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Harvest Progress, USDA Report Review and Long Range Weather Outlooks

Update for October 16th, 2018

Last week the USDA announced their latest figures which were surprisingly friendly to the market. The national corn yield was reduced from the September report by 0.6 bushels lowering the expected average to 180.7 bushels per acre and also reduced total production by 49 million bushels from 14.827 to 14.778 billion bushels. The projected carryout for this year was increased by 39 million bushels from a month ago to 1.813 billion bushels which was considerably lower than what the trade had expected. Some of the other figures:

· The number of ears per acre were reduced but raised the ear weight.

· Beginning stocks were increased by +138 million bushels.

· Feed and Residual use numbers fell by -25 million bushels.

· Exports were increased by +75 million bushels.

· Global corn stocks were raised from 157.03 to 159.35 MMT’s.

· The average farm price for corn was left unchanged at $3.00.

The projected soybean yield was increased by +0.3 from the September report to 53.1 bushels per acre which was less than the trade had expected. Harvested acres were lowered by 514,000 to 88.348 million acres which reduced the projected total production number from the September report by 3 million bushels to 4.69 billion bushels. Ending stocks grew by 40 million bushels to 885 million was 13 million lower than expected. Some of the other soybean numbers:

· Pods per acre now are estimated at 1,900 which is a new record.

· Beginning stocks were raised by +43 million bushels.

· Soybean demand was left unchanged.

· Global ending supplies were increased from 108.26 MMT’s to 110.04.

· The average on farm price for soybeans was left unchanged at a range between $7.35 and $9.85 per bushels.

2018-19 USDA U.S. Harvested Acres (million acres)

USDA Average Range of USDA

Oct 2018-19 Trade Est. Trade Est. Sep 2018-19

Corn 81.8 81.72 81.40-81.90 81.8

Soybeans 88.3 88.72 88.35-88.90 88.9

2018-19 USDA U.S. Yield (bu./acre)

USDA Average Range of USDA

Oct 2018-19 Trade Est. Trade Est. Sep 2018-19

Corn 180.7 181.8 180.6-183.5 181.3

Soybeans 53.1 53.3 52.0-55.0 52.8

2018-19 USDA U.S. Production (billion bu.)

USDA Average Range of USDA

Oct 2018-19 Trade Est. Trade Est. Sep 2018-19

Corn 14.778 14.872 14.700-15.220 14.827

Soybeans 4.690 4.733 4.623-4.890 4.693

2018-19 USDA U.S. Grain Carryout (billion bu.)

USDA Average Range of USDA

Oct 2018-19 Trade Est. Trade Est. Sep 2018-19

Corn 1.813 1.919 1.766-2.352 1.774

Soybeans 0.885 0.898 0.778-0.985 0.845

Wheat 0.956 0.950 0.895-0.997 0.935

The USDA reported the U.S. corn harvest is 39% complete vs 27% from a year ago and is running ahead of the 5 year average of 35% for this point in the season. All states are running ahead of their normal harvest pace except the states of:

· Pennsylvania -9%

· Iowa -7%

· South Dakota -4%

· Minnesota -2%

· Kansas and North Dakota each are -1%

The soybean harvest has quickly fallen behind normal pace over the past couple of weeks and now has some traders beginning to question if the prolonged delay in harvest may become bushels lost in some areas. As of this week the USDA reports that 38% of the nation’s soybean crop has been harvested vs the 5 year average of 53%. The only states in the country that are running ahead of their 5 year harvest average are: Illinois, Indiana, Kentucky, Tennessee and North Carolina. Many states are running far behind their normal 5 year pace, some showing the largest delays are:

· South Dakota -36%

· North Dakota -33%

· Iowa -32%

· Minnesota -31%

· Wisconsin -21%

· Michigan -18%

· Kansas -17%

· Arkansas and Nebraska are each -16%

· Ohio -10%

· Mississippi -5%

· Louisiana and Missouri are each -4%

RMA is reporting that farmers from all across the U.S. are finding weather-damaged soybeans. In order to qualify for a quality claims adjustment for damaged crops under the federal crop insurance program, soybeans must grade “sample grade or worse”. If you are finding damage to your soybeans you are encouraged to call your crop insurance provider immediately.

The heavy and persistent rainfall that has blanketed the Midwest over the past several weeks and caused harvest delays and grain quality concerns is also causing a slow-down in barge traffic along the upper Mississippi River. This river is used as a major shipping channel for Midwest grain to reach U.S. Gulf exporters. According to a Reuters report three locks #16, #17, #20 which are located between Davenport, Iowa and St. Louis have been closed due to high water and the latest estimate says that this situation is likely to continue for at least a 2 week period.

U.S. Ag Secretary, Sonny Perdue told Reuters that the $12 billion aid package to producers of crops affected by tariffs may shrink now that a new agreement has been reached that will replace NAFTA. According to Perdue they will be recalculating the financial aid once it’s determined which tariffs will come off and which ones will remain in effect until the formal agreement is signed.

The National Weather Service’s long-range forecast continues to show a very welcomed dry but cool forecast for the heart of the Corn Belt through the end of October.

It’s a bit hard to believe but the newest winter forecast from The Weather Channel says that we will see a pattern flip in November. Warmer than normal temps are expected in November from the West Coast to the Northern Plains and for much of the Midwest while below normal temps can be expected across the Southern Plains. NOAA has issued an El Niño watch and currently projects a 70-75% chance of El Niño type conditions by this winter. The monthly maps shown below are largely based on typical conditions found during an El Niño winter and give us some insight on what we might expect if the pattern continues.

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