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USDA Report Worksheet and Weather Week 2

Update for August 14th, 2020

Wednesday’s USDA report delivered larger yield and production estimates than the trade had been anticipating. The corn yield increased from 178.5 bushels per acre in July to 181.8 bushels per acre now in August, surpassing the average trade estimate of 180.5. Soybeans also received a hefty increase to 53.3 bushels per acre vs the average trade estimate of 51.3 and the USDA’s previous report in July of 49.8 bushels per acre. This July to August jump in soybean yield estimates is the largest on record.

*The USDA also pointed out that yield estimates in the August report were determined prior to the Derecho wind event that occurred earlier in the week.

August USDA Supply & Demand

Source: USDA, Reuters

Prices were expected to be under pressure Wednesday following the USDA’s estimated bump in production. U.S. commodities have been battered since March and typically additional bad news of this magnitude should cause prices to collapse. But instead we saw a remarkable turnaround in the market indicating the negative news may have already been priced into the market and that traders are finally becoming more optimistic about Chinese demand. This also signals that traders are no longer confident in their own yield estimates and are very skeptical of the record yield estimates as well as the number of planted corn acres from the USDA. Soybean prices also saw an impressive rebound following the report due to worries U.S. yields may have peaked as forecasts have again turned drier during a critical development period and steady increases in Chinese buying.

Whether you’re a fan of the Pro Farmer Tour or not, the annual event will begin on Monday and will finish Thursday with a re-cap of the week’s findings on Friday once both the East and West tour group can meet to finalize the results. The tour supplies some interesting data and insight but can also “ruffle a few feathers” along the way. To do an exact comparison between your fields and those from the Tour here are the step by step procedures recommended by Pro Farmer for determining yield for both Corn and Soybean fields:

In each corn field — Get past the end rows and then take 35 paces into the field.

• At the 35th pace, lay out a 30-foot plot and count all the ears that will make grain on two 30-foot rows.

• From one of those two rows, pull the 5th, 8th and 11th ears. This gives us a consistently random process to select sample ears.

• Measure the length of grain (in inches, rounded to the nearest one-quarter inch) on each ear.

• Count the number of kernel rows around each ear.

• Record the row width in the field.

• To calculate the estimated yield, take the average number of ears in the two 30-foot rows TIMES the average length of grain per ear

TIMES the average number of kernel rows around; DIVIDE the total by row width.

Example: (50 ears X 6.5 inches X 16.7 kernel rows) / 30-inch rows = 180.9. This example gives you an estimated yield at that spot in the field of 180.9 bu. per acre.

In each soybean field — Pick a ‘representative spot’ in the field.

• Measure 3-foot of row and count all the plants in that plot. Randomly select three plants. Count all the pods on those three plants and

Calculate the average number of pods per plant.

• Multiply the average number of pods per plant by the number of plants in the 3-foot plot. Multiply that number by 36, and divide by row width.

Example: (14 plants X 32 pods/plant X 36) / 15-inch rows = 1,075.2 pods in a 3’X3’ square. Compare your results to what we find on Tour.

Tuesday, Iowa Agriculture Secretary Mike Naig told a news conference that storm damage from Monday’s derecho has impacted 10 million acres of Iowa farmland and millions of bushels of grain storage. Naig said that the early estimates show tens of millions of bushels of commercial grain storage and millions of bushels of on-farm grain storage were either heavily damaged or completely destroyed by the storm’s hurricane-force winds. This could leave some producers without storage for harvest which is only weeks away. And while crop damage is obvious, the extent to which it will lower final yields won’t be known until harvest. (Reuters)

*The USDA reports that Iowa producers planted 14 million corn acres this year or more than 50% of the states farmland acres. Iowa is the nation’s largest corn producing state in the nation producing about 2.58 billion bushels of corn in 2019 or 19% of all of the corn grown in the entire U.S.

USTR Robert Lighthizer and Chinese vice Premier Liu He have been scheduled to meet via videoconference tomorrow. There has been no formal announcement that the meeting will occur and if it does most expect it will be a short discussion as there are no major issues to address at this time. Deputy level discussions have been ongoing which have yielded additional progress. The Phase 1 trade agreement continues to be implemented with 50 of the 57 structural improvements already in effect. In fact China’s imports of U.S. ag products are already better than those of 2017 and many now believe 2020 could be a record year for U.S. exports to the country with 4th quarter sales expected to approach $10 billion.

Ag Economist Scott Irwin with the University of Illinois told Brownfield that based on 2021 budget projection reports by his fellow colleagues, more government aid will be needed in order for 2021 crop budgets to remain out of the red. He expects that on average most Illinois corn and soybean producers should get close to break-even for the 2020 crop when you factor in more than $100 per acre in government payments. “If we look at 2021, without those payments we are looking at losses on corn of roughly $75 per acre possibly upwards of $100 per acre. Those are just really catastrophic projected losses.” So something must be done to ensure U.S. farmers are able to reach break-even prices in 2021. “Either we have to continue $100 per acre plus payments, or prices for corn and soybeans go up, or we will have to have a substantial ratcheting down on the cost side of the ledger.”

We hear a lot about “Break Even’s” but do you know exactly what yours is right now, or do you assume it’s unchanged from last year? As we look ahead to 2021 producers across the country know margins are going to be tight and profitability will be determined by knowledgeable decisions made from solid data and years of experience. The patented MAX Program at Ag Performance is not a “one size fits all” program. The MAX provides producers with personalized, up to date production costs so informed marketing and spending decisions can be made. If you would like to take the guess-work out of your business decisions please contact one of our advisors today at (641)562-2370 or email Laurie directly at

The National Weather Service’s Climate Prediction Center has increased the odds for La Niña development in the Northern Hemisphere for fall 2020 to 59% (up 5% from last month) and gives the weather pattern a 55% chance of lasting through the winter into 2021. This could mean a more active Atlantic hurricane season this fall with impacts that could reach even further. La Niña weather patterns generally produce drier winter’s across the southern U.S. and bring colder and stormier weather to the north. La Niña effects to weather in South America are often varied with croplands in Argentina generally becoming more arid while Brazil can receive heavy rainfall. Australia and Indonesia usually experience flooding. (Bloomberg)

The National Weather Service has projected a significant chance that temperatures will remain above-average across the U.S. through October. Michigan state climatologist Jeff Andresen says “That’s a problem, it’s already a problem in some portions of the Corn Belt.” It’s already been a hot year for much of the nation and Andresen says the outlook for the remainder of August shows a continuation of unfavorably dry conditions across parts of the Midwest to add more stress to crops, especially soybeans during key development stages and also to livestock.

The NWS data regarding the hot summer and drier outlook ties in closely with a report released several weeks ago by Bill Kirk of WeatherTrends 360. In this article Kirk warns that statistics suggest an extremely dry correction is coming soon which has already started across 1/3rd of the U.S. This is a copy of the article:

Bill Kirk

Weather, trade wars, and a global pandemic haven’t been kind to American farmers in recent years, but there are some very big changes on the horizon with the weather that will help but also hurt.

The United States as a whole has experienced seven wetter-than-average years in a row (2013-2019) – and that’s only happened twice in the past 125 years and has never happened eight years in a row. Statistics alone suggest a very dry correction is coming, and it’s actually already started for 35% of the U.S. as of late May 2020.

In May of 2019, the U.S. experienced the least drought-like conditions in several decades with just 9% of the U.S. having dry conditions (see chart below). The Weathertrends360 FarmCast outlook suggests this dry trend will expand to 50% of the U.S. in 2020 and even drier into 2021.

Looking at the long-term ocean cycles, there are three that are teaming up together that further support a major correction in the U.S. weather pattern going from wet to very dry. The first is a moderate La Niña taking shape now in the Equatorial Pacific, where the waters have cooled significantly from the warm El Niño-like conditions of recent years. La Nina’s tend to make the U.S. drier but when combined with two other ocean cycles – called the 30-year Pacific Decadal Oscillation (PDO) negative (cold) cycle and the Atlantic Multi-Decadal Oscillation (AMO) positive (warm) cycle – the odds increase dramatically for a prolonged 12- to 18-month dry to drought-like scenario for 50% to 60% of the U.S.

Another factor is the reduction in global pollution due to the COVID-19 pandemic, especially sulfuric acid from power plants and automobiles. Pollution actually blocks in-bound solar radiation, keeping the world cooler; with reduced pollution, the risk for hotter and drier weather is possible.

Factoring in trillions upon trillions of statistics and 24 climate cycles, the news for American farmers is mixed: Drought-like conditions are likely to increase, which can ultimately mean much higher commodity prices in 2021. That’s the good news. The bad news, however, is that some farmers would have lower yields and be unable to capitalize on the more favorable macroeconomic conditions.

The balance of the 2020 season looks to be favorable with ample soil moisture during planting, getting crops off to a better start, but a drying trend will continue through the 2020 harvest. According to the Weathertrends360 FarmCast outlook, the harvest season is likely to be the warmest in three years with above-average temperatures and the driest in five years, with well-below-average rainfall and snowfall across the Corn Belt. Frost and freezes are likely to be much later than typical with no threat to maturing crops.

For agricultural interests outside the Corn Belt, there is very high risk for significant crop losses along the North Central Gulf Coast, Florida (citrus), and even New England with upwards of 20 named tropical systems, several likely to make landfall in the U.S. When these cycles team up, historically, the U.S. has a devastating hurricane season.

Winter will be colder than last year’s very warm and not so snowy winter with a couple of polar vortex outbreaks in early January and late February. Snowfall is again likely to be below average for a majority of the Corn Belt with expanding dry conditions.

Finally, spring 2021 planting looks to be the driest in six years, with below-average soil moisture across much of the Corn Belt; setting the stage for a very interesting, but challenging, 2021 season.”

There appears to be a bit of agreement forming within portions of the meteorology community regarding the outlook for significant changes in weather patterns over the coming months and years. Last week I included Elwynn Taylor’s research regarding tree-rings and their correlation to weather events over 100’s of years as well as and the anticipated time table for the next severe drought and the trends to watch for in its development. This week WeatherTrends 360 paints a rather hot/dry picture for the remainder of 2020 and through 2021, perhaps just the beginning of what’s to come.

Looking at the 6 to 10 day outlooks from NOAA we see a slight cool down is expected for the heart of the Midwest accompanied by below normal precipitation.

Temperature Probability

Precipitation Probability

As we move out further to the 8 to 14 day forecast we see the presence of warmer than normal temps move back into the northern Corn Belt with yet another week of above-normal temps for a majority of the U.S. Temperature Probability

Precipitation Probability

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