Yield reports from parts of the Midwest are starting to trickle in. Lots of good reports out of Illinois, variable reports from Iowa, Indiana, and Missouri. We have once again put in new marketing year lows in the recent trading days, corn and beans both dipping slightly lower than we were mid-July.
The USDA released the September WASDE report on 9/12. Much to everyone’s surprise, the USDA bumped up corn yields 2.9 bpa, to a record 181.3 national yield. Much of this increase come from the “I” states (Illinois, Indiana, Iowa). We now wait for the October report to see if they bring that number back down or keep it at a 180+. The yield for soybeans on the report was less of a shocker, coming in at 52.8 bpa. Much of trade was expecting to see 53 or higher from the USDA.
I ran across some interesting information from the USDA regarding the methodology behind how they calculated the government payments due to the trade war. Below is an excerpt from the report released by the USDA detailing an example of how the corn payment amount was calculated. I would venture to guess the soybean payment could be calculated in the same manner.
MFP example 2: Corn
Step 1: In 2017, China and EU combined imported $309 million of corn from the United States.
Step 2: With additional 25% tariff from both countries, the combined imports from the United States is estimated to be $117 million.
Step 3: Estimated gross trade damage = $117 million - $309 million = -$192 million
Initial MFP rate = $192 million/14.6 billion bushels = $0.01/bu.
As I reflect on how the tariffs have affected the market and now is going to affect our decisions we make after harvest for next year’s crop, we are hearing of quite a few more acres going to be planted to corn next year. Yes, this does make the most sense in today’s market environment, and who doesn’t like to raise some great yielding corn?! But I would encourage you to look hard at a Dec 19 corn sale at or above $4.00 futures, if we get back to those levels. Another 5 to 7 million more acres of corn next year will leave us with another huge carryout if we see average or above average yields again next year.
Our fall policies are posted for this crop year, please be sure to look at those prior to delivering this fall and give us a call if you have any questions.
On behalf of everyone in the grain department, we wish you all a safe harvest and look forward to serving you at our facilities this fall!View News