Better Farming – September 2016

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Better Farming September 2016 Farm News First > 41
MOE'SMARKET MINUTE
As most farmers know, the price
of corn and soybeans is
impacted by a number of
factors, many of which are not in the
control of the individual farmer. For
example, there are international
markets and how the crops are doing
in other countries. Ultimately, the
coming together of such factors
shapes international supply levels and
influences prices.
For Ontario farmers, one of the
biggest influences of corn and soy-
bean prices are the crops produced in
the American Midwest. Several
significant milestones throughout the
growing season affect corn and
soybean yields in that area. This year,
half of the U.S. corn crop was planted
by April 1 while the remaining 50 per
cent was planted in late May due to
delays from a very wet spring. Some
agronomists argue that late-planted
corn is more susceptible to yield losses
because it gets a shorter crop develop-
ment window. In such cases, timely
rains become all the more necessary.
Despite record temperatures in the
early summer, the U.S. Midwest has
been experiencing an excellent
growing season. The first few days of
July saw good rainfall, with some U.S.
growing areas receiving as much as 4.5
inches of rain. The rest of July was hot
and humid but provided enough
moisture to offset the heat.
By the beginning of August, 80 per
cent of the U.S. Midwest corn and
soybean crop was looking good. Only
10 to 20 per cent of the crops were
experiencing some concerns. With the
majority of the crops in good shape,
there is less concern with the 10 to 20
per cent that are experiencing less-
than-ideal conditions. The prediction
Gauging the market impact of the U.S.
Midwest corn and soybean harvest
Where best to determine if 2016 will produce bin-busting U.S. corn and soybean crops
than in that country’s Corn Belt? How will those bumper crops affect Ontario commodity marketing?
by MOE AGOSTINO and ABHINESH GOPAL
is that 2016 could be
producing the best
U.S. Midwest crop
conditions in 10 years,
as evidenced by early
August corn crop
ratings of 76 per cent
good to excellent and
soybeans at 72 per
cent good to excellent.
As farmers know,
both U.S. corn and
soybean crops need to
have ideal growing
conditions in late
summer and early fall.
In 2016 a strong finish could lead to
record yields and above-average
kernel weights.
Risk Management is
forecasting an above average U.S.
corn and soybean crop with a record
corn yield of 170 bushels per acre
(bu/acre) or better, and 48 bu/acre or
better for soybeans. The record high
for corn was 171 bu/acre in 2014 and
48 bu/acre for soybeans in 2015.
In fact, in early August, INTL
FCStone Inc.’s commodity advisory
also forecasted record-breaking U.S.
corn and soybean crops, with average
yields at 175 bu/acre and 48.8 bu/acre,
respectively. This will take ending
stocks above 2.5 billion bushels for
corn and 450 million bushels for
soybeans and put more downward
pressure on prices near-term.
A record yield equates to an
over-abundance of supply, which
means Ontario farmers will not likely
see strong corn or soybean prices this
year. As farmers know, however,
weather disasters and other unforeseen
circumstance can quickly increase the
price of either crop. If such conditions
occur, opportunities for record crop
prices could quickly enter the picture
and, in such a case, farmers should
swiftly book their crops.
What farmers should absolutely
avoid doing is falling into the bear
trap and desperately selling at the
lower end of a typical yearly range,
unless they have immediate bills to
pay and are too cash-tight. A review
of the long-term corn and soybean
charts does reveal that patience pays,
and we do get opportunities to sell
during a counter-seasonal or late-sea-
son rally, depending on the year.
Since La Nina weather conditions are
widely forecasted to kick in by late in
the year, which could have dramatic
effects on crops, it’s probably worth
the wait. BF
Maurizio "Moe" Agostino is chief commodity
strategist with Risk Management.
Abhinesh Gopal is a commodity research
analyst with Risk Management.
Risk Management is a member of the Farms.
com group of companies. Visit RiskManage-
for more information.
2016
Waist high soybeans
near Grand Mount, IA.
U.S. soybean field
in West Central, IN.
2015
What a difference a year makes! Last year in June, floods
from rain was the big issue for farmers in the U.S.
Midwest. This year in early July, the soybean crop was
almost waist high in Iowa. Big vegetation in soybeans
can be a concern early in the season, as growing
conditions often deteriorate and yields often turn out to
be poor.