Fundamentally Speaking

Corn & Soy Harvest as of Oct. 19th

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

The dynamic action this month in corn and soybean futures is certainly giving traders the impression that the harvest lows have been set.

The rain delayed U.S. harvest appears to be one of the main reasons with potentially adverse impacts on both quality and quantity.

This untimely precipitation is also alleviating the much feared storage crunch where this year's monstrous row crop harvests would overwhelm available farm storage space resulting in forced producer sales at the tail end of harvest pushing values down to new lows.

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The accompanying chart shows the percent of the U.S. corn and soybeans harvested as of October 19 going back to 1981.

This week's crop progress figures reported 31% of the nation's corn crop harvested as of October 19 vs. the 53% five year average and 53% of the U.S. soybean crop combined as of that date vs. the 66% five year average.

Save for 2008 and 2009, this is the slowest corn harvest pace since 1996 while with the exception of 2009, this year's soybean harvest progress is the slowest since 1990.

The lagged soybean harvest progress amid sky-high crush margins and a strong early season export lineup for both soybeans and soybean meal has depleted the supply pipeline leading to the sharp pop in values.

Though not to the same degree, available supplies of corn have also tightened given the inclination of producers to store corn and sell soybeans right off the combine.

(KA)

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Freeport IL
10/23/2014 | 11:35 AM CDT
Slow corn and soybean harvest may be the cause of or is correlated with slow soft red winter wheat (SRWW) planting. USDA's crop progress numbers for winter wheat planting progress has all classes of winter wheat combined. The states of Arkansas, Illinois, Indiana, Missouri, Michigan and Ohio (AIIMMO) might represent SRWW. The AIIMMO has gone from over 60% of SRWW planted in the 1980's to the low 40% in the 2010's. AIIMMO planted 5 to 9 million acres of SRWW in the 1980's to 2.5 to 4.5 million acres in the 2010's. The total SRWW planted acres has dropped in this time period but AIIMMO acres are dropping faster than the total. So other areas, mainly the states to the south and east are becoming more important areas. This also means USDA's AIIMMO winter wheat planting progress is less of an indicator of possible SRWW planted acres. It is important to remember the farther south one goes the later one can plant a successful SRWW crop. So with that being the disclaimer, it looks from the weighted AIIMMO planting progress of winter wheat this is the slowest plant since the fall of 2009. That marketing year, 2010-11, there was 5.3 million SRWW acres planted. A trend line approach, which has a very weak correlation, points to about 7.5 million acres being planted. This is 12% fewer acres than the 8.5 million acres planted last fall. If yields and use do not see a major change, prices should be within the current range. A drop in SRWW planted acres to 5.6 million acre level points to price $1.50 higher. Freeport, IL