years he’s been on this tour, he’s pretty much seen this at what he expected.

“But this year was different. I had an idea in my head and I think we all did it,” he said on Iowa Public’s ‘Market to Market’ show. Television. “It was very different from what we expected. It was quite shocking – really eye-opening. In years past, we’ve said corn is bulletproof. But this year, the answer is no.

There is real concern about the overall corn harvest this fall among those analysts, he said, attributing the corn yield losses to the double whammy of heat and drought.

Even irrigated maize fields were not always good, he said. Where they should have shown yields of 212 bushels per acre, they were at 168 bushels during the tour. “We really have problems here. The heat has always been a problem,” he added. “Maize is really much worse than expected. Beans are not good, but not as bad as corn.

With expectations falling for corn and expectations rising for beans, the market took “big shocks in opposite directions,” he said. “The Crop Tour reduced the corn yield quite aggressively and increased the soybean estimate at the same time. It’s not something you see very often.

The rise in soybean yield was particularly unexpected. “Nobody thought it was possible on an August report. Only 1 in 16 analysts saw that estimate increase from an earlier forecast of 51.5 bushels per acre,” he added.

We still don’t know what’s going on with exports. Seifried said if exports are reduced, lower corn yields will be less of a shock to the market. The fact that China, one of our biggest grain buyers, has its own heat and drought issues is another wild card in the market.

Strong dollar, effects of inflation

Other factors affecting grain markets are the strong dollar associated with inflation, exports and expected South American harvests. Jeff French, with Aghedgers.com, noted that the US dollar is now at its highest level in 20 years. “The last time we saw the dollar at these levels, commodities weren’t at these prices,” he said.

In his analysis, inflation has a lot to do with it – “there is a lot of outside money that wants to buy commodities to increase it in case this inflation continues. As the dollar rises and stays high, this will definitely have a negative effect, especially in the export market,” he said in a “Market to Market” interview on Sept. 2.

The strength of the dollar could have something to do with the fact that there have been no export sales for several weeks.

French noted that there has been a sharp rise in prices on the corn supply side, with private analysts – two in the past week – forecasting a smaller corn crop. Now, without any USDA export reports, “we don’t see where the demand is and that brings an element of uncertainty — and markets don’t like uncertainty,” French said.

In general, corn prices in September are lower as harvest approaches, but corn prices are currently $1.50 a bushel higher than the average price for this time of year over the past five years, French said.

Soybean prices were lower on higher yield forecasts last week and word that Brazilian farmers are expected to plant 104 million acres of beans this winter.

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