By Doug Tenney, Leist Mercantile
As we move into August, we would normally be seeing much higher consensus about expected U.S. corn and soybean yields. Nothing could be further from the truth for this unusual growing season in the U.S. For weeks many have called this a growing season of the “haves versus the have nots.” Consistent rains in June and early July in the eastern Corn Belt states of Illinois, Indiana, and Ohio have many producers expecting above average corn and soybean yields. Several of those rains were broad in coverage.
Conversely, the northern Corn Belt states of Minnesota, South Dakota, and North Dakota would be called the “have nots,” with poor yields, as they have consistently during June and July experienced numerous hot and dry periods of a week or more. Rains then followed, broad in scope and geographic coverage for several states, but severely lacking in significant amounts of rain of one inch or more.
If you measure summer rainfall totals into corn and soybean yields and bushels compared to the number of times your yard is mowed during June and July, I would expect above average yields in my area of central Ohio. Except for a week and a half period during mid-July, I consistently mowed my lawn about every 4 days during much of June and July. For over a month there has been talk of above-average yields expected for Illinois, Indiana, and Ohio. Some speculate even great yields in those states will overshadow or exceed the reduced yields expected in the western and northern Corn Belt states. Lest you think that any state with the name of Dakota cannot be a U.S. big deal for corn and soybeans, this year the combination of Minnesota, South Dakota, and North Dakota account for 19% to 20% for both corn and soybean acres in the U.S.
The Weather Channel the last week of July reported China’s Henan province had flooding following the heaviest rainfall in over 100 years. Typhoon In-Fa affected millions with its torrential rains. The city of Zhengzhou received an incredible 31 inches of rain in a 72-hour period, exceeding its yearly average rainfall in that time frame.
The deluge of rain has caused uncertain damage in China’s hog production facilities. In recent months China’s hog herd and its production capacity has exceeded previous records seen before the onslaught of African swine fever (ASF), which took place in 2018. It is estimated ASF at that time reduced China’s hog herd up to 50%.
China was a buyer of U.S. soymeal the last week of July. Producers are hopeful China’s buying shoes will soon be covered with U.S. corn and soybeans. Approaching the final two weeks of the marketing year for corn and soybeans, which ends Aug. 31, U.S. sales of new crop corn and soybeans have seen very little activity the past two months. As a result, some are labeling those sales of U.S. new crop corn and soybeans at disappointing levels for this time of year.
December CBOT corn has a gap at $5.735. It closed its daily limit of 40 cents lower on July 6 as a result of broader rain coverage than anticipated the July 4th holiday weekend. If corn is to move back above the $6 level of strong resistance, a close above $5.80 is needed shortly.
Old crop corn and soybean basis levels have seen declines of multiple dimes during the month of July. In addition, new crop basis levels for corn and soybeans experienced declines of a nickel or more during that same time. With the anticipation of above average yields in areas of Ohio, expect long lines during harvest.