While everyone spent this past week waiting for the Aug. 12 WASDE report, farmers have been watching the weather forecast. The two items are, of course, related.
Last year USDA increased its estimates of crop yields by two bushels in August, only to be forced to drop the estimate by nine bushels in September. This year may not be any easier for the analysts, according to Don Roose, president of U.S. Commodities in West Des Moines.
“The market is kind of handcuffed,” Roose says.
In most years a crop that makes it past pollination tends to get bigger, but this year many people aren’t sure if the crop is getting bigger or smaller. And that, in turn, means analysts aren’t sure if prices will start dipping to a normal harvest low or if they will shoot up like they did last year when the big crop didn’t quite materialize.
So far it appears the eastern Corn Belt is wetter and better than the western Corn Belt. But there are plenty of unknowns out there. Those unknowns aren’t just in the United States. There are worldwide production issues. Brazil’s production is down. Ukraine has issues with its wheat crop. Russia also has problems with its wheat crop.
There are also some questions on the demand side. China has been rather quiet on the buying front this summer. Traders aren’t really sure if China bought ahead enough to stockpile over the winter or if it is waiting to see what happens to the market. World supplies appear to be down, but nobody is sure if the United States has become the supplier of last resort as a result of recent trade wars or if its dependability has pushed it higher on the list.
The result of all this uncertainty is that corn has remained “handcuffed” for the last month or so, trading in a 33 cent range. But it is clear there is much to watch in the coming month and farmers should be paying attention.
“This might be the year where the combine (and its yield monitor) tells the tale,” Roose says.