Cool Forecast for September and Market Headlines - Wednesday, 30 August 2017

Conflicting headlines and crop condition reports have the markets nervous. Better than expected crop ratings and estimated yields have been pressuring prices but headlines of another round of export sales for both corn and soybeans added some stability. Mexico has placed an order for new-crop corn for 2017-18 delivery.  Exports to Mexico have been a major concern with ongoing NAFTA renegotiations and renewed talk of a the U.S. building a “wall” between our nation’s but so far Mexico has not been deterred in their purchases of U.S. products.   It’s believed that the USDA is overestimating the demand for old-crop corn by 100 million bushels, these bushels as not likely to have much impact on our stocks but it will reduce the effect of a lower yield this season on the balance sheets causing prices to continue in a sideways pattern.

The trade is already debating the topic of expected acres of corn and soybean production in 2018.  Looking at market prices it’s evident that there is a higher return with soybeans vs corn at the present time.  This leads analysts to believe that the U.S. will likely see an even larger number of soybean acres next year than in 2017 providing profitability remains as it currently is. According to current figures it is reasonable to assume but also hard to believe that U.S. farmers would actually reduce their corn acres any further than they did this year.

We continue to hear about vast global corn reserves but some analysts are beginning to question the validity of these claims.  Farmers in the U.S. and South America hold the majority of their own bushels but in countries such as China and Ukraine little is actually known about their supply levels, because of this some analysts are beginning to doubt the data reporting these massive corn inventories in other parts of the world. The weather will continue to be a factor watched for crops in both the U.S. and in the Ukraine as dry conditions have been a factor in both countries and as these crops move into harvest the attention will again turn to South America

 

 

 

Hurricane Harvey has generated unprecedented amounts of rainfall which has prompted the National Weather Service to add new colors to rainfall maps.  Dark purple has been added to the chart to indicate areas of 20 to 30 inches of rainfall and light purple was chosen to represent rainfall in excess of 30 inches. Before Hurricane Harvey dark mauve which showed rainfall amounts of more than 15 inches was sufficient. Parts of Texas have received more than 30 inches of rainfall with some expected to get up to 50 inches by the time the storm leaves the state. According to Scientific American, “The record rainfall is thanks to an unusual situation.  Hurricanes usually suck water up from the ocean and release it over land. But Harvey has already dropped so much water in Texas that the flooded area is acting like a small ocean; the storm is “pulling that water back up into itself and dumping it again as more rain”.

The maps shown below breakdown the Farm Journal Crop Tour Results for both corn and soybean yields by state and by region within each state as well as the 3-year average in comparison to this year’s estimate.  According to the final results for the tour their national average yield for corn is forecast at 167.1 bushels per acre with a total crop of 13.953 billion bushels.  Their national average yield for beans is forecast to be 48.5 bushels per acre with total production of 4.331 billion bushels.

 

                 

 

                  

 

                 

 

Medium to long range forecast models are calling for colder weather into September and a dry pattern for the next two weeks and new European weather models are indicating a threat for possible frost to reach as far south as Iowa.  Kevin Van Trump of the Van Trump Report warns that, “these are very early forecasts, but they are signaling something very important that we need to be keeping our eye one.  The map below shows temperature anomalies expected in early September.  As you can see, we could be looking at 15 degrees cooler than normal weather in the Upper Midwest.”

Hurricane Harvey’s expected precipitation path is shown in the map below.  Areas through the nation’s mid-section are forecast to receive beneficial rainfall from the system. 

CROP PROGRESS

 

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