The markets made some big moves on Monday following last week’s Pro Farmer Crop Tour. Pro Farmer estimating the U.S corn crop to be the smallest in three years...due to drought and heat damage. December corn extended its rally to two-month highs as a result.
Pro Farmer dropped the national corn yield 7.3 bushels per acre (bpa) from USDA’s August estimate to 168.1 bpa, and lowered production by around 640 million bushels (mb), which came as a shock to the market. If that confirms it would lower corn ending stocks below 1 billion bushels, to around 750 million bushels. However, market analysts say USDA may stair step down to that figure.
Chuck Shelby of Risk Management Commodities says, “It is a number that I don’t know if USDA will come down that low, but I think it shocked some people to see the results be that low. I also think they did not go into other areas like Texas and Kansas, other areas that are kind of struggling. So, I think the markets are going to digest this and be well supported until the September crop report.
The soybean market is also digesting the Pro Farmer estimate, which confirmed the potential for record production at 4.535 billion bushels, and some recent rains moving in to benefit yield potential. Jeff Hoogendoorn of Professional Ag Marketing says in the extended forecast for the central and Eastern Corn Belt plus better than expected rains over the weekend continue to weigh on soybeans. “So there’d be a chunk of central Iowa and even southwestern portions of the state that got very nice rains over the weekend. That, combined with a little higher than normal temps, that’s a pretty impressive forecast for soybeans.”
Hoogendoorn says, however, the soybean market finds good demand on pullbacks, even with a potentially record crop.
The corn and wheat market are also seeing some fund buying return as money is coming out of the equity sector. The stock market has sold off after Fed Chairman Jerome Powell’s comments on the economy and concerns of a 75-basis point increase in interest rates in September.
