The summer heat is kicking in, and with forecasts calling for dry weather, markets are jumping higher.
Recent rains in portions of the Midwest helped ease a few dry areas, but many fields across central Illinois are dealing with the opposite problem with floods drowning out crops. That has led to some concerns about the quality of the overall crop.
“Considering how (those rains) came, there’s no shot to put anything back in those flooded fields,” Jerry Gidel of Midland Research said. “Beans are definitely not fantastic, with some rain issues causing wet feet. It’s tough to make a judgment. It’s amazing how quickly you go from needing rain to too much.”
Gidel said he is expecting a 200-bushel per acre corn crop in high-performing fields this year, but not in the 210-215 range for most farmers. He said the corn pre-pollination period wasn’t the best for corn growth “particularly in Iowa.”
Condition rating reports are going to be the major focus for traders for the upcoming weeks, Gidel said. He said it’s tough to keep up with some of the USDA figures that follow trend line yields in the Supply and Demand report as it’s been difficult to meet those marks in recent years. That leads to their estimates being higher than what ends up occurring come harvest time, causing additional volatility at the end of growing season.
“We haven’t had anything above 176 since, what, 2017?” He said. “They keep telling us 179 or 180, so prices go down as people think we’ll overcome all the issues we’ve seen. But that’s a heck of a bunch to bounce back and that’s going to take down the U.S. yield.”
However, U.S. yield isn’t the only variable to the grain markets, as Brazil has had its own crop issues this season. Gidel said the USDA may be overestimating the corn crop in South America, which will have a major effect on the demand picture for U.S. corn. If that comes to be true, that could mean another harvest-season rally for U.S. grain prices.
“I’m not wildly excited we’ll be making September corn go back to $7.50 like we had for July, or that September beans will be a $17-18 item, but I don’t think there’s much gloom and doom out there,” Gidel said. “I think our yield judgments are going to be off the trend yields from the USDA.”