We seem to have arrived at a harvest lull, not only with the action in markets right now but additionally concerning market driving news. Yes, we have a report dead ahead but one that is normally overshadowed by actual harvest information but the slow pace at which this season has begun, not to mention the variability that has been reported in yields thus far, gives us little to grasp onto at this point. The USDA did report yesterday corn harvest remains off the pace as we are just 22% complete versus the normal 37%. Undoubtedly a combination of bean harvesting, rain, and the slow maturation process have all contributed to the sluggish start. It is interesting to note that 82% of the crop is classified as mature by the USDA which is only 5% behind normal but in some Northern tiers, we remain significantly behind. Minnesota is 77% mature compared with an average of 85%, South Dakota 72% vs. 87%, North Dakota 62% vs. 82% and Wisconsin 58% versus the normal 74%. The most recent 6 to 10 and even 8 to 14 day outlooks issued by NOAA call for above normal temperatures so frost risk would seem to be minimal, but one would have to imagine that with these depressed price levels, most producers will be none too anxious to harvest high moisture corn, which could just drag out the overall pace even longer. Bean harvest had reached 36% by last weekend which leaves us 7% off the average pace, and current moisture will probably not allow much progress this week. Note that Iowa was 19% behind normal at just 26% complete, Minnesota 41% behind normal, South Dakota 37% behind and North Dakota 20% behind. This alone with the dry condition and slow planting pace in Brazil continue to be the factors underpinning the soybean market.
It was nice to see a number of export sales reported in the daily system this morning. 264,000 MT of beans to China, 150,000 MT of corn to Mexico, 104,202 MT of wheat to Mexico and 132,000 MT of bean to unknown.
Still another day until we see the October crop numbers but once again, here are pre-report estimates, these via DJ Wall Street Journal; Corn production of 14.168 billion bushels via a yield of 169.7 bpa. This would supposedly then result in a 2.249 billion bushel ending stocks. Bean production is estimated to be 4.439 billion with a yield of 49.8 bpa and ending stocks of 453 million. Finally, wheat ending stocks are expected to come in at 946 million.
While I intend to write about a few of the topics in forthcoming letters, yesterday I attended the second annual WSJ Global Food Forum and was able to hear presentations from a wide range of agricultural and food industry executives. Most certainly, one of the key subjects or questions at the event was how do we produce enough food for a global population that growing around 1.1% or around 80 million people annually and is projected to close reach close to 10 billion in the mid-2050’s. Just as critical is that as world incomes continue to rise, theoretically so will the demand for increased protein in diets (meat based) which could create exponential growth in demand for feed stuffs. Granted, these are technically long-term questions and possible problems, and there are multitudes of new technologies, not only in the production of crops but proteins as well, that could be revolutionary. As the old saying goes, if you know about a problem far enough in advance, through innovation, ingenuity, and planning, that problem can be averted. The danger today is that we can become lulled into complacency and begin to let our guard down. On a global scale, we have just produced five exceptional crops in a row, and everyone knows that world stocks are quite adequate. What may be overlooked through is that the crop problems experienced in 2012, only resulted in a shortfall of 5% in production but nevertheless sparked a panic in many nations that are concerned about food security and as global demand continues to grow to record levels, it would not take much of a production scare to unleash that type of buying once again. Odds would seem to suggest it is only a matter of time.