Favorable weather in the 6-10 day forecasts combined with better than expected yields are pressuring the markets. There are a lot of corn yields are running 200 – 240 bpa in Central and Southern IL. Producers are reporting yields 20+ bpa better than they expected. If these yields continue to be the case, we may be looking at the best prices of the year unless something dramatic happens on the demand side. Fall prices are currently in the $3.20-3.30 range. Spring prices are currently in the $3.50-3.60 range. This may be as good as it gets and producers should be actively locking in some of these levels before we get too far into harvest. Here are some interesting comments to support the better yields:
Last week the USDA increased U.S. corn yield to 169.9 bushels per acre from its August estimate of 169.5 bpa, and raised soybean yield to 49.9 bpa from last month’s 49.4 bpa.
Overall August weather – the period that most heavily influenced USDA’s recent adjustments – shows that temperatures and precipitation last month were actually supportive of a yield increase for both crops.
The precise yield is important to the soybean balance sheet as a 1-bpa yield change is worth about 89 million bushels – roughly 20 percent of the projected ending stocks for the current marketing year.
The impact on corn is more of a psychological one, especially if that number breaks the 170-bpa mark. About 84 million bushels of corn are at stake with a 1-bpa yield move, just 4 percent of USDA’s domestic carryout prediction for 2017/18.
The corn peg of 169.9 bpa is 2.7 percent lower than last year’s all-time best of 174.6 bpa. Larger year-on-year drops were observed in five of the last 15 years – 2002, 2005, 2010, 2011 and 2012 – and at least four of those years had significantly more trying weather conditions than this year.
It might be wise to mentally prepare for corn and soybean yields to hit 170 and 50 bpa, respectively, if the trend in USDA’s past adjustments is any indication. Six years in a row the final soybean yield that is published in January has been higher than USDA’s September estimate. Corn yields look to increase as well. Whenever September yield rebounded from an August number the final corn yield was actually higher than the September figure.
If you are interested in ACH, please completely fill out the attached form and return it to Didion. Some financial institutions charge for this service.(You will have to check with yours to see if there is a fee) If you have a lien on your grain, we will not be able to pay you via ACH. Click Here to view form.
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