Harvest is well started across the principal states in the U.S., and the government numbers released each Monday afternoon by the U.S. Department of Agriculture will soon be spooling up. Accept that the dryness that was nearly universal in the main Corn Belt this spring and summer pushed the maturity of the crop along. It remains to be seen how the dryness affected yields.
USDA thinks the change is relatively minor, but farmers may be exaggerating the damage to crops. This idea is based on a cynical principle of farming: Nothing is ever any worse than a discouraged farmer thinks it is.
Contrary to that thought is the rule of life my father based his farming on. He said, “There are three types of people in this world — pessimists, realists and optimists. No pessimists farm, and very few realists do!”
Big picture. With harvest at hand, we need to look at some big-picture ideas. First, take a look at the government’s weekly crop condition report. If you do not get this passed to you in a digested form from some advisor, go to your web browser, and search for usda.library.cornell.edu/catalog, and then type in the box “crop progress.” A plethora of information is revealed, but don’t blindly hit print or you will discover how many crops USDA follows.
Today’s crop progress shows us the percentage harvested and condition ratings for corn and soybeans, and there are few surprises. First, it will come as no surprise to those of you who remember early weather that Ohio’s corn and soybean condition ratings are among the best in the country.
Seventy-two percent of our corn is rated good or excellent, mostly due to timely rains and sunshine in June. This compares to 62% for Illinois, 63% for Indiana and 50% for Iowa. Without some late rains for the ‘I’ states, their ratings would be worse.
Scroll down on your Cornell search, and you will find the soybeans harvested page. It is no surprise to you that Ohio has only 5% of the crop off, compared to 7%, 9% and 10% for the ‘I’ states. We are seeing rain forecasted for much of the Midwest, so it remains to be seen how much ground gets uncovered this coming week.
Lower trends. The next big picture comes from a study of the corn and bean charts. Just a casual look tells us that we don’t like the prices, which have generally been lower for several months. Yes, we had exciting days of trading that gave us an excuse to not sell, but the trend has been lower, so much so that we made a new low on December corn futures last week. We are no longer wondering if we can get back to a bean price that starts with $14 and are seeing prices that start with $12.
In June, we had a high for December corn futures of $6.29 3/4. We were down as low as $4.69 on Sept. 11. That’s a drop of $1.60 3/4 in three months — three months where most producers were stuck in the “wishful thinking” mode. That is where you rationalize that there are reasons for prices to recover to the level where you didn’t sell anything, but wish you did.
There was a blip in the market last week when it was announced that our largest trading partner for corn, Mexico, bought 65.4 million bushels, mostly old crop. The blip didn’t last long, maybe because traders remembered that this sale was just helping us catch up a little toward the export estimate that USDA has used for the year and that we are not reaching.
Then, there is the mess that is the November soybean chart. The board traded the November contract at $11.30 1/2 on May 31. I am guessing that is just about where traders started speculating about the coming Crop Production Report that ended up telling us that we planted several million acres more corn than expected, leaving us with that much less soybeans.
Indeed, soybeans rallied until they hit a high of $14.35 on July 24. Now, the traders were worried about too few soybean acres and a potentially dry August to hurt the condition of the acres that were planted.
The thing is, in two weeks we gave up on that idea and traded a low of $12.82 1/4. It seemed impossible that we could get that cheap, and in three weeks we rallied back to $14.09 1/2, almost at the high. That would feel pretty good if we had stayed there. In fact, as this was being written on Sept. 25, we traded down to $12.92 1/2 again.
All of this is a lesson in seasonality. In the years we grow a good crop, even though we have some excitement here and there, we normally see the high for corn in late June and the high for beans either in late June or, in a dry year, in late August.
Conclusions. There are some conclusions to be made here. First, the harvest so far has just started and we cannot conclude how the crops are going to be. We will know a lot more in a few days. Second, last week, new crop corn made a new low and soybeans were off 44 cents. Third, December Chicago wheat futures were off 25 cents last week, giving us a new low just like the corn.
There are other factors to influence markets right now. It matters that the South Americans have their soybeans off and no one needs ours in the export markets.
It matters that the Mississippi River is near record low for the second year in a row and that affects barge traffic enormously. The rain that is forecast for the Midwest will soak into dry ground before it gets to the river unless the rain comes very fast.
Low levels on the Big Muddy yield fascinating pictures of tows following serpentine paths in the river to avoid grounding. They are also being pushed down the river (they still call them tows) loaded less than capacity because the river is shallow.
The river will get water this week in all likelihood, but that has the river rats talking about the problems that come with a surge of water that is too fast for the barges to navigate efficiently.
