By Doug Tenney, Leist Mercantile
“All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.” – Martin Luther King Jr. This quote certainly epitomizes the work of the American farmer as the Labor Day holiday was celebrated earlier this week. Your excellence and hard work is to be celebrated and copied by all. Thank you!
Parts of Ohio are already harvesting corn at this reading. Anderson Ethanol received the first load of new crop corn last week from southern Darke County. It was 107-day maturity, planted in mid-April and at 18.3% moisture. Numerous producers in central Ohio are expecting record or near record corn yields. Reports late August suggested the four best states for corn production are Nebraska, Ohio, Illinois, and Wisconsin. Indications from Illinois stated corn harvest would be starting in the days that followed Labor Day. The worst states for corn production appear to be Missouri, North Dakota, and South Dakota. First glances would have you wondering how the Dakotas would even be a factor. Twenty years ago that was the case. However, in the past decade we have seen a huge expansion of corn and soybean acres in the Dakotas. At one point, Ohio had been sixth in the mix of states ranked for corn production. Today, it has slipped to eighth.
In a landmark court decision last month in Brazil, the decades long ban for Roundup has been overturned. Environmentalists there have been active in bringing to the forefront their huge concerns about Roundup as well as the shrinking of the Amazon River areas through aggressive cutting of timber. No doubt the Roundup availability is a factor in the anticipated soybean acre expansion of 3% to 5% for their upcoming planting season in September and October. That planting season would mark the twelfth straight year for Brazil to increase soybean acres. Brazil is certainly expecting to capture a larger share of the soybeans imported into China. This next year, China is expected to import 95 million tons of soybeans. Certainly missing for U.S. producers continues to be our own soybean imports into China.
Last month USDA announced their Market Facilitation Program for U.S. soybean producers. This is in response to China embargoing the purchase of U.S. soybeans months ago. Soybean producers will be eligible for payments of $1.65 per bushel on 50% of 2018 soybean production. Producers will need to report their production to their local FSA office. Details remain sketchy including the speed at which the check gets cut as well as if the remaining 50% will receive a payment on down the road.
August was not a kind month for grain prices with all closing lower. Corn declined 21 cents, soybeans 75 cents, and wheat 28 cents. Soybeans had a rally mid-August as they reached $9.07 with the November CBOT contract. Its August low was $8.29, but could not take out the July low of $8.26.
Basis for fall delivery corn and soybeans also took a huge hit last month. Fall delivery corn basis fell at least 10 cents in many locations across Ohio. Basis for fall delivery soybeans fell even more with declines of 15 to 20 cents or more across Ohio. Cincinnati fall soybean basis fell to 98 cents under the November for fall delivery late last month. The lack of a strong export program for soybeans is obvious with China not buying U.S. soybeans at this time. Producers with bin storage for soybeans should be able to capture many dimes of basis improvement from fall delivery to delivery during the winter or spring months. Corn producers will also capture basis improvement for bin-stored corn. However, it will not be as much as soybeans.
Once again this summer, producers across Ohio and the Midwest had late blooms on soybean plants. They are almost always present. The question is, will those late blooms abort? That was not the case this year as those late blooms did in fact produce pods. Rains brought pods that actually developed, followed by soybeans filling those pods. This boost brings about hopes for even larger soybean yields at harvest time. USDA, in a surprise last month, had the U.S. soybean yield at 51.6 bushels per acre. The mid-August Pro Farmer crop tour seemed to confirm the US corn yield will be 178 bushels or higher. The August USDA corn yield was 178.4.
Soybean prices are going to face huge hurdles to see sustained gains of more than a dollar above current levels in light of ending stocks a whisker away from hitting 800 million bushels. Last month ending stocks were 785 million bushels. The absence of China buying U.S. soybeans has producers already fearing weak soybean prices for 2019 production.