MarketsFarm — Reduced corn yields and a lower amount of soybean pods compared to the last few years were two major findings by the Pro Farmer Midwest Crop Tour, which started on Tuesday and ends Friday.
In turn, prices for both crops on the Chicago Board of Trade (CBOT) have sharply risen over the past few days.
Four states were visited over the tour’s first two days: South Dakota, Nebraska, Indiana and Ohio. After those visits, average corn yields for both South Dakota and Nebraska were found to be much lower than the U.S. Department of Agriculture estimated in its supply/demand report released on Aug. 12.
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“The (average) corn yields for the four states reported implied production would be down roughly 471 million bushels from their estimate in August,” said Terry Reilly, grains analyst for Futures International in Chicago.
Compared to USDA’s figure of 175.4 bushels per acre, the average South Dakota corn yield was projected at 118.45 bu./ac. by the tour, below last year’s figure of 151.45 and the lowest yield since 2012. Nebraska’s average corn yield was projected at 158.5 bu./ac., down nearly 24 from last year.
The average number of soybean pods in a three-by-three foot square was counted at 871.4 (down 125 from last year) in South Dakota and 1,063.7 (down 162) in Nebraska.
The nearby December corn contract closed at $6.5525 per bushel on Tuesday, more than 43 cents higher than Aug. 17 close, before technical selling occurred on Wednesday (all figures US$). The November soybean contract closed at $14.61/bu. on Tuesday, 71 cents higher than its Aug. 17 close.
While the crop tour was the major factor for the rallies, according to Reilly, it wasn’t the only factor.
“You also have weather problems in China. The Yangtze River basin is still under several different heat warnings and you have drought concerns in Europe. One outfit said they may be experiencing their worst drought in 500 years,” he said, adding that Ukrainian grain plantings may be lower in 2023 than this year due to Russia’s invasion.
Reilly expects December corn to stay above $6/bu. over the next few days and could rise above the $7 mark. According to him, the November soybeans could trade between $14 and $15.50/bu., while December Chicago wheat might trade in a $7.60-$8.30/bu. range, he added.
“I think the general consensus is higher prices,” Reilly predicted. “If the crop tour’s final results come in next week below what people are looking for… the prices could eventually rally.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
