Updated: Jul 19, 2019
Update for July 17th, 2019
Prices on the CBOT moved sharply higher following last week’s USDA report but this week we’ve seen that initial reaction fade. The hot and dry outlook that had developed and captured the trade’s attention has also lost much of its punch now that most of the Midwest has, and will, continue to receive ample rainfall to assist crops through the upcoming heat wave. Oftentimes summer prices will peak and then begin their long slide towards the harvest low once summer weather outlooks to show mostly favorable conditions for the foreseeable future. If the cooler pattern that is now expected to arrive next week does not materialize and the forecasts leading up into the August report turn hot and dry once again, new weather concerns could begin. Without this we are likely to watch the downturn in prices escalate as spec funds ramp up selling.
Results are in from an aerial tour of the Corn Belt that took place over a two week period surrounding July 4th, and the findings are “staggering”. The farm division of John Stewart Corporate, AgMarket.Net, along with a few private investors developed a private plan, “Corn Project 2019” to assess the un-harvestable corn acres and the health of the crop over a specific region. Bill Biedermann, a partner in the company involved, described the process and findings during an interview this week on AgriTalk. He explained that the study used hi res and ultra hi res aerial pictures taken every 25 miles. The flight path included three to four passes over each of the 5 states included in the study. The process photographed over 157,000 acres across the states of Ohio, Indiana, Illinois, Missouri and Iowa.
“Corn Project 2019” results generated an overall yield estimate of 156 bushels per acre and a harvested acres estimate of 79.62 million acres. Biedermann, explained that that these figures are “conservatively hopeful” and will require ideal weather from this point on to achieve. He went on to say, “That’s really not the story here. The story is to look at look at these pictures and to digest the stage of the crop that we’re in…it’s just unbelievable…We evaluated 9 million acres that would be at risk of not making maturity if there’s a September frost, and I think it was 12 or 13 million more acres that if it doesn’t make it it’s going to be potential silage.” He also noted that even where ground checks showed good crop conditions the aerial photos showed massive holes where the crop had been destroyed.
The USDA’s Risk Management Agency (RMA) has been compiling prevent plant acre totals. Prevent plant internal numbers from early July showed 7 to 8 million corn acres and 2 to 3 million soybean acres with a total prevent plant tally for all crops at 12.5 million acres. These amounts are expected to increase as the final figures are received. The USDA is expected to release more information of importance to farmers by the end of this week.
There is still a lot of uncertainty regarding exactly how the next round of trade aid payments will be distributed amongst U.S. farmers (will payments vary widely by county and what will the payment rate be for each commodity covered in the plan). USDA Undersecretary Bill Northey stated that he expects that the sign up process could begin as soon as the end of July and producers could begin to receive payments by the middle of August.
An upper-level pattern has developed which will allow a “heat dome” to expand across the Corn Belt bringing with it dangerously hot temperatures with excessive heat warnings posted for much of the Midwest and eastern Plains through Saturday. Following this the 6 to 10 day outlook from the National Weather Service trends cooler for the Midwest.
High temps are expected to reach into the upper 90’s and low 100’s. The “feel like” or heat index temps could reach as high as 110 degrees in portions of the eastern Corn Belt.