Fall harvest is upon us, with about 20% or more of corn and soybeans probably harvested by now.

We are starting to get a handle on yields, and so far the yields have been impressive, and much better than most farmers expected. While most producers were only expecting average yields, many are getting either the second largest or largest yields ever of both corn and soybeans.

Of course, with yields trending higher (for example, 2 bushels per acre per year higher in corn) each year due to improved technology, perhaps we should expect that? For many producers in Northern areas, we may not top 2016 yields for a while.  Yet, 2017 yields are decent as well, with Southern areas reporting the best yields due to a relatively cool August. Soybean yields are also impressive in most areas, and it seems the farther south you go, the happier farmers are with their soybean yields.

Crop conditions released yesterday, showed an improvement of 2% in corn rated G/E to 63% G/E, which resulted in an improvement in the Pro Ag yield model of 0.80 bushels per acre to 172.4 bushels per acre. We have also heard some surprisingly good yield results from those who have harvested some corn. The yields in most cases are not as good as last year (though some are), but they are much better than farmers expected. Corn harvest is 17% complete, 9% behind normal while 96% is dented (2% behind normal), and 68% is mature (10% behind normal). Northern states still lag normal progress, even though we are into October already, in some cases two weeks later than a normal frost. It’s very fortunate we didn’t have cold weather the past few weeks, as even a normal frost would have done some damage to crop yield potential.

Soybean conditions were steady at 60% rated G/E, with the Pro Ag yield model down slightly to 47.3 bushels per acre, down 0.16 bushel per acre from last week. Soybeans are closer to being on schedule, with 80% dropping leaves (2% ahead of normal) while 22% are harvested (4% behind normal).

Cotton is 17% harvested (4% ahead of normal), while cotton conditions were down 3% to 57% rated G/E, still well above last year’s 49% rating.

Sorghum is 94% coloring (equal to average), with 60% mature (3% behind normal) and 34% harvested (3% behind normal also). Sorghum ratings were 64% rated G/E (unchanged), still 2% behind last year’s excellent crop.

Sugar beets are 22% harvested, 1% behind normal.

Winter wheat is 36% planted, 7% behind normal as it’s been wet in HRW wheat country the past few weeks. Winter wheat is 12% emerged, 4% behind normal as well. Soil moisture levels rose last week (mostly in the western Corn Belt where rains were frequent), with subsoil up 3% to 59% adequate/surplus, and subsoil was also up 3% to 57% rated adequate/surplus.  Both are still well below last year’s 75% rating.

Note PLC payments for 2016 are finalized, with corn payments at 34¢ per bushel ($3.70 support minus $3.36 marketing year average price). Wheat payments are a whopping $1.61 per bushel (figured at $5.50 support minus $3.89 MYA price).  Soybeans will have no PLC payment; with support at $8.40, the MYA was $9.47, above the support price.

Weather forecasts are oscillating back and forth for the eight- to 14-day forecast. Some updates are turning back to near-normal or even above-normal temps, and some are trying to turn it colder and drier. The most recent is back to mostly below-normal precip (except the Southeast U.S.), and normal to below-normal temps (except the eastern Corn Belt which is above normal). The seven-day nearby forecast is more predictable, with precip above normal to normal in most of the Midwest favoring the western Corn Belt and HRW wheat belt. Temps are above normal in the seven-day period for nearly all of the Corn Belt.

Stocks numbers released Friday, 9/29, were mostly smaller than expected for corn (-54 mb) and soybeans (-38 mb). That supported those markets all day, as they gained in strength throughout the day, but then at the close soybeans and corn
lost half their gains in a weak finish. The U.S. dollar has had a recent resurgence higher, and that is hurting grain prices (especially wheat). Since the report, prices have sagged lower for all grains, perhaps a typical harvest price response when yields are better than expected.

In the 9/29 Small Grains Report, HRS production was actually hiked from 401 mb for “other spring” wheat category to 416 mb.  This was very disappointing for those expecting an acreage and production cut. HRS wheat production was instead
increased from 364 mb to 385 mb, with harvested acreage reduced but yields hiked. Total wheat production was therefore up 16 mb from September numbers, with wheat stocks then up 33 mb from traders’ expectations. That was most bearish HRS wheat, and here we are pushing into new low territory for HRS December futures.

In the HRS wheat numbers, harvested acreage was reduced 140,000 acres in Minnesota; 90,000 in North Dakota; 270,000 in South Dakota; and 15,000 in Idaho. But harvested acreage was hiked in Montana (+170,000 acres) and +10,000 acres in Oregon. Yield offset the acreage decline, with yields up 5 bushels per acre in Idaho, +6 bushels in Minnesota, +5 bushels in North Dakota, and +13 bushels in Oregon.

Yields were down 1 bushel per acre in Montana, South Dakota, and Washington. The net result was an increase of 22 mb in North Dakota, -10 mb in South Dakota, with minor adjustments in other states for a net hike of 15 mb. (Traders expected a decline of 14 to 20 mb instead). So this was a bearish HRS and wheat report.

With trends turning back down in wheat and corn, and soybean prices sagging as well, this might be a year when prices sag into harvest of what is turning out to be a better-than-expected yield of corn and soybeans.