It has been kind of a long three days for me. I’ve just returned from a road trip sponsored by Kearney Planters of Thamesville Ontario. The trip was to Iowa to visit the Kinze Innovation Center as well as the John Deere Waterloo tractor plant. It is a long journey of about 12 hours to the West. I do not get an opportunity to visit the American Midwest during summer very often and I was so looking forward to the journey. Part of that anticipation had to do with knowing that I would be able to see for myself firsthand how the American corn and soybean crops would be looking.
Then I was rudely interrupted. Remember that old saying that the market is always right. In the middle of my trip to Iowa the USDA spoiled things a bit with one of their most bearish reports of the year. At the Iowa 80 truck stop in central Iowa I was able to access the Internet, where I learned of the carnage in the markets. The USDA’s report on August 10th had seemingly ignored the hot dry conditions in July pegging US corn production at 169.5 bu/acre for a total production of 14.2 billion bushels and soybeans increased to 49.4 bu/acre for production of 4.4 billion bushels. My eyes must’ve lit up in that truck stop as I realized these numbers were far higher than trade estimates. The grain market was being bombed Thursday afternoon.
I have a saying about the USDA, which is not as eloquent as my friend Darin Newsom’s views on the same. I always say, “the USDA likes to reset the goalposts”. In other words it’s like we are all playing a game of football. Everybody knows the rules in the marketplace. However, we all know that the USDA comes out with their reports each month that serve as flashpoints to the grain market. Often times I’ve seen it where they will come out with the reports, which don’t seem to make sense compared to the conventional wisdom in the trade. This latest August 10th report is the quintessential example.
It is because the market seemingly was ignoring the buzz about hot and dry weather in July, which would impact the corn crop specifically. So trade estimates were much lower than the 169.5 bushels per acre for corn predicted. Soybeans on the other hand are a bit more of a mystery to me. August weather usually determines soybean yields and the survey from USDA is based on information from July. Raising soybean yield estimates at this point was a major surprise. However, having said all, this time around I had a bit of a bird’s eye view on the US crop.
As the bus pulled into the Detroit border station I was awakened from a deep sleep. The Kearney bus had picked us up at midnight with a plan to roll through American farm country toward Iowa for an afternoon tour at the farm of John Kinzenbaw, the founder of Kinze Manufacturing. After clearing customs, I again fell soundly to sleep only to wake up on the expressway I-80 south of Chicago. The sun was coming up just in time for me to get a bird’s eye view on just how burnt up this crop was. It was such a privilege for me to get this view of Illinois and Iowa soybeans and corn from the expressway.
From south of Chicago Illinois to Williamsburg Iowa the crops looked tremendous. The corn was tall and strong with little signs of drought stress anywhere. There was no firing from the bottom of the corn plants that is very evident in some southwestern Ontario fields. The last time I had visited this area was in 2012 when corn plants were half the height they are now and scorched from that devastating drought. The soybeans also looked very healthy. You could tell all along the route that things were getting dry, but this crop was a good one and I had that feeling USDA might be setting us up to reset the goalposts on the marketplace.
Jon Kinzenbaw is an American agricultural legend. That first afternoon was priceless as I along with other Kearney customers had a personal tour of his antique tractor collection. I got many chances to question him about American agriculture. Of course, my questions were more about his vision than his crop, which surrounded that farm location. However, some other farmers on the tour asked him about his crop and he exclaimed his frustration with USDA, commenting that has 2017 crop was not as good as his 2016 crop because of dry weather. At one point he suggested that areas of his cornfields in 2016 were over 300 bushels per acre and this year he was sure they’d be down hundred bushels per acre.
I swallowed when I heard that because in reality it was a complement to the productivity of American agriculture. I was in one of the most productive areas for corn production in the United States and this man as a farmer was commenting that 200 bushel per acre was a disappointment. I’d worked to get there all my life and thought of it more as some crowning achievement. Needless to say, he was expressing his view that the American corn crop was not as good as 2017 by a country mile. I can imagine Mr. Kinzenbaw eyes must’ve rolled when he heard the updated numbers from the USDA on Thursday afternoon.
It is what it is. If I had not traveled into Iowa like I did this past week and see for myself, I would be more incredulous with the USDA numbers. However, the crops look good everywhere I was and I know I wasn’t everywhere. Wednesday evening I had the distinct privilege of having dinner with Iowa farmer and Twitter follower Ted Hamer. He took me around in the local area looking at crops. All the crops I saw were pretty handsome. Ted expressed the view that he did not expect as good of yields as he had in 2016, but this crop was still a good one. He’d like to see a good rain.
Obviously though, the USDA knows better than all of us even though, with my own eyes, crops looked tremendous. Maybe it is a case of expectations from those of us who write about agriculture going a little bit too far. Sometimes what you think should be there isn’t there. Needless to say, the grain markets have recalculated and we move on. Someday, combines will roll and we’ll get even more affirmation. Someday these markets will scream higher. Of course the question is, when will someday come? I don’t know, but I’m sure the USDA will have something to do with it.