Could Corn, Soybean Yields Be Low Enough To Help Prices?

August 23, 2017 01:30 PM

As Farm Journal’s Midwest Crop Tour makes its way across Illinois on Wednesday, scouts are beginning to wonder if yields could be low enough to boost prices. According to Pete Meyer a Crop Tour scout and senior director of agricultural commodities at PIRA Energy Group, the 165-166 bushel per acre yield range he’s expecting won’t impact price even though it’s 4 bushels lower than the USDA August estimate.

“I think the corn crop is ok, but it’s obviously a definite step down from the past two years,” he told Tyne Morgan in Fulton County, Ill. on Wednesday. “It doesn’t look like it should look like, and the numbers bear that out.”

According to Meyer, yield estimates on their route were down 7% from where they were last year. They have found samples ranging from 160-190 bushels per acre from Fulton County through Bloomington.

“Whether or not the government realizes the crop is not here like they think it is, is to be determined,” he said.

The lower yields they have seen are enough to drop national yield to the 165-166 bushel per acre range, Meyer said.

“That being said, that’s just what I’ve seen so far,” he said. “A lot of it will depend on what the guys see in western Iowa and what we see in eastern Iowa tomorrow.”

Even if yields slide down to that 165 number, Meyer says it won’t be enough to help prices because of carryout.

“This is going to be the second decent year,” he said. “I have trouble getting carryout below 2 billion.”

According Meyer, corn carryout was at 1.7 billion bushels for two years in a row and corn prices averaged $3.65 per bushel. By his estimates poor production would have to shave off a billion bushels to get carryout down to 1.7 billion bushels.

“The numbers aren’t there to lose that much production,” he added.  

Soybeans could be a different story. Chris Narayanan, a Crop Tour scout and CEO of Gladius Aratrum Capital, LLC, was also in Fulton County, Ill. with Tyne Morgan this morning and he says pod counts are seriously low.

“We’re down 37% from last year on these pod counts,” he said. “We’re seeing very lumpy looking fields and when you get in there, there’s not very many pods.”

Recent rains in the area could add some weight to the pods, but it won’t change pod count, Meyer said.

According to Meyer, losing a couple bushels in soybeans could make a difference in price.

“If we lose a couple of bushels in beans that makes a big difference,” he said. “Incremental demand is much, much stronger than it is in corn.”

Still, it’s too soon to have a good estimate on final yield in soybeans.  

“I’m going to reserve my judgement on the bean crop yet,” Myer said. “I’ve killed more soybean crops in my career than I care to admit. I will say the maturity at this point two years ago was much less mature than they are now. At his point, we can add some weight, but we can’t add pods.”

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