ProFarmer Midwest Crop Tour shapes market perspective
The annual tour put on by ProFarmer sends scouts all over the Corn Belt. The objective is to gather samples all over the top producing corn and soybean states to give a "boots on the ground" look at these crops and provide a yield outlook for the fall.
Over the years, the tour has grown to include not only farmers, but the media, industry analysts, traders and more. And the interest has grown with more and more scouts posting results on Twitter. In earlier years, the major news was the evening reports that held the day's state corn yield and soybean pod count estimates (which is still news). But now, the flood of information, up-to-the-minute pictures, and immediate analysis of the market allow the crop scouts to showcase the U.S. crops to a huge audience thirsting for direction for pricing.
This year, the big yield estimates in the U.S. Department of Agriculture August reports on supply and demand set big expectations for scouts. Will the crops measure up? Each state saw a significant increase in corn yield and soybean pod count estimates. All states but Minnesota saw an increase in corn yield, with South Dakota the highest at 20.3 percent higher than last year's tour estimate. Most of the states were around a 6 or 7 percent increase from the previous year. The USDA pegged the overall crop at 178.4 bushels per acre, which is up about two bushels from a year ago. If the crop can finish well, the tour did not give any reason to expect yields not to hit or exceed the current USDA forecast.
Similarly, soybean pod counts were well above a year ago in all states, with all but Minnesota and Illinois more than 10 percent above a year ago. The August report from the government pegged the crop at 51.6 bushels per acre, which is definitely attainable barring some major, late-season crop disaster.
The market responded as one would expect with such findings: prices were pressured. The soybean complex lost ground while corn, too, was pressured. Look for the September supply and demand estimates from the USDA to increase yields to account for the strong crops in most areas.
Wheat markets have been on the defensive of late. Harvest is progressing well. The monthly Canadian crop report showed an expectation for a 3 percent reduction in output compared to a year ago. Crops are expected to return to trend yields from last year's excellent crop, and larger planted area for spring wheat cannot offset that drop. Additionally, there is strong export demand for U.S. and Canadian wheat due to lower production abroad.
Durum prices in Minneapolis dipped modestly this week. There just is not a case to be made for higher prices at this time. In Canada, production is expected to increase by 17 percent on higher seeded area. Ending stocks are set to rise as well, even with greater export demand. The North Dakota crop is ahead of schedule at 87 percent mature. The crop is also 35 percent harvested. Look for the market to remain depressed.
The canola market fell apart this week. Prices were pressured by the continued fall in other fats markets. Canola prices can't get too far out of line and become uncompetitive on the world market, thus pressure brought futures down. Generally, the crop outlook looks good, though some dryness has been a concern in areas. Look for rising supplies as the Canadian government has forecasted.
Peas and lentils
According to the Canada Principal Field Crops Report, both peas and lentils are expected to see a drop in production from a year ago, to the tune of 12 and 7 percent, respectively.
There has been little mustard seed market activity of late. Little harvest progress has been reported so there is not much news for the market to get excited about. However, Saskatchewan should see some activity in next week's market report. It is unclear how this crop will finish. Early indicators suggested normal to slightly above normal yields. But later season heat and dryness could have reduced production potential.
The U.S. barley crop harvest is hitting the back stretch. The USDA reported 66 percent of the harvest done compared to 56 percent for the five-year average pace. Of the remaining crop, conditions are still quite good at 78 percent good to excellent. The Canadian crop is expected to increase by 8 percent from a year ago with an increase in area. Harvest has not shed much light on actual yields, as some reports show good crops while others are not so good.