Big crops in 2016 pushing need to boost demand

first_imgShare Facebook Twitter Google + LinkedIn Pinterest The USDA weekly crop progress report of Nov. 7 had the U.S. corn harvest at 86% while the soybean harvest was 93% complete. Ohio was at a very similar pace that showed corn harvest at 81% with soybeans at 95% complete. The five-year average harvest pace for Ohio had corn harvest at 67% and soybean harvest at 85%. The fantastic harvest weather since early October had Ohio’s producers experiencing very few delays due to rain events. In fact, the weather has been pretty much one of a prolonged trend of normal to above normal temperatures with below normal rainfall. It allowed those producers planting wheat to get it sowed timely during the first two weeks of October. Then for many, rains followed within seven to 10 days, pushing wheat to a fantastic early start with fields a deep green, bringing smiles to producers. Unfortunately, with world wheat stocks at record levels, wheat prices are in the tank as they continue to trade at 10-year lows. For many in Ohio, wheat prices for new crop 2017 wheat are near the $4.30 mark, certainly nothing to be excited about. Those that can double crop soybeans following wheat will certainly be well pleased with the 30 to 40 bushels per acre many experienced with double crop soybeans in 2016.The Nov. 9 USDA supply and demand report proved to be bearish as corn and soybean production, yields, and ending stocks were all above trader expectations. USDA put U.S. corn production at 15.226 billion bushels and the yield at 175.3 bushels per acre. Both are at new record levels. Corn ending stocks rose 83 million bushels from October, now at 2.403 billion bushels. Corn is flirting near the critical ending stock number of 2.5 billion bushels. That kind of a number often brings about negative price thoughts that can last for months. Demand for corn is above levels of last year. All eyes will continue to watch U.S. corn exports in the months ahead, now at 2.15 billion bushels. It will be crucial to watch since those exports were lowered 100 million bushels last month. December CBOT corn currently has a contract low of $3.1475. For much of this fall it traded in a sideways range of $3.30 to $3.60.USDA estimated U.S. soybean production at 4.361 billion bushels with a yield of 52.5 bushels per acre. Ending stocks are at 480 million bushels, up 85 million bushels from the October report. Both U.S. corn and soybean production and yields are at record levels this year. The U.S. soybean yield has risen every month since the actual field reports began with the August report. At that time USDA estimated the soybean yield at 48.9 bushels per acre. It should be no surprise that the U.S. soybean yield in November was up 7% or 3.6 bushels from August. The 2016 soybean production year has been compared to 1994 with similar weather patterns. In 1994 the November yield compared to August rose 11%.Grain producers, especially soybeans, are being treated to a new news event. No, it is not the election of Donald Trump as President. Rather, it comes from China. On Friday, Nov. 11, grain markets watched with anxiety and surprise all at the same time. That day January 2017 CBOT soybeans closed at $9.86, down 12 cents, and near the lows for the month of November. News that the Chinese government had capped speculation on the trading of commodities in China aided the day’s decline. Rumor had it that China had forced a large fund to liquidate large long soybean positions as the fund exceeded position limits. More details will certainly be seen in coming months.With harvest quickly coming to a halt as of mid-November, harvest selling pressure is now behind us. Producers seemed to be willing to sell soybeans this harvest season to give them operating funds. They are holding quite a bit of of corn in anticipation of prices hopefully moving near the $4 mark in coming months. In the near-term the market will continue to focus on record production and less on record demand.last_img

Leave a Reply

Your email address will not be published. Required fields are marked *