Crop Observers Descend On Midwest

8-26-16 – This week, hordes of crop analysts, observers and hangers-on have swept through Midwestern corn and soybean fields in their annual attempt to gauge the progress of the crops first-hand.  What they have found is just what the USDA has said was there all along – good crops that are ready to produce bumper yields.

Chief among these “crop tours” is the Pro Farmer Midwest Crop Tour.  It is perhaps the largest, and most widely known of the bunch as its methods of assessing the crops have proven to be some of the more scientific and accurate.

That accuracy could be the result of its fame and number of participants as much as its methods, sort of a mutual-aid that provides more data, and therefore better results, than other crop tours.  This brings in more participants, which brings better results…  And on it goes.

Because of its scale and the amount of data produced, the Pro Farmer tour can, and does, move markets.  But there are things like weather conditions between July and harvest that cannot be measured, so the market is left to figure these things out for itself.

 

CORN PROGRESS AHEAD OF NORMAL

 

The USDA’s National Agricultural Statistics Service’s weekly report on crop progress and conditions listed the corn crop’s progress ahead of the five-year average.  Eighty-five percent of the crop had reached the dough stage of development, compared with the 2011-2015 average of 76%, and 40% had begun to dent, compared with the average of 35%.

The overall crop condition was rated by NASS at 75% good to excellent, compared with 74% the previous week and 66% in the same week a year earlier.

The Pro Farmer crop tour Thursday estimated corn yields in Iowa at 188.17 bushels an acre, up from 180.25 bushels last year and the three-year crop tour average of 176.98 bushels.  This is behind the latest USDA forecast of 197 bushels.

The final estimate of the US corn crop is scheduled for today.

While crops have received adequate moisture this year, temperatures in many areas have been high, and this may account for corn’s ahead-of-schedule development and a Pro Farmer yield estimate that is below the USDA number.

Corn matures based on a combination of calendar days from sprouting to maturity and the temperature in between.  Moisture requirements also must be met.

The crop this year has seen adequate moisture but sometimes excessive heat and may be reaching maturity too fast, robbing the plant of its ability to meet its genetic yield potential.

 

CORN PRODUCTION POTENTIAL STILL VERY GOOD

 

But whatever amount of corn the US produces this year, it is evident from the Pro Farmer crop tour and others that the crop this year still will be very good, even if it doesn’t meet USDA estimates of a record 15.146 billion bushels.

Cattle feeders should have little trouble finding corn for feed.

Going forward, though, feeders will be watching the first yield results for hints about the 2016 crop size and its effect on feed prices.

 

CASH CATTLE MARKETS QUIET

 

Cash cattle markets Thursday were quiet after trading $3 per cwt lower Wednesday in a range of $114.50 to $115.50 with most at $115.  On a dressed basis, cattle traded lightly at $179 in Nebraska after trading at $181 to $183, down $3 to $4, Wednesday.

The USDA’s choice cutout Thursday was $0.04 per cwt higher at $200.36, while select was up $0.42 at $194.15.  The choice/select spread narrowed to $6.21 from $6.59 with 79 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Wednesday was $147.29 per cwt, down $0.44.  This compares with the Aug settlement Thursday of $146.72, up $0.07.

 

IN OUR OPINION

 

–The trend in live cattle futures remains bearish as cash markets cool.  Only the market’s deeply oversold technical condition has the ability to support prices.

–Not to be outdone, feeder cattle markets are weak as more calves come to auction houses from pastures that are giving out seasonally.

–Technology is getting better about predicting calf performance before breeding.  The latest is Biometric Open Language Tools, software that improves prediction accuracy using genomic data in the Expected Progeny Differences calculations.  By allowing DNA data to be used in the initial calculations of expected results rather than inserting them later, producers are able to make better breeding predictions to achieve the desired results.  Such technology will become increasingly popular as producers try to hit production and pricing windows with their calves.