An "extra" 20 days is a wonderful thing!
Oct 21, 2008
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…
... can you believe some of the corn yields being reported!?! Heck... can you even believe what your yield monitor is showing you when you open up corn fields!?!
So far, yield reports are coming in "above expectations." Of course, most growers were expecting a crop below their five-year average... so it's a little difficult to figure the real impact of "better-than-expected" corn yields. When we wrapped up the 2008 Midwest Crop Tour, we estimated the national average corn yield at 153.3 bu. per acre. Since then... based on September weather and a few other factors, we trimmed about 1.2 bu. from our yield estimate, to 152.1 bu. per acre.
We did that when it looked like Midwest would see an "average end" to the growing season -- a killing frost in the first week of October. Well... that didn't happen and even the latest-planted corn has reached black layer. The "extra" 20 days most of the corn crop in the Midwest saw added to the end of the growing season also allowed the crop to continue to gain weight. Test weights aren't any better than the last few years... but they are generally in the mid- to upper-50s. If the growing season would have ended on time, test weights (on average) might have struggled to get to 50 lbs. on some of that late-planted corn.
Still, there is a lot of variability from field to field, but that "variability spread" has narrowed in the last 20 days. That means the "best" corn out there is good, but the lowest-yielding corn is coming in better than most growers expected.
Where there doesn't seem to be much variability is in the moisture content of this year's corn crop -- it's too high in most major corn-growing areas. The equipment growers have in the field can handle about twice as many bushels per day than the drying equipment can handle. Drying bins handle some of the daily overload, but corn with moisture in the mid-20s can't stay in that holding bin for too long. That's going to drag out harvest and slow movement of corn for the near-term. And if the earliest-planted corn isn't drying down, it will probably be an even bigger challenge to get the late-planted corn to dry. Typically, slow movement of corn during harvest leads to some basis strength. So, watch for some basis spikes to take advantage of this fall.
Back to yield... are we still comfortable at 152.1 bu. per acre? Well... we're waiting for some actual harvest results from that late-planted corn before we update our corn yield estimate. But, when we released our first 2008 corn yield estimate back on Aug. 22, we put a plus-or-minus 1% on the yield to allow for a "poor" or "strong" finish for the crop. The last 20 days has made it a "strong" finish -- which would suggest a national average yield up to 1% bigger than 153.3 bu. per acre. That means a national average yield of about 154.8 bu. per acre is probably back in play.
Another thing I've been thinking about --
You probably know this is one of my favorite times of the year... not only is it time to "ring the cash register" and to deliver crops we've been working on since spring, it's also hunting season. I've fired a few shots already this fall, and so have my kids. It also means it's time for another round of Outdoors on the Farm on AgDay and U.S. Farm Report. This fall, I'm featuring an Illinois grower that is dedicated to rebuilding upland bird habitat, is using food plots to attract deer and turkey to his "happy hunting grounds" and I also had a chance to hunt his farm (literally... right behind the machine shed!) during Illinois' dove season. It was my first dove hunt... watch Thursday morning to find out what this ol' pheasant hunter thinks about dove hunting!
Don't get too excited when the market moves in your favor; don't get too frustrated when the market moves against you.
I know... easier said than done! What it really means is now is a good time to view the market's big picture. Stay informed, but don't get too caught up in the day-to-day price movement. Understand that we need more acres of corn in 2009 than we planted in 2008. Understand beans can give up a few acres from 2008, but not enough to satisfy corn's appetite for acres. September 1 Grain Stocks took some of the urgency out of the battle for 2009 acres (thanks to the discovery of those "extra" 2007 bean acres and bigger yields). The October Crop Production Report also took some spark out of the 2009 acreage battle. Still... these markets have some work to do to put some profitability back into the outlook for 2009 corn and soybean crops. Without the opportunity for profit, growers will "cut corners" (where they can) on inputs. First spot to cut -- fertilizer. Growers that I thought would never do anything that might threaten even 1 bu. of potential corn and soybean yields are talking about zero P&K application this fall or next spring. Of course, they've spent a lot of time building up the fertility on their ground and now they're thinking of tapping the fertility bank to ease input costs on the 2009 crop. If it happens widespread, it could develop into a "buyer's strike" on fertilizer for the year ahead. That should build up fertilizer stocks, driving prices lower. Some are looking for nitrogen and phosphorus prices to drop about 30% for the 2009 crop, but potash prices are sticking near this year's price highs. (Potash supplies aren't building.)
We detailed a fertilizer price outlook in last week's Pro Farmer newsletter. If you're not a Pro Farmer Member and would like a copy of our comments on 2009 input prices, click here to drop me a note and I'll make sure you get that page of the newsletter -- and (of course) some information on how you can get Pro Farmer newsletter each week!