Market News- POET: Portland  08/23/19 8:10:58 AM Printer Friendly VersionPrinter Friendly Version

August 23rd, 2019
  • Overnight trade war news is having a very negative impact on grain prices this morning, with corn getting very close to contract lows vs the Dec contract.  China is indicating that they will levy retaliatory tariffs on another $75B of US Goods – and also resume tariffs on U.S. Autos.  The news broke at 7AM CDT and was followed by large volume spikes in the soy complex – which ultimately spilled over into corn as well.
  • Profarmer finalized both Iowa and Minnesota corn and soy yields yesterday – with IA coming in at 182.83 bpa and MN at 170.37 bpa.  These were down 3% and 5%, respectively from last year’s tour averages.  Again, these YoY % decreases match exactly what the USDA printed in their August WASDE just a couple weeks ago.  So far, by using ProFarmer’s yields for the 7 states they sampled, while leaving all other state equal to USDA, it would suggest a 166 bpa national yield.  ProFarmer will release their final results and national average today after market close.
  • While I’ve obviously spent a fair amount of time talking about PF’s corn results, one thing that appears to be noticeable is the extremely low pod counts for soybeans.  A general observation here, but seems like soybean yields from this point forward could be facing the biggest headwinds.  While the tour indicates soybean yields will likely come down, it’s hard to get overly excited when the current 19/20 carryout is 750MM bushels – which is more than double the historical average.  In other words, there is a massive cushion to absorb soybean yield drag, but something to keep an eye on.
  • Not a whole lot has changed on the Dec corn chart.  Bulls still need to see price close above $3.81 to get overly excited about a possible bottom – with near term objective to the open gap at $3.92.  On the downside, it appears a test of $3.63 is likely, followed by the gap fill at $3.57 ¼.

August 20th, 2019
  • The grain market is a bit firmer in overnight trade – likely a combination of lower than expected crop ratings as well as ProFarmer yield results that are coming in below USDA numbers printed earlier in the month.
  • Expanding on the lower crop ratings: only 2 major corn growing states (IL and ND) saw improvements, while every other state was either unchanged or down fairly significantly in ratings.  The biggest WoW decreases were seen in SD, KS, OH, and MO.  Image from AgtraderTalk is below.
  • As far as the ProFarmer crop tour results: efforts were focused in SD and OH yesterday.  The tour pegged OH corn yields at 154.35 bpa, down 14% YoY.  What’s interesting about this number, is that the USDA is also -14% of last year’s number, although arriving at an August yield of 160 bpa for the state.  So, both data points are pointing to the same YoY delta.  For South Dakota, PF came in at 154.1 bpa which was -13% of last year’s tour estimate, while USDA is only -2% YoY.  For reference, USDA is at a 157 bpa yield, so keeping the same % decline YoY as PF would put USDA yield at 140 bpa…final answer is likely somewhere in between, however a takeaway so far from the tour (although not surprising) is that the crop is very far behind and needs another 3 weeks longer vs normal to mature.
  • A massive swath of rain is moving through IA this morning on it’s way to IL.  The 10-day forecast remains non-threatening and actually would lean bearish for grain prices, however the trade appears a bit on edge as it waits to see if September will hint at early freeze potential.
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