Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.
Not Since 1996
Aug 27, 2009
Allendale research data discovered not since 1996 has the percent dough stage for corn has been as delayed as it is at present. The present dough stage registers 57 for the 18 states which comprise 92% of the nations corn supply potential. This compares to a year earlier level of 66% and in 1996 when the percent dough stage for Aug 23 was 54.
The market is impressed with the current health of the crop with its 70% good to excellent rating vs year earlier level of 64% and may only assume the 2009 corn crop yield is gaining. Equally important is how the present trade is also very aware of the lag in corn maturity and any prospects for an early or even a normal frost/freeze event.
The trade is very much aware of how year earlier corn dough percent registered 66% and was lagging vs previous years, but was able to dodge a bullet with a later than usual fall with the majority of the crop escaping damage. What are the chances the 2009 US corn belt will have back to back later than usual frost/freeze event?
Allendale Inc discovered in 1996 the August USDA corn yield was estimated at 118.7 bushels per acre and yet even with historically low percent of dough stage, five months later the January annual yield registered 127.1 bushels per acre. How could the percent lag in corn maturity in 1996 find a greater yield per acre? The answer is 1996 was able to dodge the proverbial frost/freeze bullet with a later than usual date. 2004 was yet another year when despite a lag in maturity, the January yield was better than the prior August yield. It is also interesting to note of the 15 previous crop years, 60% of the time, the January yield has been better than its prior August yield estimate. However it is also interesting to note of the most recent three crop years, the January annual report held a smaller yield per acre than its prior August yield.
The 1996 pod set for soybeans registered 80% compared to this years second lowest level of 85%. Unlike corn, the January annual yield estimate provided by USDA was 35.8 bushels per acre, vs 36.3 bpa in the prior August estimate. It may be surprising how in both 1996 and 2008 when there was a lag in soybean maturity, the January annual yield came in a half a bushel less than the prior August report. Of the past 15 years the January annual yield estimate has been higher 40% of the time vs 60% for the corn.
Lastly comes the keystone between success or failure for the 2009 corn and soybean crop and that is the prospects for an earlier than normal frost/freeze. The vast majority of the private weather services we use are not willing to “officially” forecast odds for the event but most will explain, the vast majority of the crop to have somewhat below normal amounts of growing degree units as a result of the cooler than average year. For nearly a month Allendale Inc has been recommending the accumulation of long risk management October options as an insurance policy against lagging maturity and cooler than average weather trends.
What are your thoughts, which crop is a greater risk for a normal frost/freeze? Does the high percentage of good to excellent crop rating automatically imply larger yields? Do you believe your crop will escape a normal frost/freeze? What measures are you taking to help offset the potential yield loss of a normal frost freeze?
We welcome your questions and comments.........Joe Victor
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