I’ve said many times, soybeans are the great liars. I was in one of my soybean fields today, pulling weeds. Every year in the middle of August it seems the weeds show up more and more. Get into September, and the weeds never seem as bad. However, pre usual, it’s not necessarily about the weeds, its more about the soybeans, which look better despite the heavy rains that came through earlier this growing season.
Pulling/hoeing weeds is a relic from another time. However, I’m of the generation who grew up doing that, so now in my 60s, even though it was the hottest day of the year, I was out hoeing weeds. It’s kind of a guilt thing, like I must be doing something even if the heat makes me wilt. I was saved by my crop supplier to stopped to talk as the afternoon grew late.
I told him the soybeans looked good in the field, but he cautioned me as he said tall soybeans don’t necessarily mean great yields, something about elongated nodes between branches and stems can mean less soybeans. In any case, I knew what he meant, that soybeans per usual are tough to judge. Sometimes good-looking soybeans like I have in that field might not necessarily yield as good as they look.
To be honest, you can almost translate that across North America. Today the USDA released their latest WASDE report. On the soybean side of the ledger, USDA pegged domestic soybeans to come in at 50 bushel per acre, .8 below their July estimate. This will put the US soybean crop at 4.339 billion bushels, which was within trade estimates. This was somewhat buffered by USDA increasing old crop soybean ending stocks to 160 million bushels, which surprised me, and put it at the high end of pre report estimates. New crop soybean ending stocks were left unchanged from July at 155 million bushels. Soybeans prices were only up a penny on the day.
On the corn side of the ledger, there was some big news with the USDA reducing US national corn yield down to 174.6 bushels per acre, down 4.9 bushels per acre from their July estimate. The crop is now forecast to come in at 14.75 billion bushels, down from 15.165 billion bushels last month. This was in the lower level of trade expectations going into the report. New crop ending stocks are expected to come in at 1.242 billion bushels, which is down 415 million bushels from last month. The Brazilian corn production was cut down to 87 MMT, down from last month’s 93 MMT. Corn prices shot up 14 cents on the news.
These are big crops, but as you all know, we had some big demand erupt last year that we’re hoping repeats. As it is, Ontario corn is approximately $6.83 off the combine this fall, and soybeans are approximately $16.26. In Ontario, the crop is pretty good and if Michigan is forecast to have a 169 bushel per acre corn yield and Ohio is pegged at 193, a good guess for Ontario corn yield would be in the 170-180 mark, which would challenge record levels. As it is, with good corn crops abundant around the great lakes, basis should feel the pressure if those September frosts hold off.
The question now is whether all these crops will finish. Future USDA reports will surely give us those clues. My colleague DTN’s Todd Hultman mentioned in our daily DTN comment that the August estimates are often changed. In fact, there is a wide plus or minus factor of 6.7% a wide margin of error over the final crop numbers. That surely will be the case again this time. As it is, buyers don’t want too many more surprises. If demand keeps up as expected, we’ll need all this crop to sustain current prices.
Statistics Canada has pegged Ontario soybean acreage at 2.9 million acres with Quebec at 925,300 acres, an increase of 3% and 4.5% respectively. Ontario corn acreage has been reduced by 2% down to 2.1 million acres with Quebec corn acreage down 0.6% to 885,500 acres. If everything stays as it is, it should mean big crops in Eastern Canada. This should mean a robust export program into Europe for Ontario and Quebec corn, helped on by our favoured trading status. Of course, we need that rain in August to get five soybeans in every pod.
I’m sure hoping for that, and the August rains have surely been coming as I’ve had an inch of rain over the last two days with more coming tonight. My beans are compromised from earlier flooding rains, but August rains are generally welcome, ditto across Ontario and Quebec. As it is, unlike Western Canada, which has suffered all year from drought, Eastern Canada is heading into later summer with a potentially big crop. Of course, we all know prices are better too. Let’s just hope, soybeans will be soybeans. They might be the great liars, but in the end, always tell the truth.