Crop tours and yield surveys this month might swing markets in the short term, and they could hint at what USDA will report in September. But tour news likely won’t carry markets far for long.
Yield estimates from the Pro Farmer tour of crops from Ohio to Nebraska were scheduled for release Aug. 24. Allendale started its survey of farmers Aug. 20 and expects to release results Sept. 5.
These and other tours and surveys offer discussion points ahead of USDA’s September numbers, but Allendale chief strategist Rich Nelson said, “We probably have a little trouble with suggesting this is a proxy for annual yield numbers.”
Tour and survey numbers tend to generate some short-term price action, but “it may not be a major price move as far as starting major trends,” Nelson said.
Yields are always important and timely pricing signals, but this year the market faces secondary issues, he said: Trade psychology and trade agreements are having a bigger impact. That’s why corn looked underpriced after USDA’s August production and supply-demand reports.
In the August issue of Iowa Farm Outlook from Iowa State Extension, economist Chad Hart laid out the market challenge.
“The trade disputes with China, Mexico, Canada and the European Union have dimmed the prospects for export growth. And the run of strong productivity in Iowa’s main crops seems to be chugging right along. Despite flooding in the north and drought in the south, USDA’s Crop Progress reports have shown crop ratings that are above average, leading to thoughts of another set of bumper crops.”
With the carryovers from last year, corn and soybean supplies could be record-high this fall — weighing on prices and margins.
Hart said estimated farm margins for 2018 corn and soybean peaked at the end of May, when futures traded around $4.25 for December corn and more than $10 for November soybeans. Estimated margins fell below breakeven in June and were negative in early August.
Bargain buying from some customers in smaller export markets boosted prices a little in late July, Hart noted.
“However, the overall picture seems to be a repeat of the last several years of large crops and minimal returns,” he said.