This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Corn continues to find strength and work its way slowly higher. Most traders feel the crop size is going to come down from USDA’s lofty 188.8 bushel yield estimate on the August report. Since that report, field tours and lots of analysts have been reporting disease pressure and some pollination issues. Southern rust and tar spot are the main diseases being cited, and they are causing plants to prematurely shut down. USDA’s August estimate was based primarily on farmer surveys and supplemented with the NDVI scores and condition ratings. Pollination issues will not show up on satellite data, and some of the disease pressure had not shown up yet when those readings and surveys were taken. Of all the private estimates we have seen of yield, the ones that are heavily survey-based seem to run higher than the ones based on crop tours. The crop tours seem to be weighting the production issues more than the ones that are strictly survey- and satellite data-based. My takeaway from the tours we have seen is that the eastern Corn Belt is going to be much lower than USDA’s estimates. They are the only region of the Corn Belt that suffered from lack of water this summer and faced the highest nighttime temps during the heat wave. Nebraska and Kansas are probably going to blow their old records out of the water. Initially, many were thinking that the higher yields in the West could offset the lower ones in the East, but there is now more talk of issues in Iowa and Illinois. That would be too much for Nebraska and Kansas to overcome and would really weigh on national yield.
For soybeans, the farm tours have found very solid pod counts across most of the Midwest. If Illinois and Iowa pull the average up instead of down, the western belt may be able to pull up the average and offset the lower yields in the East. It is August weather that makes yield in beans, and the late August weather has been a mixed bag. The rain finally shut off across most of the Midwest. Western soils that were well-watered fared better than the East, where they did not have the subsoil moisture reserves. It is hard to believe we are already having issues with navigation in the Mississippi River because the water levels are too low after such a wet spring and summer. We also went from excessively hot to near record cool. Eric Snodgrass said it was one of the coldest finishes to August since records began in 1893. There was concern about frost this week in parts of the upper Midwest. Temps on Thursday morning fell into the 40s but did not get low enough to result in widespread frost or freezes, aside from far northern areas and some low-lying spots.
The bean market has struggled this week. We have been pushed to lows not seen since early August. Lack of China in the U.S. market, and beans do not have the headlines of production issues. Some analysts believe we could see an increase in USDA’s bean yield on subsequent reports. China still seems to be gearing up to try to avoid buying any U.S. soybeans until a trade deal is reached, and we do not seem closer to that. They have been building stocks in state reserves for years now, possibly in preparation for this showdown. There are rumors of them releasing those state reserves to help domestic users make it until the next South American crop is harvested. If China buys U.S. beans, we will tighten up the balance sheet. If they manage to make it until South American harvest without buying any, we are going to have too many.