If the fall of 2018 showed producers anything, it is the importance of having the right weather to get the crop out of the ground.
For many, harvest is on the doorstep, and now the markets are actively watching the weather. Producers are wary of any harvest delays, as that increases the chances for frost damage to the crop. However, that concern is not yet matched in price action.
“I don’t know if we’ve priced in a whole lot of that,” Jack Scoville of Price Futures Group said. “Looking ahead at weather forecasts, NOAA just came out with an October outlook implying warmer than normal temperatures and we are thinking we are going to skate on the frost/freeze potential.”
Going into early October, NOAA is giving a 60 to 70% chance for above-normal temperatures in Iowa, Illinois and Missouri.
Scoville said traders are expecting a smaller crop overall this season, which is supportive, saying any colder weather might not make much of a difference.
Some early-planted yield counts are on the high end of expectations, Scoville said, which makes sense for this year. However, as the harvest truly kicks into full swing, he expects yields to start dropping off.
The latest USDA yield estimates had corn pegged at 168.2 bushels per acre, while soybeans came in at 47.9 bushels per acre.
Internationally, there were positive signs on a trade deal with China during the week of Sept. 16, with the Asian country making multiple purchases of soybeans totaling 720,000 metric tons over the course of three days.
Scoville said he is interpreting these as goodwill purchases.
“That’s how they are being advertised,” Scoville said. “I don’t think we know what is going to happen here. I think we are all hoping there will be some sort of an interim deal. Hopefully we are finding a way for sales to increase.”
With recent deals China is making with countries such as Argentina, he said working toward a shorter-term interim deal would be to the United States’ benefit. The potential impacts of China receiving agricultural exports from other countries has been in the minds of traders for some time. Repairing those trade routes, even with a deal, could take a little while, Scoville said.
“With the trade war, we certainly gave (China) a big push,” he said. “We know from experience when we’ve done these things in the past, with Russia and Japan for example, it’s meant loss of business for a considerable period of time.”