Slow soybean harvest for the Midwest
Harvest progress released last Monday afternoon showed corn harvest at 39 percent complete. Up 5 percent from the previous week and 4 percent over the 5-year average of 35 percent. Soybean harvest progress is at 38 percent complete, up 6 percent for the week. Soybean harvest is 15 percent behind the 5-year average of 53 percent.
The harvest progress report for soybeans to no surprise showed harvest pace much below average for the major soybean producing states. Only two of the ten states recorded harvest progress above their respective 5 year average, those being Illinois and Indiana. Four states were recorded being 30 percent or greater behind their average pace. The furthermost being South Dakota at 36 percent behind average.
The corn harvest progress data was much more typical than that of the soybeans. Harvest progress for the 11 larger producing states showed four states above average; three of which are over 10 percent, five that are below normal pace, largest being Iowa at 7 percent, and two states at their five year average for this time.
A wide-open forecast for much of the Corn Belt has many areas playing catch up from rain delays. Snowfall amounts have ranged from 3-6 inches out in the Dakotas. There has been reports of soybean pods popping open in Northern Iowa through Minnesota and the Dakotas. Continuous rainfall and large temperature swings are to blame as pods have been dropping beans. Actual yield loss has yet to be seen and has many questioning the basis implications this could bring.
The soybean complex got a boost early in the week from bullish demand numbers Monday in the NOPA September crush report. The report came in at 160.78 million bushels, up 3.78 million from the pre- report estimates. A record for the month of September. Crush is up 18 percent from a year ago, up 24 million bushels, versus the USDA estimated increase of 15 million bushels. Soybean oil stocks were lower than expected at 1.53 billion pounds, 48 million pounds less than expected and down 92 million pounds from August.
Congress was officially notified by the Trump administration that trade negotiations will start with Japan, the European Union and the U.K. within the next three months.
The notifications is a procedural step under the U.S. trade law that is required 90 days before the U.S. enters into negotiations with other countries. Talks can’t be engaged before the 3 month window is over and consulting with Congress, to assure objectives laid out by the law are being fulfilled. Talks with the U.K. are planned to start after they exit the European Union on March 29, 2019.
President Trump stated in an interview last Wednesday that he doesn’t think the U.S. and China are ready to talk more about trade at the present time. Next discussions won’t likely be before the G20 Summit in November and possibly after that, many are speculating more tariffs will be proposed before any real progress will be made.
Despite the optimism following the recent E15 announcement, ethanol margins remain under pressure. Ethanol manufacturing for the week ending October 12, showed a decrease of 29,000 barrels per day, putting daily production at 1.01 million barrels. Ethanol stocks grew by 109,000 barrels on the week, totaling 24.13 million barrels, 100 million gallons above last year for the same time.
Export sales data released Thursday for corn and soybeans were below expectations. Corn sales totaled 15.1 million bu, which was half of the lowest estimate. Soybean sales were at 10.8 million bu., also half of the lowest estimate. Although, it’s very early in the marketing year, concerns are being voiced over the slow export sales pace for soybeans, which are 15 percent behind what is needed to reach the USDA’s estimate. Wheat sales totaled 17.5 million, which was above expectation and the 10 week average.
Currently, both Argentina and Ukraine export corn values are $2-3 per ton cheaper than the U.S. corn for October, November, and December. This is not a large enough spread to deter buyers to other sources but it is something trade will be monitoring.
Soybean quality concerns contributed to the soybean strength early last week; wet, snowy conditions have likely caused some yield loss to take place in certain areas but its’ impact may be less than originally thought. Although, it’s thought to be an inaccurate, the crop condition rating fell 2 percent Monday. The good to excellent ratings now stand at 66 percent, which is 5 percent above last year for the same date. The current USDA’s estimated soybean yield is 7 percent higher than year it was a year ago at the same time.
For more information, you may contact Mick Hoover at (515)-200-5115, or e-mail at email@example.com. The opinions and views expressed in this commentary are solely those of Mick Hoover. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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