Grain prices were mixed over the past week. The yield and acreage debates continue. Weather will be a factor over the next 6 weeks at least as crops remain behind in development.

 

The Pro Farmer crop tour pegged the US average corn yield at 163.3 bushels per acre. USDA put it at 169.5 in their August 12 report. If the US has 85 million acres, that is a difference of 527 million bushels, a significant difference.

 

Soybean pod counts were significantly less than last year, and average, especially in the eastern grain belt, where conditions were more difficult. Even in Iowa, where crops look the best, there were fewer pods than usual.

 

In their latest crop ratings report, conditions did improve over the past week. Good/excellent corn improved 1 percent to 57 percent of the crop. Last year it was 68 percent at this time.

 

Soybeans improved 2 percent to 55 good/excellent. Last year it was 66 percent in the top two categories. On August 12, USDA put the soybean yield at 48.5 bu/ac versus 51.6 last year.

 

Most of the US Midwest will see below normal temperatures over the next 2 weeks. This is not what crops need right now. Corn that is denting is only at 27 percent compared to 59 last year and 46 percent on average.

 

79 percent of US soybeans are setting pods, A year ago it was 94, while the average is 91. The bottom line is that the main growing areas, including Ontario, will need to be frost free for at least the next 6 to 8 weeks.

 

The next USDA crop report will be released on September 12. Hopefully, it will clear up some of the large discrepancies that traders are trying to reconcile.

 

Then there’s the demand side. On August 23, China unexpectedly raised the tariffs on many US exports, including agricultural products. Surprisingly, Trump tweeted on the following Monday, that negotiations were on again. A day later China denied that.

 

Crop futures have given back most of the gains they made on the spring weather. Nearby corn futures topped at $4.64 in June, while soybeans hit $9.21 and wheat got to 5.58. Now we’re at 3.57, 8.46 and 4.74, respectively.

 

Livestock futures aren’t doing so well either. USDA said they have 11.1 million cattle on feed, the highest since they started that report in 1996. US live cattle futures are not far from their lowest price since 2010.

 

Nearby hog futures rallied to $.93 per pound in May after the African swine fever story hit. Prices are back to the $.63 area now, despite the huge decrease in pig numbers, especially in Asia.

 

The low prices in agriculture that exist today will present a major challenge to all farmers that operate in the free markets. The US is helping its farmers with huge subsidies. Even though we have an election in less than 2 months, politicians here seem oblivious to what’s going on.

Subscribe to this Blog Like on Facebook Tweet this! Share on LinkedIn