The Federal Reserve made another aggressive rate hike this week, and as recession talks continue, one Iowa State University agricultural economist doesn’t think the bearish tone in the economy should warrant drastic marketing moves from farmers this fall.
A recession is typically defined by two consecutive quarters of negative GDP growth. With the Fed’s decision to hike the benchmark interest rate this week, more economists jumped on board with the thought he U.S. will enter some type of recession. Whether that recession is mild or not is another ongoing debate.
Even with all the noise about the economy, Iowa State University’s Chad Hart says farmers should remain focused on the crop at hand.
“If they’re bringing the crop in right now, take advantage of the basis levels we’ve still got out there,” suggests Hart. “If I’m a week or two from now, though, I’m probably sitting on my hand and planning for how long do I want to hold on to this crop, and allow that basis to improve back up again, as we move through the course of the marketing year.”
Hart says Iowa’s corn yields all are over the board. In the eastern side of the state, he’s hearing from farmers who are preparing to take in the best yields they’ve ever seen. Farther west, the crop was hit with drought and heat, which is showing up in yields this fall.
“We are seeing a lot of challenges when we’re looking at how much yield variability is going to be across the nation and across the state here,” he adds.
How is basis responding? He says basis is doing its job to try to spread that crop out more evenly.
“Just like we saw last year, you’re going to see again this year, basis fairly positive here,” says hart. “As we go into the harvest season, we’ll see that go negative, again, as the crop rolls in, and then it’s going to strengthen again as we move through the spring into the early summer of next year. Again, it’s trying to pull that crop back towards where we have the weakest yields.”
USDA’s Crop Progress Report released Monday, Sept. 19, showed 7% of the U.S. corn crop has been harvested so far, which is 2 percentage points behind last year. 2% of Iowa’s corn crop has been picked, which is 1 point behind 2021’s pace.
