The big news of the week was Pro Farmer's Midwest Crop Tour, which posed a smaller corn yield estimate than what USDA projected in its August report, said Jerry Gulke, president of the Gulke Group.
“Corn was rather a surprise,” Gulke said about Pro Farmer’s U.S. corn yield projection.
Pro Farmer estimated the 2015 U.S. corn crop on Friday at 13.323 billion bushels, with an average yield of 164.3 bu. per acre. That compares to USDA’s corn yield estimate released earlier this month at 168.8 bu. per acre – a 4.5 bu.-per-acre difference in the two yield estimates.
In Gulke’s own tour of the Midwest, the corn crop he observed was the best he’d ever seen, with exception to parts of Indiana. Pro Farmer noted nitrogen deficiency issues in Indiana, which will weigh on the crop’s ability to make a strong finish.
Listen to Gulke's full audio analysis:
Pro Farmer also noted disappointing yields in parts of the western Corn Belt resulting from excessive wet weather this spring.
“I think (Pro Farmer’s) conclusion is that maybe the western Corn Belt didn’t quite make up for the losses in the eastern Corn Belt,” Gulke noted.
If the Pro Farmer corn yield estimate is correct, Gulke points out it would have a significant impact on total production and carryout, and consequently would also have a major effect on price. The Pro Farmer total crop estimate came in 363 million bushels lower than USDA’s August projection of 13.686 billion bushels.
However, Gulke stresses that there is much to be determined in the coming weeks as the crop matures. If the crop benefits from two to three more weeks of growing season, yields will improve as the crop adds test weight.
Meanwhile, Pro Farmer pegged the average U.S. soybean yield at 46.5 bu. per acre with total production at 3.887 billion bushels, which was only slightly under USDA’s August yield estimate of 46.9 bu. per acre with a crop size of 3.916 billion bushels.
“I guess I’m not surprised at their soybean number,” Gulke said of the Pro Farmer estimate. “The beans look good, and they kind of said the same thing I felt, that beans seemed to fare better than corn. They look a lot better. They’ve got potential.”
With the critical month of August nearly finished, Gulke noted that it’s unlikely the soybean yield estimate will move in the next USDA crop report.
Meanwhile, China’s currency devaluation in recent weeks also played a role in the psychology of the marketplace, Gulke pointed out. September soybean futures on the CME ended the week 20 cents lower at $9.05 ¼ while September corn futures were up slightly by 1 ¼ cents at $3.6525. September CME wheat was down 7 cents on the week to finish at $4.99 ½.
While it’s commonly argued that China’s valuation portends a weakening economy and softer demand for U.S. crops, Gulke said actual Chinese demand has not suffered. In fact, he said, it’s gone up every year.
“I’m not so concerned about the demand side of our market, and the marketplace in general may be discounting us too much on the downside,” he said. “And of course, price is down. That doesn’t discourage demand. That kind of stabilizes it. So I think the Chinese thing is more of an emotional thing that is going to take time to come out.”