Pre-August US Crop/S&D Ideas - Despite Recent Dryness, Stronger Output Expected On Higher Ratings

Market Analysis

As we approach the USDA’s 2020 crop report on August 12, the trade chatter is very optimistic about this year’s corn and soybean prospects given the strong national crop ratings. After an erratic spring planting period in the Eastern Midwest where bouts of cold/heavy rains impacted fields and prompted some replanting, June heat across the Central US promoted rapid growth of crops. Dryness developed during late June and first half July before rains returned from KS, MO, E IA, and much of the ECB boosting the US corn and soybean G/E ratings. Excessive heat has been has been short lived in the past month, but dryness has surfaced in E NE, IA, N IN and NW OH. My early August C. IL crop tour revealed a strong green corn and clean bean fields, but our low ear populations limited our yield average to a solid, but not a super IL yield of 198 bu.

Previously, the USDA’s August crop reports have been based upon plant counts and a producer yield survey. With plant and ear counts delayed until September beginning last year, the survey & enhanced digital methods will be used by the USDA in this month’s corn & bean estimates.

Utilizing my tour data trends & various state soil conditions, my initial US corn yield is 177.5 bu. for a 14.915 billion bu. crop. With US driving leveling out, old-crop ethanol could dip 50 million bu. this month, Overall 2020/21 stocks could advance to 2.713 billion bu with new-crop exports being cut by 100 million bu from Brazilian competition.

August weather is soybeans’ big yield factor. Our crop tour revealed good potential with very clean fields & minimal drown out spots. The shortness of the crop is a bit of concern, but we expect the US August yield to advance to 51.2 bu & 4.25 billion bu crop. Old-crop exports could drop 30 million while the crush advances 10 million bu.

A smaller WW crop will likely be compensated by a larger US spring wheat crop leading to a 8 million increase in the US crop & wheat stocks to 950 million bu. for 2020/21. 

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Disclaimer: The information contained in this report reflects the opinion of the author and should not be interpreted in any way to represent the thoughts of any futures brokerage firm or its ...

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