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.
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...