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Yields are one thing; test weights are another

combine tractor in corn
Could a deal with Mexico be announced this week?

Corn bears continue to point towards a record U.S. yield as private crop tours across the country are confirming large USDA estimates. I've personally heard from producers down south in the Delta area that the yields are big but "test weights" are a bit of a disappointment because the crop matured too fast.

From a traditional balance sheet perspective, bears want to argue that a yield north of 180 bushels per acre will start to bring back debates about a +2.0 billion bushel carry. Bears are also talking about more corn acres in Argentina being planted and perhaps a substantial jump in U.S. corn acres for 2019. I've heard some early talk of more than 95 million corn acres being planted in the U.S. next season. I'm not so sure I'm on board with that argument this early, especially as I wonder if the banks will be willing to loan on that many corn acres. I've heard some fairly large farm lending groups are starting to become harder to work with and are reducing and cutting lines of credit.

Let's also keep in mind, that 28 and 32% N for 2019 is about +20% to +25% higher for the 2019 growing season in many locations. I've heard from numerous producers across the country who are seeing steep increases and becoming a bit more worried that prices might not come down much. Keep in mind, spot prices across most parts of the U.S. remains strong and global demand is certainly robust.

Meaning the price of poker in the corn field next season looks as if it will be raised. Bulls in the market are talking about perhaps a handshake deal with Mexico being announced today or tomorrow, which will open up the door to overcome some of the hurdles with Canada. I'm still not hearing much new in regard to trade negotiations with China and or Europe. From a technical perspective, I still feel like we are range-bound for a while somewhere between $3.40 and $4.10 per bushel.

The Pro Farmer Crop Tour finished their third leg last night and released estimates for Illinois and western Iowa. The results for Illinois show an average yield of 192.63 bushels per acre, up substantially from last years 180.72 estimate. The USDA is currently forecasting the Illinois crop at 207 bushels per acre vs. 201 average yield harvested last year. Western Iowa showed some big numbers to the West and Northwest, both regions up over +4% from last year. On the flip side, the Southwest region of the state showed yields down over -3% compared to last year. The rest of the state will be reported tonight. 


The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.


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