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August 2009 Archive for Chip's Chore Time

RSS By: Chip Flory, Pro Farmer

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm. In fact... I don't even have horse chores to do any more!

USDA puts record corn yield 'in reach'

Aug 12, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about an update to the report reaction I filed earlier (which is included below).

The ability of the corn market to limit losses this morning is pretty impressive and suggests USDA's crop estimate is lining up well with the "whisper number" on the trading floor.

The bean market, however, is so far telling us it doesn't believe USDA's yield and crop estimates. Traders seem to be treating the 2.199 billion bu. crop estimate and the 41.7 bu. per acre national average yield as a "benchmark" for the 2009 bean crop. With plenty of moisture available in most (not all) locations, traders seem to be viewing 41.7 bu. per acre as a low-water mark for the year -- and some of the more aggressive traders appear to be adding to that yield estimate already. The S&D Report for 2009-10 wasn't "negative" with the 40-million-bu. cut to estimated carryover, but the market is posting double-digit losses. That suggests traders are looking for the yield, the crop and carryover to get bigger in the September updates.

 

... about this morning's USDA Crop Production and Supply & Demand Reports.

(From earlier this morning...)

Traders expected a national average corn yield of 157.1 bu. per acre and a crop of 12.472 billion bushels. Instead, USDA delivered an Aug. 1 corn yield estimate of 159.5 bu. per acre and a crop estimate of 12.761 billion bushels. With the corn crop estimate 289 million bu. above the average pre-report trade guess, that should put hefty pressure on corn futures this morning.

However, opening calls are for the corn market to be "just" 3-5 cents lower on the open. With the corn crop nearly 300 million bu. above the average pre-report trade estimate, you'd think the market would open more than a nickel lower this morning. That suggests the 159.5-bu.-per-acre national average corn yield estimate lines up fairly well with the "whisper number" on the trading floor. As we've been talking about in Pro Farmer newsletter, traders are looking for the 2009 corn crop to set a new record national average corn yield, beating the 160.4-bu.-per-acre record set in 2004.

And USDA says the 2009 corn crop has what it takes to set a new record national average corn yield.

USDA said in its Crop Comments: "The August 1 corn objective yield data indicate a record high number of ears per acre for the combined 10 objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin). Record high ear counts are forecast in all objective yield states except Illinois, Missouri and Wisconsin."

Record ear pops, but not a record yield. That suggests USDA is working with an average ear weight slightly above year-ago, but below 2004's ear weights. Given the slow development of this year's crop and the uncertainty for the end of the growing season, an increase from year-ago in ear weights seems to be a bit of a "risky assumption."

The state corn yield that absolutely jumps off the state-by-state yield table is Iowa's -- USDA puts the state at 185 bu. per acre, 4 bu. per acre better than the record of 181 set in 2004. Iowa's 2004 corn crop looked like "fresh-laid carpet." It was consistent from field to field and consistent within each field. There were a few holes out there in 2004, but nothing like we're seeing this year. Late-planting in southeast Iowa and the worst hail damage the state has seen in I don't know how many years is going to make it tough to get all the way to 185 bu. per acre.

Another yield that jumps out is Illinois at 175 bu. per acre, down just 4 bu. per acre from year-ago. Oh... and Missouri corn yields, despite serious planting delays, are expected to beat last year's corn yield in the state by 2 bu. per acre.

And despite a resurvey of acres, USDA left planted acres unchanged at 87.0 million and now puts harvested acres at 80 million acres, down just slightly from the June Acreage Report.

On soybeans...

Traders expected a national average bean yield of 42.1 bu. per acre, USDA delivered a yield estimate 41.7 bu. per acre. Traders expected a bean crop estimate of 3.213 billion bu., USDA delivered a crop estimate of 3.199 billion bu., just 14 million bu. below the average pre-report trade guess. That's close enough to say the average pre-report trade estimate "nailed" the bean crop.

Still, traders are calling beans steady to higher this morning. That suggests USDA's crop estimate fell short of the "whisper number" on the trading floor and the sub-42-bu. national average bean yield estimate has at least some traders questioning their ideas of a hefty bean yield in 2009.

I'll try to come back with a few comments after the open to see how things are lining up...

USDA puts record corn yield "in reach"

Aug 12, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about this morning's USDA Crop Production and Supply & Demand Reports.

Traders expected a national average corn yield of 157.1 bu. per acre and a crop of 12.472 billion bushels. Instead, USDA delivered an Aug. 1 corn yield estimate of 159.5 bu. per acre and a crop estimate of 12.761 billion bushels. With the corn crop estimate 289 million bu. above the average pre-report trade guess, that should put hefty pressure on corn futures this morning.

However, opening calls are for the corn market to be "just" 3-5 cents lower on the open. With the corn crop nearly 300 million bu. above the average pre-report trade estimate, you'd think the market would open more than a nickel lower this morning. That suggests the 159.5-bu.-per-acre national average corn yield estimate lines up fairly well with the "whisper number" on the trading floor. As we've been talking about in Pro Farmer newsletter, traders are looking for the 2009 corn crop to set a new record national average corn yield, beating the 160.4-bu.-per-acre record set in 2004.

And USDA says the 2009 corn crop has what it takes to set a new record national average corn yield.

USDA said in its Crop Comments: "The August 1 corn objective yield data indicate a record high number of ears per acre for the combined 10 objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin). Record high ear counts are forecast in all objective yield states except Illinois, Missouri and Wisconsin."

Record ear pops, but not a record yield. That suggests USDA is working with an average ear weight slightly above year-ago, but below 2004's ear weights. Given the slow development of this year's crop and the uncertainty for the end of the growing season, an increase from year-ago in ear weights seems to be a bit of a "risky assumption."

The state corn yield that absolutely jumps off the state-by-state yield table is Iowa's -- USDA puts the state at 185 bu. per acre, 4 bu. per acre better than the record of 181 set in 2004. Iowa's 2004 corn crop looked like "fresh-laid carpet." It was consistent from field to field and consistent within each field. There were a few holes out there in 2004, but nothing like we're seeing this year. Late-planting in southeast Iowa and the worst hail damage the state has seen in I don't know how many years is going to make it tough to get all the way to 185 bu. per acre.

Another yield that jumps out is Illinois at 175 bu. per acre, down just 4 bu. per acre from year-ago. Oh... and Missouri corn yields, despite serious planting delays, are expected to beat last year's corn yield in the state by 2 bu. per acre.

And despite a resurvey of acres, USDA left planted acres unchanged at 87.0 million and now puts harvested acres at 80 million acres, down just slightly from the June Acreage Report.

On soybeans...

Traders expected a national average bean yield of 42.1 bu. per acre, USDA delivered a yield estimate 41.7 bu. per acre. Traders expected a bean crop estimate of 3.213 billion bu., USDA delivered a crop estimate of 3.199 billion bu., just 14 million bu. below the average pre-report trade guess. That's close enough to say the average pre-report trade estimate "nailed" the bean crop.

Still, traders are calling beans steady to higher this morning. That suggests USDA's crop estimate fell short of the "whisper number" on the trading floor and the sub-42-bu. national average bean yield estimate has at least some traders questioning their ideas of a hefty bean yield in 2009.

I'll try to come back with a few comments after the open to see how things are lining up...

Are traders 'on the mark' for tomorrow's reports?

Aug 11, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about tomorrow morning's USDA Crop Production Report.

Big day... USDA's first survey-based estimate of 2009 corn and soybean crop potential. It's important to keep USDA's survey procedure in mind as they assess yield potential as of Aug. 1.

First, USDA is conducting farmer surveys, asking for their opinion of crop potential. USDA's National Ag Statistics Service's state offices will also conduct field surveys. In those surveys, they'll collect any data point that available. If all that's available in a field are stalk counts, they'll count stalks. If, however, ears have silked, they'll also count all "ears and silked ear shoots," explained one state enumerator.

That's the way NASS does it year-to-year, but in the August 2008 Crop Production Report, the "Crop Comments" only included comments about stalk counts (not the specific stalk populations, just comments about how stalk counts compared to record levels).

The reason I bring this stalk-count versus ear-count subject up is because of some comments I've been getting from Pro Farmer Members about some "blank stalks" in the field this year. In the latest-planted, soggiest areas of the Midwest, growers reported after emergence that plant populations were off a bit from their target and from year-ago. Now these growers are reporting the ragged emergence of the crop has resulted in some "spindly" plants, or "blank" stalks. One of these growers told me this morning, "There are always a few wimpy plants or blank stalks, but there are a few more than normal this year."

Ear counts are probably one of the "most trusted" data points we collect during the Midwest Crop Tour. Obviously, "ear pops" have been trending higher in recent years, helping to push yields up in "less-than-ideal" growing seasons. At some point, however, plant/ear pops have to reach the point of diminishing returns -- when the high plant pop starts to impact ear sets or reduce ear length and/or grain fill. And it's got to be "easier" to reach that point of diminishing returns in a less-than-ideal planting season.

The comments we're getting from Members suggests ear counts will (once again) be very critical data from the Crop Tour this year. But... I won't go into the Tour "assuming" each counts will be down from year-ago... we'll let the numbers show us the way.

Now... for tomorrow morning's report, the market is expecting USDA to put the national average corn yield at 157.1 bu. per acre. I think that's a very respectable number going into this report. Last August, USDA's survey method generated a national average yield estimate of 155 bu. per acre. Assuming a 1.5% year-to-year "trendline" gain in yield, that would project to a national average yield estimate of 157.325 bu. per acre in Wednesday morning's update.

Now... with that said... that's what the market may be expecting USDA to deliver tomorrow morning, but we continue to hear in reports from the trading floor that traders are looking for this year's crop to at least challenge the record national average corn yield of 160.4 bu. per acre set in 2004. So... if USDA delivers a "157-something" yield peg tomorrow morning, these traders will immediately start to add bushels to the Aug. 1 peg to "ratchet up" yield expectations for the September, October and November Crop Production Reports.

On soybeans...

The average pre-report trade estimate for soybeans is 42.1 bu. per acre. Again... that's a very respectable estimate. Somewhat surprisingly, the average pre-report trade guess, however, is a half-bushel below USDA's July yield projection of 42.6 bu. per acre.

As in corn, NASS will take all the available data points it can collect when sampling for yield. If pods are set, they'll count pods. If only blooms are available, they'll just count blooms. But, any data that's available, they'll collect.

In August 2008, USDA's survey methods resulted in a national average soybean yield estimate of 40.5 bu. per acre. USDA will also take into consideration crop condition ratings and the pace of development.

I "like" the 42 bu. yield expectations... not only for tomorrow morning's report, but that "feels" like a solid estimate based on the amount of moisture available to the crop. Obviously, bugs and disease pressure from this point forward will have a lot to do with the final bean yield.

On acres...

USDA is doing some resurvey work on acres, too. When they did that last year, it generated some weird results. In the July 2008 S&D Report, planted corn acres were put at 87.3 million; harvested acres at 78.9 million. In the August S&D Report (using data from the August 2008 Crop Production Report), planted acres were down 300,000, to 87.0 million acres; harvested acres were up 400,000, to 79.3 million.

On soybeans, the July S&D Report put planted acres at 74.5 million; harvested acres at 72.1 million. In the August S&D Report, planted acres were up 300,000, to 74.8 million; harvested acres ballooned 1.2 million, to 73.3 million acres.

Getting ready for the Midwest Crop Tour!

Aug 10, 2009
Chip Flory

 

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm, but taking care of two horses in the morning before I head in for work gives me a little time to think about the day ahead. Each morning, stop at this spot to get a feeling for the "tone of the day" - and some attitude about agriculture and the markets.

I was thinking…

... about the Bremer Co. Fair!

I know the Pro Farmer Midwest Crop Tour is close when the Bremer Co. Fair comes to an end. Well... I spent yesterday afternoon working with my 4-H club to help clean up the fair grounds (washing trash cans... yuck!), which means Tour is right around the corner. I'd call it another successful fair for the kids. Daughter Emily (who will be a senior in school this fall) placed fourth with her horse in halter, was second in showmanship and won western pleasure walk-trot and western pleasure. She also had the reserve-champion pair of market lambs and has a photo going on to the state fair. Son Thomas (who will be a freshman in school this fall) won a market lamb class and had a picture and his shooting sports project considered for state fair, but didn't get anything through (but he did get an honorable mention).

And even though I said "this fall" for when the kids will be a senior and a freshman... it's actually next week! And since the fair is over and the kids start school next week... it must be time for Crop Tour!

AgWeb.com is home of Crop Tour coverage --

As always, you'll be able to find all the details from the 2009 Pro Farmer Midwest Crop Tour at AgWeb.com with additional coverage available at profarmer.com. As added coverage on profarmer.com, PF Sr. Market Analyst Brian Grete will be offering some perspective on likely market impacts from what we find out on Tour.

And believe it or not...

You can follow comments from me on the western leg of the Tour and from PF News Editor Roger Bernard on the eastern leg on Twitter! Now... we're both new to this Twitter thing, but I think we've got it figured out. We'll drop notes out throughout the day about what we're seeing on Tour. We'll try to stay away from some of the "goofy" stuff that people "tweet" about... but you might just also find out where to get a good tenderloin, a hot-beef or even fried pickles if you're signed up for our tweets.

Just go to www.twitter.com, and signup for the service. After you create an account (it's free), click on "Find People" and type in "Midwest Crop Tour." After you get there, click on "Follow." After that, everytime we update, you can get the comment either on Twitter or your cell phone.

When we update, we'll tell you where we're at, what we're seeing in the field and any other general comments we think are worthy of some of the 140 characters we're allowed to use in each comment.

Before we head out on the road...

I try to give this "warning" every year, but there are always some Tour-followers that for one reason or another don't seem to get the message. Please do not directly compare the Tour results to USDA's Aug. 1 estimates for each state.

The absolute best way to use the data is to compare year-to-year changes in Tour estimates to USDA's year-to-year change in yield estimates. For example, if USDA's Aug. 1 yield estimate for Indiana is down 5% from year-ago and the Crop Tour yield estimate is down 5% from last year's Tour findings, we call that "a match." That, however, does not mean the calculated Crop Tour yield will match USDA's Aug. 1 estimate... just that the year-to-year change matches up.

If, however, USDA's estimate for Indiana is down 5% from year-ago, but the Crop Tour yield estimate is steady with last year's Tour findings, you'll likely hear Roger say something like, "It looks like USDA cut a few too many bushels from last year's yield."

On the other hand, if USDA's Aug. 1 estimate for Indiana is down 5% from year-ago, but the Crop Tour yield is down 10% from last year's Tour findings, you'll probably hear Roger say something like, "USDA's Aug. 1 estimate is probably a little too optimistic for the yield potential in Indiana."

And even then, the numbers need some analysis --

Each Tour state has a different "historical error" for the calculated yield... and for good reason. In Illinois, for example, we don't scout lower-yielding acres in "far-down-state." That means the calculated yield from the Tour is, on average, 2.25 bu. above USDA's final yield estimate.

The same is true in Minnesota... the fact that we don't sample north of Highway 212 (about even with Minneapolis) means we sample only the highest yielding part of the state. So, on average since 2001, the Crop Tour yield has been 12.38 bu. above USDA's final estimate for the state. It's a similar story in South Dakota.

In Ohio, Indiana and Iowa, the average historical error since 2001 ranges from 2.38 bu. to 5.42 too low. (That means the calculated yield from Crop Tour is typically below USDA's final estimate for those states.) This is most true in Nebraska. On average in Nebraska, the Crop Tour yield estimate is nearly 17 bu. below USDA's final estimate. That's because the Crop Tour's typical mix of samples is about 40% irrigated and 60% dryland, when in reality the Nebraska corn crop is about 60% irrigated and 40% dryland.

The "neat" thing about this is we know how much the calculated Crop Tour yield estimate typically "misses" USDA's final estimate for each state. So, when looking at the Crop Tour data, please keep these "historical errors" in mind.

 

 
Avg. yield
Avg. historical error
 
since 2001
since 2001
Ohio 138.46 bu. per acre 2.41 bu. too low
Indiana 149.62 bu. per acre 2.38 bu. too low
Illinois 161.50 bu. per acre 2.25 bu. too high
Iowa

160.83 bu. per acre

5.42 bu. too low
S. Dakota 120.81 bu. per acre 6.44 bu. too high
Nebraska 135.08 bu. per acre 16.92 bu. too low
Minnesota 167.00 bu. per acre 12.38 bu. too high

Average of all samples

152.40 5.85 bu. too high
     
     

So... what's that mean?

It means... on average since 2001... we know how much the calculated yield from the Crop Tour typically misses USDA's final yield. So, when you see the Crop Tour yield from Ohio, you've got to add (on average) 2.41 bu. to the estimate. When you see the average yield from Minnesota, you've got to subtract (on average) 12.38 bu. per acre.

Of course... each year is different. That's why you can't just add 2.41 bu. per acre to the Crop Tour estimate for Ohio and subtract 12.38 bu. per acre for Minnesota to come up with the Pro Farmer estimates we'll deliver when the Tour is over. Maturity, disease, moisture levels... there are many factors we'll take into account when we estimate a yield for each of the Tour states.

And the Pro Farmer estimate is a different estimate!!!

Here's another source of confusion. On the afternoon of Friday, Aug. 21, at 1:30 p.m. CT, Pro Farmer will release our 2009 corn and soybean crop and yield estimates. I'm telling you right now... and trying to say it as loudly as I can... the Pro Farmer estimates will be different than those delivered by the Crop Tour. The reasons are very simple. As I've already (hopefully) explained, each state has a historical error that MUST be considered. And, of course, we'll figure in all the other factors that could eventually impact yield. And we will take a very close look at the average yield of all samples... it's like pulling 1,000-plus yield samples from one big corn field.

Tour area --

Every year, more than a few will say something like, "They didn't even travel through my area and we grow a lot of corn around here! Boy... if they'd just do the thing right, the numbers would have been a lot different!" First... we can't reach every area. And, frankly, we wouldn't even if we had more time. Again... the reason is simple. We've been running routes through the same areas since 1993. If we expand the routes north, south, east or west, we're starting to "play" with the data. By keeping the same boundaries year-to-year, we come home with comparable yield samples.

Okay... there you have it!

I decided to get this information "out there" a week before the Tour so I can try to answer any questions you might have before the Tour starts. One of the goals of the Pro Farmer Midwest Crop Tour is to be as transparent as possible... and this is part of that process. If you've got a nagging question that's always made you doubt the Tour, please ask it now. If you've got a question that might help me explain the Tour a little more clearly... please ask it now.

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