Podcast Summary
Midwest Agriculture Changes: Crop yields are expected to be bountiful in Central Illinois, but fertilizer prices remain low due to Middle East conflict and beef demand is increasing.
The agricultural scene in Central Illinois and the Midwest is experiencing significant changes in crop yields and commodity prices. Fertilizer prices are expected to remain lower than previous years due to the ongoing conflict in the Middle East. On the other hand, beef demand is on the rise, according to ag economists. Merrill Crowley from Ag Data Talk in Watska, Illinois, shared his observations on the crop progress in central Illinois, which looks promising with large expectations for bountiful harvests. The conversation also included updates from Brian Hoops from Midwest Solutions in Springfield, Missouri, and Brian Grete from the Pro Farmer Crop Tour. Overall, the agricultural industry in the Midwest is facing both challenges and opportunities, and it's essential to stay informed about the latest developments.
US crop yields: Favorable weather conditions may not lead to significantly higher crop yields due to USDA's high production goals set in August, with corn and soybean conditions showing only minor improvements.
Despite the favorable weather conditions, the current crop yields for both corn and soybeans may not significantly surpass expectations due to the USDA's already high production goals set in the August report. The ongoing Pro Farmer tour is showing only minor improvements in yield, with corn conditions down 8% since June and soybean conditions down 4%. However, it's important to note that condition reports throughout the year do not directly influence USDA reports, which are based on field surveys. While the crop may not exceed expectations, the final yield will depend on how the weather conditions finish out the year.
US Presidential Election, Cattle Market: The outcome of the US presidential election, China's financial struggles, and increasing imports from Mexico could negatively impact the cattle market. The cattle on feed report may show an increase in marketing and heifers being kept for breeding, but a recession could encourage farmers to sell livestock for grain. The market is currently facing high investment and marketing levels.
The outcome of the upcoming US presidential election is a significant factor to watch in the current cattle market. With China's financial struggles potentially leading to a recession and increasing imports from Mexico, the market is facing challenges. The cattle on feed report, which is coming up on Friday, is expected to show an increase in marketing and more heifers being kept for breeding. However, the market may be negatively impacted during a recession, and the current low cattle prices could encourage farmers to sell grain in the form of livestock. The average investment in on feed is currently at 104%, and marketing is at 108.2%. The political landscape and global economic conditions will continue to shape the cattle market in the coming months.
Cattle Feeder Basis Contracts: Large crop yields and high freight rates could put pressure on cattle feeder basis contracts, with potential losses for those with contracts due to storage capacity issues and freight rate pressures.
The current market conditions, including large crop yields and high freight rates, could put pressure on basis contracts for cattle feeders. Merrill Crowley of Ag discussed this during a recent interview, pointing out that with a large crop coming in, elevators may struggle with storage capacity, leading to potential spread increases. However, freight rates currently are keeping spreads under pressure, which could result in losses for those with basis contracts. It's crucial for feeders to consider the timing of their contracts and the potential risks before entering into these agreements. The ongoing PRO Farmer Crop Tour has reported variable yields, with South Dakota coming in below last year's levels at 156.5 bushels per acre, and Ohio also below last year at 183.2 bushels per acre.
Midwest harvest yields: Midwest harvest yields are showing promising numbers, with Nebraska expecting surpassing last year's yields, while Ohio and South Dakota soybean pod counts are above average. However, extreme heat and moisture levels in parts of the Dakotas could impact final yields.
The ongoing crop tours in the Midwest are revealing impressive yields, particularly in Nebraska, where yields are expected to surpass last year's numbers. Soybean pod counts in Ohio and South Dakota are above the three-year average, indicating a strong yield potential. Corn yields in the southern parts of the Midwest are already being harvested and are expected to be good. However, there are concerns about extreme heat and moisture levels in parts of the Dakotas that could impact the final yield. Traders will closely monitor the yield announcements from the tour, comparing them to last year's crops and USDA forecasts. In summary, the Midwest harvest season is showing promising yields, but there are still challenges to overcome in certain areas.
Corn, Soybean harvest lows: Market analyst does not expect early harvest lows for corn and soybeans, anticipating potential yield increases in September report, and harvest lows may still be a few weeks away.
The market analyst does not believe we are at the point of an early harvest low for corn and soybeans. He mentions that we are currently experiencing technical balance as the market digests yield data, and we may not see harvest-type lows until after the September supply and demand report. The analyst also mentions that there is a lot of anticipation for potential yield increases in this report, which could indicate harvest lows. However, he believes we are still a few weeks away from any significant news being digested into the marketplace. Additionally, the analyst shares that the crop tour by Pro Farmer will not be covering Missouri, but they anticipate good yields based on the current crop ratings being over 80% for most of the summer. Overall, the market is expected to see average to record-large yields this year, but we may not see harvest lows until after the September report.
Commodity prices: Despite good crop conditions, soybean and corn prices may drop to 850 and 350/355 respectively due to high stock use ratios, with potential for further weakness through late summer.
Despite generally good crop conditions reported in most areas, commodity prices, particularly soybeans and corn, are experiencing downward pressure. Brian Hoops of Midwest Solutions in Springfield, Missouri, suggests potential downside targets for soybeans at 850 and for corn at 350 or 355 based on historical data from a year with similar stock use ratios. He also indicates that ideal growing conditions could lead to further price weakness through late August and into September. Producers may have missed opportunities to sell old crop and could still have some time to sell new crop. However, downside pressure is expected before potential price recovery. Other commodities, such as cattle, lean hogs, and crude oil, also experienced price changes during the discussed period.