What Could a Fast Moving Corn Crop Mean?
Jul 31, 2018
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Corn conditions for the week ending July 29, 2018 show the corn crop at 72% good to excellent condition. This is a very high rating for a corn crop and suggests that production could be at or above the USDA's current estimate. However, there are still some questions about this crop. In particular this has been a corn crop that is moving very quickly towards maturity. We are all trying to figure out exactly what this means.
Good but Fast
While this corn crop has one of the higher good to excellent ratings that we have seen at this time of year it is also very advanced. The ratings in the good to excellent category are 10% better than this time last year with last year setting a new record high national average yield. At the same time this crop is also 38% in the dough stage compared to 18% last year and a 5-year average of 20%.
This is a very advanced crop indeed, but it actually has slowed down a bit. Warm temperatures since shortly after planting has had the peddle to the metal but a recent return to more normal temps as pumped the breaks a little. For the week ended July 15th the 2018 corn crop was 63% in the silking stage, 26% ahead of last year and the 5-year average. The week ending July 23rd had corn 81% silking, 18% ahead of last year and 19% ahead of the 5-year average.
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However, with warmer than average weather seemingly returning in the first week of August and a forecast from the NOAA for mostly above normal temps through the month of August it would figure that this crop could speed toward maturity again. Soybeans are in a similar situation with 44% of the crop setting pods compared to 23% on average. Both crops are very advanced, but what does this all mean?
Can I Buy an Analogue Year?
The advanced state of this crop is making traders wonder what exactly this means for the crop. Looking back there are really two other years I see with similar rates of maturity... 2012 and 1987. And these years both had some distinct factors that may preclude them from giving us accurate insight into 2018. In 2012, as we all know, a serious drought push crops to maturity very quickly as hot and dry conditions left corn no other choice. Obviously yields were down significantly, but this is not a similar situation as this year as evidenced from crop ratings.
In 1987 the crop was planted in a similar timeframe as 2018, crop ratings were also very good (a little better than 2018) and the yield results were also good for the time (about 4% over trend). However, what 1987 did not have was a 4-5 year period of record caliber crops directly in front of it. The 2013-2017 crop years were fantastic years for corn production on a national scale.
So, 1987 is a better fit than 2012 for a comparison year to 2018 yet still maybe not perfect. One of the features common of 2013-2017 has been mild Augusts and slow moving crops. This "slow cooking" may have had a dramatic and positive impact on corn yields. It allowed extra time for corn crops to fill in and pack on yield. This does not seem like it will be the case this year and may have an opposite impact on yield, but it is very difficult to know for sure.
I Smell a Crop Tour
It is always important to get out and actually see what is going on with the crop and to cover a large area. This year crop tours may give us a lot of insight into what this crop really is. The Pro Farmer crop tour starting August 20th could help answer a lot of questions. In the mean time I am a little skeptical of the high ratings of this crop and what that means for yield. We certainly have some very good looking plants out there in many areas but I really wonder how well we will fill in and what the final yield will be.
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Give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit. Find me on twitter - @thetedspread
December Corn Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or email@example.com
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