Soybean Acreage Estimate for 2017 & Falling Farm Incomes - Wednesday, 31 August 2016

I read an article by Darin Newsom in The Progressive Farmer this week titled, “September Mourn” which in my opinion could easily be expanded further to “Summer Mourn” or “Year of Mourning”...  Darin Newsom, a senior analyst with DTN, wrote of the similarities between our last growing season and this one such as the early arrival to summer weather and the weather driven corn rally that was followed by an abrupt collapse in prices across the entire grain complex.  The one variance between this year and last is the overall negative mood amongst producers this year as they face the possibility of yet another year of low profitability. (The USDA has a newly released report that indicates that farm sector profitability is expected to fall to the lowest level in 7 years.  A pay cut of 11.5% is forecasted for producers this year caused in part to a drop of 15% in corn prices and 20% in wheat prices.) Newsom stated in his article, “As for corn, we may be roughly six months from the market finally breaking out of its bearish rut. There’s a good chance the U.S. Federal Reserve won’t raise interest rates this month, putting pressure on U.S. dollar index and raising interest in U.S. supplies on the export market.  Factor in Brazil’s extremely tight supplies, and U.S. exports could get back to where they were prior to the three-year drought from 2010 through 2012.  Lastly, as DTN Senior Ag Meteorologist Bryce Anderson has been saying since this past February, the much discussed La Niña could come into play in the spring and summer of 2017.”

This week the USDA again remained firm in their assessment of U.S. crop conditions.  The Good to Excellent rating of 75% for corn was unchanged from a week earlier while soybeans were found to have improved from 72% to 73% Good to Excellent from their rating one week ago.  The bearish yield outlooks and large supplies still on hand from a year ago continue to weigh on market prices, in fact it was reported yesterday that end-users in parts of the Dakota’s were able to purchase cash corn for $1.90-$1.95 per bushel!! According to Darin Newsom new-crop corn futures for December tend to trend lower from now through the early portion of October when seasonal lows are usually found.  The drop in corn value from late August to the early October low is typically near -8%, if that occurs again this year that would mean the market long-term low of $3.18 from October 2014 could be revisited. He also stated that soybeans generally lose about -11% of their value on the new-crop November contract during the month of September but with the -18% decrease in soybean prices from June it is possible buying interest may be found near $9.30 this season.

Harvest progress has been hampered by heavy rains but current reports for corn harvest show: Georgia 72% complete, South Carolina 70%, Louisiana 59%, Texas 56%, Mississippi 30%, Arkansas 22% and just getting started is Tennessee with 2% completed. Soybean harvest is also getting underway, Texas is estimated to have 17% complete, Louisiana 7%, Mississippi 5% and Arkansas 1%.

 

Farm Futures predicts, based on their first survey for the upcoming season that the U.S. producers plan to increase soybean acreage in 2017 to an all-time high.  Increased demand is expected to push soybean acres to 84.4 million acres next year, up from 83.7 million this year, while corn acres are predicted to decrease by 1 million acres to 93.1 million acres in 2017. 

Today is the last day of summer according to the meteorologist calendar but a map developed by Brian Brettschneider an Alaskan climatologist indicates that many parts of the U.S. may need to wait longer than normal for fall to arrive.  This adjustment, he believes, is due to a delay in the “peak of summer” in some regions of the country.  According to Brettschneider this is caused by changes in sea surface temps, ocean currents in the Gulf of Mexico or excessive cloud cover earlier in the summer.  The map below indicates the adjusted schedule for the arrival of fall as it compares to normal.  Notice that we in the Midwest are a few of the lucky ones than can expect an earlier than normal arrival to fall. sad

 

The map below shows the forecasted rainfall for the U.S. from August 30th-September 4th

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