While many Canadian farmers wonder if they will get a break in the rainy weather long enough to harvest their crops, American analysts are raising their forecasts for U.S. corn and soybean production.
Crops in the Midwest passed through the July heat wave in great shape and some analysts think there is potential for record-breaking yields.
That is keeping downward pressure on the major crops traded on futures markets — corn, soybeans and wheat — and that is pressuring prices in Canada too.
On Aug. 12, the U.S. Department of Agriculture releases its Crop Production report, the first of the year to base its yield forecasts on a farmer survey, conducted July 25 to Aug. 6, and in-field measurements. It will accompany the regular monthly supply and demand report.
Look for same day coverage of the USDA reports at producer.com.
In advance of the reports, private forecasters began releasing their estimates last week.
They all think there will be an increase from the July USDA forecast, which pegged corn yield at 168 bushels an acre for a crop of 14.54 billion bu.
It expected the soybean yield would be 46.7 bu. per acre for a harvest of 3.88 billion bu.
The record national corn yield was set in 2014 at 171 bu. per acre, a remarkable feat, which exceeds by more than 11 percent the five-year 2011-15 average of 153.5 bu.
The soybean record was set in 2015 at 48 bu. per acre, topping the five-year average of 44.3 bu. by about eight percent.
As this column was written Aug. 8, several analysts, including Allendale and Informa, had published updated corn yield forecasts within a bushel of 170.5 bu. an acre — very close to the 171 bu. record. An outlier was Intl FCStone at 175 bu.
For soybeans, there was a cluster between 47 and 48 bu. and FCStone said 48.8 bu. per acre.
The market has already likely priced in a lot of this increased yield potential, but if FCStone is correct, then there could be more downside.
The USDA’s weekly crop condition report for corn is 74 percent good to excellent, which topped the 73 percent at the same time in the record yield year of 2014, so these strong corn yield forecasts are not just wishful thinking.
In the corn heartland of Iowa and Illinois, there is little difference in crop ratings from 2014. Conditions in the west, the Dakotas and Kansas, are not as good, but in the northern Midwest, in Wisconsin and Minnesota, they are much better than 2014.
Corn is more advanced than soybeans so August weather will have less effect.
And soybeans have little to fear from the August weather outlooks, which do not include extreme conditions.
Bigger production will likely cause the USDA to increase its year-end stocks forecasts.
Broadening out to the international outlook, the consensus is that world supply will be ample, even with the severe problems in France.
Eastern Europe and the Black Sea regions are well into the harvest of excellent crops and conditions look good for Australia’s wheat, which will be harvested in several months.