Corn and Soybean Prices Have a Major Catalyst This Week as the Pro Farmer Crop Tour Kicks Off

Grain traders around the globe will be closely following the annual Pro Farmer Crop Tour of corn (ZCZ26) and soybeans (ZSX26) in the U.S. Corn Belt that begins today and ends Thursday evening. Crop tour scouts will roll into an eastern Corn Belt that has taken a week of record rainfall and a western Corn Belt still working through drought.

More than 100 crop scouts left Columbus, Ohio, and Sioux Falls, South Dakota, on planned routes this morning. “They will be measuring a corn crop that looks very different, depending on which side of the Mississippi River they are standing on,” said respected veteran ag and policy journalist Jim Wiesemeyer of “Wiesemeyer’s Perspectives” and Ag Bull Media. “The eastern leg drives straight through a flood corridor that has produced record river crests, downed corn and standing water from central Illinois into eastern Ohio. The western leg samples a crop that has been short of moisture for most of the summer.”

Between those two extremes sits the USDA’s Aug. 12 national corn yield of 180.7 bushels per acre — down 2.3 bu. from the July USDA report and 5.8 bushels below last year’s record, and a corn crop rated just 61% good-to-excellent, 11% below a year ago. “The tour will not resolve that argument this week. It will, however, produce the first hand-measured evidence of whether the ear counts and kernel rows support the number USDA is carrying,” said Wiesemeyer.

The Pro Farmer Crop Tour samples seven states — Ohio, Indiana, Illinois, Iowa, Minnesota, Nebraska, and South Dakota — that together account for roughly 70% of U.S. corn and soybean production. Two legs run Monday through Thursday and converge in Rochester, Minnesota, on Thursday night for the final tour meeting. Pro Farmer releases its national corn and soybean production estimates Friday afternoon. Scouts sample more than 2,000 fields along the way, using a procedure that has not changed materially since the 1990s, “which is the entire point: the value of the tour is not the absolute number, it is the comparison to the same measurements taken the same way in prior years,” said Wiesemeyer.

“The central tension of this tour: the damage that dominated the weekend field reports — drowned root systems, denitrified nitrogen, lodged and leaning corn — expresses itself in kernel depth and test weight over the next two to three weeks, not in the ear counts scouts will collect on Monday and Tuesday,” he said.

The Corn Setup: A 61% Good-to-Excellent Crop, not a 72% Crop

Scouts are walking into a materially weaker U.S. corn crop than the one they measured a year ago. 

As of the week ended Aug. 9, the USDA rated the U.S. corn crop 61% good-to-excellent, unchanged on the week but 11 points below the 72% of a year ago, with 14% rated very poor to poor versus 8% in late July. Soybeans were 62% good-to-excellent, down a point on the week and 6 points below last year. “The national numbers, though, conceal an unusually wide spread among the seven tour states — Iowa at 78% good-to-excellent corn against South Dakota at 45%,” said Wiesemeyer.

USDA’s August Benchmarks

The USDA’s Aug. 12 Crop Production report put national corn yield at 180.7 bu. per acre on 88.6 million harvested acres for a 16.013-billion-bu. crop, and soybeans at 52.7 bu. per acre for 4.519 billion bu. — the largest U.S. soybean crop on record. The corn cut of 2.3 bu. per acre from July came in below the condition-based models: the University of Illinois trend-and-condition model had pointed to 183.0 bu. per acre going into the report, and DTN’s Digital Yield Tour, run Aug. 1, had 178.5 bu. per acre. “The market, therefore, has a roughly 4.5-bushel band of estimates, and the tour walks into the middle of it,” said Wiesemeyer.

USDA’s August crops survey is anchored to Aug. 1 conditions and carries record corn yields in Indiana and Ohio, and a record soybean yield in Ohio — the three states that took the worst of the rain in the 10 days after that survey closed.

“A second, fully independent read points the same way. DTN’s Digital Yield Tour, a machine-learning model run against satellite and weather data rather than farmer surveys, published state estimates from an Aug. 1 snapshot — before the flooding. It landed below USDA in six of the seven tour states, including every state on the eastern leg: Indiana 3.8 bu. lower, Ohio 3.1 lower, Iowa 2.0 lower and Illinois 1.7 lower. It was above USDA only in Minnesota and South Dakota. That matters because DTN’s Aug. 1 model and the private field scouts working Illinois and Iowa reached the same conclusion by completely different methods, and both did so before the water arrived,” Wiesemeyer said.

Field reports over the weekend were dominated by water. A stalled frontal boundary parked repeated rounds of thunderstorms over the same ground for the better part of a week, producing widespread 3.00 to 5.00-inch totals across portions of Iowa, Illinois, Indiana and Ohio — and considerably more in the hardest-hit band. Parts of eastern Indiana and southeastern Ohio picked up more than 11 inches over the week. 

“The agronomic damage is the part that matters here. The rain fell on soils that were already saturated, so almost all of it ran off or ponded. Corn and soybeans are standing in water across a corridor running from central Illinois through central Indiana into eastern Ohio, with lodged and downed corn reported through the same band after gusty outflow winds accompanied the heaviest storms. Ponded corn at dough-to-early-dent loses root function first and kernel fill second; beans setting pods in saturated ground abort the youngest pods,” he said.

Will Scouts Apply a Discount Factor for the Flood Damage?

“This is the right question to ask this week, and the honest answer has two parts: no in the state numbers, and partly yes in the national estimate. The state results Pro Farmer publishes each evening are mechanical. They are the arithmetic average of what scouts physically counted in the fields they stopped at — ear count times grain length times kernel rows over row width. There is no judgment layer, no haircut for stress, and no adjustment for what a field is likely to look like in three weeks. However, Pro Farmer is explicit that its final production number is a Pro Farmer estimate, not a tour estimate, and that it incorporates crop maturity, acreage adjustments, areas outside the tour's routes, the historical tour-versus-USDA relationship and other factors — and it is issued as a range, not a point. That is where a flood discount can legitimately be applied,” said Wiesemeyer.

Let me know what you think. I enjoy hearing from my valued Barchart readers all around the globe. Email me at jim@jimwyckoff.com.