Update for October 14th, 2020
Friday the USDA announced October Supply and Demand numbers which included a million acre reduction in harvested corn acres and a 700,000 acre reduction in soybean acres. These substantial adjustments caught the trade off guard. Traders expected much smaller adjustments this month since significant reductions were made in September to account for the derecho storm across central Iowa and because of the resurvey that the USDA plans to conduct this month. Net changes in corn acres by state are listed:
Iowa lost -300,000
North Dakota down -410,000
South Dakota lost -360,000
Illinois saw an increase in harvested acres +500,000
Nebraska also increased +380,000
The 7.8 million prevent plant acres from this season will be greatly influenced over the next few months by the corn to soybean price ratio.
Production estimates for South America did not change in this USDA report, October is too early to make any accurate adjustments. Brazil received scattered rainfall over the weekend with more expected this week which will help improve soil moisture for better planting conditions. Temperatures across Mato Grosso do Sul and Sao Paulo set record highs last week reaching 110 to 112 degrees, Crop Consultant Dr. Michael Cordonnier stated, “These rains can’t come soon enough”. Farmers are waiting for additional rainfall to proceed with planting. Brazil now has the driest soil moisture profile in 40 years for the month of October so it is going to take more than a few light rainfall events to erase the dry conditions. AgRural reports that soybean planting is at the slowest pace in 10 years with only 3.4% of the crop planted compared to 11.1% a year ago. Typically farmers in central Brazil want to have their soybeans planted by October 25th to allow enough time to plant their Safrinha corn crop by February 5th.
The maps below show an overview of the rainfall and temps expected across Brazil for the last half of October. The top soybean producing states are labeled by name and by the percentage of Brazil’s total production that is grown in each.
USDA left their corn exports to China unchanged at 7.0 million tonnes which has been met with a lot of skepticism for a few reasons. For one, the USDA’s Foreign Ag Service shows commitments of 9.975 million tons of U.S. corn to China as of October 1st. In addition corn prices within China are moving higher and have recorded new record setting highs of $9.25 a bushel this week. JCI says “after the China holiday, DCE most-active corn futures 2021 contract soared, setting a new record”. Right now the market is reacting to concerns regarding the extent of crop damage from the typhoons earlier this season. The diminished corn stockpile also has the market very nervous. Meng Jinjui, a senior analyst with Shengda Futures told Reuters that “The stockpile has been sold out. The market strongly expects supply shortages, and has gone bullish on futures.” An operator of a grain drying business in the top producing Heilongjiang province reports that traders and users are scrambling to purchase corn fearing prices will continue to climb.
The USDA program known as WHIP+ (Wildfire and Hurricane Indemnity Program) is accepting applications until October 30th for losses in 2018 and 2019. While the name of the program itself does not sound like something farmers in our part of the country would qualify for the title is misleading. WHIP+ is designed to compensate farmers for crop losses due to natural disasters which include drought and excessive moisture. If you have any questions regarding eligibility please call your Farm Service Agency, remember the application period expires October 30th. (Brownfield Ag)
WeatherTrends 360 predicted many months ago that a La Niña weather pattern was beginning to develop, well it has formed is building strength. Water temps are rapidly cooling along the equatorial Pacific Ocean and models are now indicating that we will see a strong to very strong La Niña pattern which is expected to last well into 2021. We have already seen drought conditions emerge and intensify across both North and South America and those conditions are likely to expand.
The Midwest has seen a wide fluctuation in temperatures this month but models indicate the cold is here to stay for a while. In fact some areas may see the first snowflakes of the season. The GFS and EURO models differ widely as we move into the weekend. The two maps below show the GFS on the left and the EURO on the right, notice the major difference in the extent of the cold air.
The GFS forecast is very cold and snowy. The EURO is rainy but much warmer.
The difference between the two models is significant. If the GFS is correct we could see 3-5 inches of wet snow across parts of Iowa, MN, Illinois and Wisconsin.
Notice that the EURO keeps the snowfall further north.
The forecasted temperatures also vary significantly with the GFS showing temps Monday morning in the low 20’s. While the EURO shows lows in the 60’s!