This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets have been trading in narrow ranges on very low volume waiting for USDA’s latest supply and demand update coming out today, Tuesday Sept 12th at noon. We have been watching all the private estimates released over the last few weeks and those are all over the board. Some have been much lower than USDA’s August estimates of 175.1 bushels per acre on corn and 50.9 bu/acre on beans and some have been very close to that. The range of expectations for USDA’s estimates is also very wide ranging from 175 to 171 on corn yield and from 51 to 49 bushels on yield. Carryout estimates range from 1.83 to 2.34 billion bushels on corn and 170 to 270 million bushels on beans. On the low side of the corn estimate at 1.83 billion bushels is still a decent cushion and the upside at almost 2.4 billion would be fairly burdensome ending stocks. For beans, 170 million bushel carryout is running out of beans and 270 is still very tight.
The growing season started off very dry but not too hot for much of the Midwest. Then the spigot turned on for much of the growing regions for pollination in july and a little into august. Then August finished the growing season very hot and dry. The Profarmer crop tour showed the crop is not as good as it looks from the road. USDA will be including their own field measurements in this report, not just satellite and survey data used in the last estimate. But the big question is how aggressive they will be cutting yield and harvested acreage. They are also going to be making adjustments to planted acreage based on updated FSA data. The market is looking for corn acreage to be revised higher but that might come off of planted acreage due to chopping and abandonment from the drought. And this is just the questions that have to be answered on the supply side, there are also could be changes to the demand side. The only thing we know for certain is that there will be a lot of debate and discussion and questioning of the numbers no matter what they are but those are the numbers we will be using until we get more harvest data and another update from USDA in october. This unique growing season means we will probably be debating this yield for the next year.
All the uncertainty we have in production probably limits the downside in the markets unless USDA really throws us a curveball. Seasonally corn puts in a harvest low very soon and rallies. Let’s hope it is already behind us. Soybeans are more complicated since so much is grown in the southern hemisphere. They will begin planting soon but the US is going to have razor thin carryouts. If they have a good start to the growing season the market will turn focus to that and may see some weakness despite tight US carryout. If we have a serious threat to South American production though, the market is going to react very quickly.
Crop conditions will not be as closely followed any more as the growing season comes to an end, but corn and soybeans both dropped a point in the good/excellent categories and are now both 52% good/excellent. This compares to last year’s numbers of 53% good/excellent on corn and 56% on beans. Corn was 5% harvested this week which is right inline with the five year average.