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AgriFinance Market Update 8/16/19

Today’s positive price action was a good way to end a rotten week.  Prices found strength on a technically oversold market and bottom picking.   Results of a digital crop survey and anticipation of the Pro Farmer tour also supported prices.  Nearby corn finished the day 10 cents higher.  Soybean futures closed 9 cents higher.  Chicago wheat settled 2 cents higher, and KC and MPLS futures finished up 3-4 cents.  The weekly scorecard wasn’t so pretty.   December corn lost 37 cents on the week. November soybean prices fell 12 cents for the week.   Livestock prices also took a beating.   We are glad to lay this week to rest.  Time to move forward.

The outside markets had a wild week between falling bond yields and concerns over the US-China trade war.     The DJIA closed up +306 points today, but is still lower on the week.  The dollar index was slightly higher.  Oil was up a few cents and trading just under $55/barrel.  The chart below shows the past year of trading for crude.  Prices came close to breaking the $50 barrel area this month.   This is important to note because oil prices do not stay under $50/barrel very long.

The market is still in shock over Monday’s report numbers.   The trade got a little dose of reality today.  Today’s results of a digital crop tour by Gro Intelligence does not support USDA’s robust projections.   The company is forecasting a national corn yield of 163.2 bpa, a whopping 6.3 bpa lower than the USDA printed on Monday.   The soybean yield is projected at 44.2 bpa, a difference of 4.3 bpa versus the current USDA August estimate.  In many people’s view, the  Gro Intelligence yields seem much more reasonable than the latest USDA’s yield estimates.  Time will tell though.  No one is really arguing about the condition and yield estimates for Iowa or Nebraska.  In general, both states have been blessed with good growing conditions,in addition to timely plantings.  There is a lot of disagreement over yield estimates in IL, IN, OH, MO and SD.  The Gro Intelligence survey pegged IL corn yield at 153 bpa, not even close to USDA’s 181 bpa.  IN was pegged at 138 vs 166.  OH corn yield at 136 versus 160.  The Iowa yield was estimated at 187 vs USDA’s 191.  NE came in at 182 versus 186.

Gro Intelligence found a vastly different soybean crop in IL versus the USDA, 46 bpa vs 55.   The Gro estimates for bean yields in KS, OH, MO and SD were at least 6 bushels lower than the current USDA estimates.  Something doesn’t add up.

Perhaps the Pro Farmer tour that starts Monday will answer some questions on yield.  Participants in the tour will sample roughly 3,000 corn and soybean fields.  The lateness of the crop and planting woes will be of particular interest this year.  Yield estimates between the Pro Farmer tour and USDA will not match up because of the sampling methods.  However, it will give the trade its first “on the ground” estimate this year.  You can follow results on twitter #PFTour19.

The ProFarmer tour will undoubtedly encounter some very late planted crops.  According to the latest 90 day forecast, we may be in luck and have an extended growing season.

Meanwhile, the ECB could use some immediate help in the rain department.   Some corn has fired up to the ear already.   There was a report of silage harvested in WC IN at 30 percent – the plant was dying and losing nutritional value rapidly.   There is huge variability in the crop and that does not equate to a good yield.

What does the price picture look like after the free-fall in prices this week?  December futures closed at $3.80 3/4.  Support lies at $3.70 and $3.63 3/4.    December will test resistance about a dime higher than tonight’s close and then again at $4.05 1/2.    If prices push beyond $4.05,  futures will need to poke through $4.20 to scare the Bears.    November soybeans held it together better than  corn futures this week.    November has support at $8.63 1/4 and $8.46.  The first test for November soybeans lie at $8.88 3/4 and then $9.10 3/4.

 

Crop Insurance Announcement:  RMA has decided to defer interest on crop insurance bills this year to provide some relief to farmers.  Typically crop insurance is billed August 15, and payable by Sep 30 with no interest attached.  For 2019 only, RMA will give you an extra 2 months to pay our bill without interest.  Billings will still go out in August, but you have until November 30 to pay with no interest.  Anything postmarked December 1 will have interest calculated from the date of the premium billing notice.

Have a good weekend.

 

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