Ag Market Update
As we close the month of August, the harvest itch was replaced in most areas with a frustration as most of the U.S. Midwest and Canadian Prairies got hit with some untimely, heavy rains. Also, some increasing geopolitical risk premium is looking to get built into the market around the September Long Weekend as there are a growing number of reports of Russia increasing its military presence at and even inside the Ukrainian border. There’s increasing buzz in the market about the sudden death syndrome (SDS) hitting some soybean fields in parts of Illinois, Iowa, Missouri, and Indiana. In my opinion, there’s not a lot of bullish news out there right now so to even out the playing field, this story is being pushed. If anything, the technical components of the market are what’s showing a possible short-term correction in soybean prices, not a few fields seeing yield potential drop from 50 to 10 bu/ac.
That being said, S.D.S. is a disease that can overwinter and so re-planting those fields next year likely won’t happen. That being said, the earliest of Plant 2015 surveys from Farm Futures suggests U.S. farmers will increase their soybean acres by 2.6 per cent in 2015 to a 2nd consecutive record area of 86.6 million acres, while dropping corn acre again by 1.25 per cent to 90.5 million acres. The recent rains were seen as positive for both sides of the cornbelt with Iowa, Illinois, Indiana, and Nebraska all getting a drink that was overdue. After their crop tour last week, Pro-Farmer pegged their overall US corn yield at 169.3 bu/ac (U.S.D.A. at 169.3 in the last W.A.S.D.E.) and total production at 14.093 billion bushels (14.032 billion). As for soybeans, the group says 45.35 bu/ac will come off, on average, from American fields (U.S.D.A. at 45.4 bu/ac), creating an output of 3.812 billion bushels (U.S.D.A. at 3.816 billion). The questions that remain as the corn and soybean harvests start up now is just how much of a record will the crop be and where will it all go? To answer the second question, there’s definitely going to be more than a few grain piles on U.S. fields this year and if rail companies don’t improve service in some parts, said grain will continue to sit there. Frustration is certainly building in North Dakota, South Dakota, and Minnesota (tell us about it eh!)
That being said, the rains that fell in the northern U.S. states and here in the Canadian Prairies isn’t helping much as the cereals and pulses that are trying to finish out and farmers are trying to get into the fields to cut down those crops that are ready. Early indications are that green lentil prices and pea prices could see a climb over the next couple weeks but red lentils won’t match the move and if you have the quality that’s been sought for wheat, you will likely be able to earn a premium. Already, reports are growing of disease issues across the earliest harvested winter and spring wheat crops, suggesting that knowing what quality you have this year will be important (one of the reasons that FarmLead partnered with S.G.S. so you could order grain tests from directly from the www.FarmLead.com website!). The numbers will be critical this year, in terms of potentially getting a bounce in market prices and also getting the best price for your grain if you’re looking to sell some.
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief.