Millions of Bushels of Unharvested Corn and Soybeans in the Path of Winter Storm - Friday, 18 November 2016

The U.S. Dollar has managed to reach a 13 year high.  Unfortunately this increase in value for our Dollar makes our U.S. exports more expensive for buyers and in turn limits potential interest in U.S. goods and products.                                   

In the U.S. harvest is winding down for producers while planting is getting into full swing in Brazil and Argentina.  The U.S. is estimated to have grown an average corn yield this season of 175.3 bushels per acre which is not great news for prices.  Exports to Mexico have been higher than expected but some in the trade believe it may have been their strategy to purchase additional bushels prior to the inauguration of the new President as a safeguard until relations between the nations becomes more evident in the months to follow. Because of this the trade does not anticipate the robust level of exports to Mexico to continue much longer. In addition Brazil has begun to bump up their production estimates for this upcoming crop and Argentina producers are expected to substantially increase their acres of production this season, provided the excessive rainfall they have been receiving subsides quickly enough. Now add to all of this negativity the fact that the USDA raised their production estimates for Ukraine and Russia and you can see the strong argument the bears have to push prices down. 

Thankfully the bulls have strong arguments as well which is helping to neutralize the many negative factors influencing the markets.  They strongly believe that the USDA has over-estimated the 2016 average corn yield and also look for producers in the U.S. to reduce 2017 corn acres by -4 to -5 million acres. They also point out that the crop in South America may have many weather issues over the next several months as the La Niña weather pattern develops and continues to strengthen.

In the last 2 weeks the U.S. has seen the cancellation of 28.4 million bushels of soybeans which has greatly affected sales totals.  The canceled orders are causing concerns that we may have already seen our largest soybean export forecast of the marketing year as buyers are now focusing more of their attention on soybeans from South America. There were also some concerns expressed prior to the presidential election regarding the possible implementation of tariffs of 45% on Chinese imports to the U.S.  Traders were concerned that such an action would likely be met by an embargo of U.S. goods by China and erase the demand of nearly 1 billion bushels of U.S. soybeans. Trump has since softened his stance on trade with China, producers need to hope this topic does not become a trade issue again in the future!

The calendar may say November 18th but harvest is not completed in all areas of the country.  The winter storm that is headed to the Midwest is likely to impact some of those areas.  According to estimates from the beginning of the week there were still over 1 Billion bushels of unharvested corn and 130 million bushels of unharvested soybeans still in the field,  of that 150 million bushels of corn and 6.5 million bushels of soybeans are in the current winter storms path.  The map provided below gives more specific numbers by state.

 

The southern movement of the jet-stream has occurred and as a result our weather conditions are changing.  Snowfall data for the first two week of November was compared recently by NOAA.  The data showed that in the last 14 years of data, the Lower 48 have never seen less snowfall than this year. A lack of snowfall for some areas is not unusual for this period in time but some portions of the country are already starting to add up large snowfall deficits.

The two maps below put into perspective the enormous temperature transition predicted in only two days (yesterday’s temps are found in the top map, tomorrow’s forecasted temps are shown in the 2nd map)!!

 

The Climate Prediction Center has announced that the 3 month outlook now confirms a La Niña pattern will be in control of our weather for December through February.  According to historical data, La Niña onset winters tend to bring with them distinct precipitation trends.  As the map below indicate most of the southern portion of the U.S. will be drier than normal while the Midwest and central states should see mostly near normal precipitation.   

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