The quality of the 2019 corn crop has been a focus for many this season.
As farmers bring in corn yields with variable results, the USDA’s final crop condition report for corn on Nov. 3 rated it at 58% good/excellent. That trails last year’s condition rating of 68% good/excellent, with much of the 10% difference falling into the fair category.
Moisture levels have been coming in extremely high for harvested corn this year, leading to concerns about overall yields. While the USDA recently cut the estimated national corn yield to 167 bushels per acre, Mike Zuzolo of Global Commodity Analytics said the cuts were largely based on the corn population, without much of the quality taken into account.
The USDA cutting yields based on population instead of ear weight is going to be a big deal, Zuzolo said. He said harvested acres could still be cut in the upcoming reports, and a high-moisture corn crop could cause yields to decrease even further.
“Where we were getting 60-62 pound test weights last year and the year before in a lot of these states, it’s not hard to find 52-54 pound test weights,” Zuzolo said. “That’s were between now and January, it would make sense for another yield cut or harvested acreage drop.”
Mike Moellenbeck, vice president of Grain at River Valley Co-op in Eldridge, Iowa, said the biggest issue with corn his group has brought in this year has been that higher moisture level. The crop they are bringing in to the co-op averages 23-24% moisture, about 6 points higher than last year. That means more drying is necessary for storage.
He said that despite the crop coming in at high levels and test weights being slightly down, he is pleased with the corn.
“Maybe test weights are down a little bit, but in general, quality is very good,” Moellenbeck said.
Zuzolo said the lower test weights will affect the overall supply of the corn crop in the U.S. While that may bring up the price floor, demand has been struggling at the same time with African swine fever and major trade deals up in the air.
The U.S. is working on reestablishing trade agreements, recently completing one with Japan. But U.S. officials have yet to ratify the United States-Mexico-Canada Agreement and deals with Europe and China are still up in the air.
Having the possibility of less supply in the market “changes the calculus” on the other side of trade negotiations, Zuzolo said. With markets eyeing the possibility of a big crop from South America and the potential yield cut in America, he said China could negotiate differently.
Another factor that could affect negotiations is the impeachment hearings.
“If you have a public impeachment that not only slows down the ability of USMCA and other trade deals to get passed, you also have it working in the mindset of the Chinese negotiators,” Zuzolo said. “Why not force President Trump into a more defensive posture?”
He mentioned that while China is important for the psychology of traders in the short-term, the USMCA deal may have more impact if not ratified soon.
“(China) is not as big as USMCA when it comes to net bushels of U.S. agriculture commodities,” Zuzolo said. “I would feel a lot better having USMCA passed in the next 30 days than the U.S.-China trade deal.”