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Early corn yield reports have been good, but pretty variable. There are more than few concerns about a disease called diplodia, too. Some are beginning to piece these items together to make a case for USDA to lower its corn yield estimate. This isn’t very likely thinks University of Illinois Agricultural Economist Darrel Good.
“The fact is”, says Darrel Good, “if you look at the last 20 years of history, there is a strong tendency of the corn yield estimate to get higher in January compared to what it was in September. This has happened 70% of the time in the last 20 years, and almost 70% of the time in the last 40 years. So, those looking for a lower estimate are bucking history, but you can’t rule it out.”
Maybe not, but even if the USDA yield changes it won’t be by much thinks Darrel Good. Certainly not enough to really alter the supply/demand balance sheet changing it from a surplus to a tight supply situation. He doesn’t expect USDA to change the acreage numbers much either. This is because the difference between the Farm Service Agency reported acreage figures released in August and then again in September was very small.
This tells Darrel Good reporting has occurred in a very timely fashion. Therefore, he doesn’t look for an FSA increase in subsequent reports. Historically when the dust settles on corn, NASS acreage is three to three-and-a-half percent higher than FSA, says the U of I number cruncher, and about two percent higher on soybeans. This is right in the range where the FSA numbers set today.
Consequently, Darrel Good does not expect NASS to change its corn acreage estimate very much going forward. If this is the case, it leaves the U.S. with record corn yield and production figures.
Farmers in the United States are about to harvest one of their best corn crops ever and prices are low. They may need to hang on to the crop for while if they want a better offer, and that could take a shift to soybeans next spring.
The United States Department of Agriculture judges this year’s corn crop to be a record breaker. If it all comes in as predicted in USDA’s September reports there will be none bigger, and the market believes it so far. The price of corn has dropped about a dollar a bushel since earlier in the summer. This price isn’t likely to change much thinks Darrel Good until some new information comes along in one of the USDA reports, and that might not be until next spring.
As long as we have that kind of carryover prospects, the market sees no reason to push prices higher to reduce consumption.
- Darrel Good
The big response he’ll be looking for is in U.S. acreage next spring, says Good. The agricultural economist suggests the price of corn now, when compared to the price of soybeans, should result in some acreage shift from corn to soybeans next years. This could result in some relief on the supply side of the corn market.
This shift, if it comes, would be from farmers responding to market signals. Right now the price of soybeans compared to corn suggest farmers in the United States should seriously consider changing up next year’s crop mix, planting more soybeans. As for marketing this year’s corn crop, well, Darrel Good says it’s a waiting game for corn, and may very well be directly related to the acreage response.
There is some carry in the market. It is not huge. Prices remain fairly low. You’d say storage is a better option for corn, but you’ll have to store it at least through the first of the year, maybe into the spring of the year, before you could anticipate much of a rebound in spot prices.
- Darrel Good
Darrel Good writes about the commodity markets each Monday. The articles are posted to the FarmDocDaily website.
The rains falling across the Midwest are delaying harvest for the moment, but they may also bring with them a sales opportunity for farmers. That's because the amount of soybeans left in the nation is pretty small, and processors are in need. University of Illinois agricultural economist Darrel Good says, if farmers can get in and harvest, they might find some pretty good basis levels.
We are coming off a period in central Illinois when spot soybean prices were running well above November futures. Twenty to thirty cents above, but it has begun to erode. However, we are still looking at prices pretty close to option value. It says to me with big yields and that kind of price, well over $9.00, revenue looks pretty good by selling some soybeans at least, if not a majority of the soybeans right out of the field. -Darrel Good
The sooner the better and the higher the quick ship premium, although those are likely to disappear quickly thinks Darrel Good.
The National Agricultural Statistical Service (NASS) - an agency of the U.S. Department of Agriculture - released average county cash rents for 2016 the second week of September. These county rents are used to imply average rents for different expected corn yields in the state of Illinois.