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October harvest progress and prices disappointing for many

By Doug Tenney, Leist Mercantile

The NASS Weekly Crop Progress report of Oct. 29 put the U.S. corn harvest at 63%, ahead of the 2017 harvest progress of 52% for the same time, but matching to the tick the five-year average. The Ohio corn harvest report was 64%, running ahead of the 56% for the five-year average. At first glance, you would think, no problem. However, the reality is quite different. With the numerous rains of September and October, fields in many parts of Ohio have taken a long time to dry out. Harvest has been a long, difficult process drawn out longer than in past harvest seasons. Some producers have already suggested that corn and soybeans still in the field could need freezing temperatures to firm the ground enough for harvest.

October was a disappointing harvest month for many Ohio producers. The size of their farm program checks was also a letdown, though not unexpected. Crop year payments for 2016 corn were $60 to $80 for corn acres in many Ohio counties with money received in October 2017. The current Farm Bill required producers to make selections for ARC or PLC payments. The vast majority selected ARC, knowing payments could be high in early years while payments could be very small or zero in the final years of the current Farm Bill.

The Nov. 1 price rally of 30 cents for soybeans was vastly welcomed by producers across Ohio and the U.S. A tweet from President Trump reported a phone call with China President Xi, when the two presidents talked at length. Trade between the two countries was discussed at length. Soybeans had been lower in early trading that day. Funds were active buyers as prices moved through at least two levels of buy stops that rested above the market. Significant weather problems were non-existent in the U.S. this summer. Numerous price forecasts with the record production and record acres earlier this summer projected CBOT prices to fall below $8, putting producer prices under $7.50. January 2019 CBOT soybeans put in a new contract low of $8.2625 mid-September.

USDA late in October detailed the Market Facilitation Program (MFP) of $1.65 per bushel for soybeans will be paid on 100% of 2018 production. The program was implemented due to the U.S. tariffs put into place on China due to trade issues not being resolved earlier this year. Analysis by the administration said the payments were warranted so that “our farmers did not bear the brunt of unfair retaliatory tariffs,” in a statement from U.S. Secretary of Agriculture Sonny Perdue. Producers must certify production at their local FSA office. Payment follows once paperwork has been completed. The program, when first announced in August said that the $1.65 payment would be paid on just 50% of 2018 soybean production. The August announcement indicated additional payments were possible but with no promises being made. That additional payment has become reality. Early conversations indicate producers need to report bushels as accurately as possible. They cannot come back at a later date to collect additional money if the certification is below actual production determined months later once bins are completely empty.

The market and producers alike are already looking ahead to U.S. acres for 2019. For many weeks it seemed a foregone conclusion that 2019 US corn acres would increase with U.S. soybean acres decreasing. The Nov. 2 USDA baseline projections into 2028-29 are for budget purposes but not World Outlook Board (WOB) official estimates. That estimate put U.S. 2019 corn acres at 92 million acres. U.S. corn acres this year were 89.1 million acres. Soybean acres for 2019 were estimated at 82.5 million. The 2018 U.S. soybean acres were 89.1 million. U.S. 2019 wheat acres were estimated at 51.0 while wheat acres this year were 47.8 million. Last month, Purdue University estimated the ongoing trade issues with China could reduce demand and lower U.S. soybean acres up to 8 million acres permanently.

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