Yield estimates

Informa Economics has made slight reductions in its estimates of U.S. corn and soybean crops compared to last month, but not as low as market analysts expected.

Informa cut its soybean yield estimate by three-tenths of a bushel, to 42.4 bushels per acre. That puts production 27 million bushels below last month at 3.24 billion bushels.

Informa lowered its average corn yield 1.4 bushels, to 157.2 bushels per acre. That cuts the crop size by 127 mb, but still puts production at 14.14 bb.

Compared to USDA, Informa’s soybean yield is down two-tenths of a bushel, but corn yield is almost three bushels above USDA’s.

The trend of the corn crop looks to be larger than the industry expected based on early harvest results.

Early yield results are coming in larger than most producers had expected, a good surprise for producers.

Cash rents

USDA’s National Ag Statistics Service estimates Minnesota’s cash rent for non-irrigated cropland averaged $177 an acre this year, up $27 from last year.

Thirty-four counties had cash rents of $200 per acre or more, compared with 18 counties last year.

Clay County had the highest average rent in northwestern Minnesota, at $160 per acre, a 44 percent jump from a year ago.

Mahnomen County had the second-highest cash rent this year, at $138. The average cash rent in the 11-county northwest district was $98 per acre, up from $81.50 last year, a 20 percent increase.

In my opinion, cash rent trends are going to trend lower after this year. Producers who have made commitments for long term rents are high price levels will be most affected as the price of corn is over $3 lower than at this time last year when many of these rents were negotiated.

If the price of corn continues to work itself lower for the next six months under the weight of a 14 bb-crop, many cash rent contracts will try to be re-negotiated and lowered by producers who find themselves unable to afford these commitments.

It’s a story worth watching develop over the next six months as many contracts are paid by March 1.

CORN ANALYSIS

Corn closed the week $.09 1/4 lower. Last week, private exporters did not report any private export sales.

In the weekly export sales report, corn sales shows sales of 34.8 mb for 2013/14.

The weekly crop progress/conditions report showed U.S. corn conditions were 2 percent lower from the previous week at 54 percent good-to-excellent.

This year’s rating is well above last year’s 22 percent. Over the last four weeks, corn conditions have declined 10 percent.

Only 9 percent of the corn crop is considered mature versus 28 percent last year.

With the USDA confirming larger yield potential compared to August and producers uncovering surprisingly strong yields in early harvesting, the corn market looks to find hedge pressure during the remaining weeks of September and into October.

Reasonable downside targets look to be $4.07 and long-term support of $3.87.

Strategy and outlook: Producers are 50 percent sold of 2013/14 crop and own the December 5.60 strike puts on 50 percent of production.

Producers are 10 percent sold of the 2014/15 crop.

SOYBEANS ANALYSIS

Soybeans closed the week $.13 3/4 higher from last week. Last week private exporters reported a sale of 121,000 metric tons of U.S. soybeans to an unknown destination.

In the weekly export sales report, soybean sales were 17.6 mb.

Crop progress/conditions report showed the soybean crop at 52 percent g/e, 2 percent lower compared to a week ago. This is well above last year’s 30 percent rating.

Soybean conditions have fallen 12 percent over the last four weeks. Soybeans continue to push higher on a combination of strong technical buying, as the market has cleared the spring highs of $13.50, which is now serving as long-term support, as well as fundamental support from a smaller-than-expected soybean crop.

Areas in the southern U.S. are reporting strong yields, but this is where rain has fallen in the summer months.

In the main soybean belt, where its been dry, yields should be well under average. Producers must recognize the 70-cent carry that January carries over July and decide not to store soybeans this year.

Strategy and outlook: Producers are 60 percent sold of the 2013/14 crop and own the November 12.60 put options on 50 percent of production.

Sell 20 percent of 2013/14 production at $14.05 against January. Producers are 10 percent sold of 2014/15 production.

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.

Brian Hoops can be reached at (605) 660-1155.