Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but doing morning horse chores before I head in for work gives me a little time to think about the day ahead.
I was thinking…
... We'll learn a lot about just what the corn and soybean markets "want" to focus on this week.
And early trade this morning is telling us a lot. Combines started rolling Saturday in Iowa, picked up the pace Sunday and should be rolling hard today and tomorrow. The corn crop is still carrying too much moisture, but a few PF Members reported this morning that yesterday did take some moisture out of the corn crop... at least a point and in some cases a little more. That's giving some growers incentive to sit back a day or two and delay hard-charging harvest... there's still hope corn will field dry down into the low- to mid-20s on moisture. At this time of the year, any field drying is a gift we'd be happy to get.
But, even with harvest expected to move quickly (at least as quickly as dryers will let you move), corn and soybean futures started the week higher. The reason is very simple: The U.S. dollar is trading lower and crude oil futures are trading higher. That's giving commodity "investors" plenty of incentive to jump on the long side of the market. I can't say corn and soybeans are completely ignoring expected harvest progress and the increase in hedge pressure, but the ability of corn and soybeans to trade higher today is strong evidence the markets are more focused on outside influences than on traditional market fundamentals.
So... even as we harvest these respectable crops (they've got their issues, but these crops are generally respectable), it may be more important to focus on what's happening to the outside markets... and, most importantly, what's happening to the U.S. dollar in particular.
... about some analysis we did in last week's Pro Farmer newsletter.
We took a look at the 10 slowest harvest seasons (based on progress as of the date closest to Oct. 25... the latest data available from 2009), and looked at what happened to USDA's national average corn and soybean yield estimates. The previous slowest corn harvest was in 1993... the flood year, or what ever you want to call it. While 1993 is notorious for its floods, the crop damage came from many different reasons. From the Oct. 1 corn yield estimate of 110.3 bu. per acre, the 1993 corn yield estimate dropped to 100.7 bu. per acre in the Final update. But, because 1993 was a severe crop growing season (it's the year grain traders figured out rain does not always make grain), it's tough to use 1993 as a comparable year.
The second slowest harvest (until this year) was 1992. In that year, the national average corn yield increased from Oct. 1 (123.8 bu. per acre) to the Final (131.5 bu. per acre... a new record corn yield at the time). In 1992, estimated harvest corn acres declined from 72.223 million (Oct. 1 estimate) to 72.162 million acres (in the Final update). So... the slow harvest increased abandonment... but by only 61,000 acres.
The slowest bean harvest on record (until this year) was 1984. In that year, the national average bean yield estimate dropped from Oct. 1 (29.5 bu. per acre) to the Final (28.1 bu. per acre). Harvested bean acres were estimated on Oct. 1 at 66.194 million and dropped to 66.093 million acres in the Final 1984 update.
Analysis of the 10 slowest corn and soybean harvest years showed many different impacts based on the reason for slow harvest. That's why it's really tough to look at any single slow-harvest year and use it as a model of what will happen to corn and soybean yields this year. And a slow harvest year for corn is different than a slow harvest year for soybeans. The five slowest bean harvest years saw yields decline from Oct. 1 to the Final update four times while yields increased slightly just once. That makes for some good odds of higher-than-usual harvest loss and lower Final soybean yields in a slow-harvest year.
In the five slowest corn harvest years, corn yields from the Oct. 1 estimate to the Final update decreased twice, held steady once (*) and increased twice. (* 2008 is one of the five slowest-harvest years for corn, but the Final estimate won't be available until the 2012 Census of Agriculture, released in 2014. The "Final update" we used for this comparison is the January Annual Production Summary.) The big yields in 1992 contributed to the slow harvest... yields were big, but corn was coming out of the field with light test weights and high moisture levels. So, in 1992, the dryer was a bottleneck for the corn harvest -- just like we saw in 2008. Simply put, big yields slow down the harvest... and so does slow development... and so does wet corn... and so does rain during the harvest season. That's all pretty obvious, but it's just really tough to find a "perfect" model year to tell us what will happen to corn yields going forward.