Over the past three years, I have done an unscientific early crop survey. I drive from Kansas City to Washington DC. If I stayed on the interstate the entire time, it is about 1100 miles from my place in Kansas to my brother’s in Arlington, Virginia. From Kansas to eastern Ohio, it is mostly farm country. There is also a lot of farm ground in parts of Maryland and Virginia.
With 35 plus years of working with farmers and traveling as much as I have for meetings and seminars, visiting clients, going someplace to see family members or just driving from one place to another, I have seen more than my fair share of U.S. grain producing ground. I am not an agronomist, but I think I have learned more than a few things about crops in 35 years. Plus, I have some very knowledgeable clients and know several agronomists.
Normally, I go at the end of June, but this year I had to go at the end of May and I drove back starting Wednesday, June 20th and took four days driving back instead of the usual three days and 1100 miles. I drove off the interstate several times, especially across Missouri and added close to another 500 miles going back to Kansas.
When I left Kansas at the end of May, across Missouri I drove the northern route across interstate 70. From Kansas City to the Illinois border, it was easy to see the start of a very good crop. Corn was waist high from west to east with many fields taller. There were already soybeans that were canopying, and other fields of beans were easy to see rows even when it was on no till ground.
A year ago, when I crossed the Mississippi at the end of June into Illinois, I wondered if some areas of Illinois and parts of Indiana could even grow 20 bushel beans. By the end of May this year, it looked like the end of July a year ago. Only the late planted beans weren’t covering the ground. When I drove back last week, it was easy to see blooms. I was surprised and even doubted it until I got out and looked and then Monday’s crop condition report also verified it. When I got off the interstate and drove county backroads, it was easy to see many fields where the beans had blooms. A lot of corn was 6 feet from the Indiana border across Missouri and a lot of corn was tasseling. Compared to a year ago, every state was like night and day.
Indiana’s corn and soybeans look great. Ohio was just a touch behind Indiana where crops looked great, but were just a little shorter. Illinois was like it is during the middle to late July. Rivers and creeks were full and there were a few places that were near flood stage. It wouldn’t take a lot of rain in Ohio to flood some acres and the same can be said for Indiana and Illinois.
I decided when I drove back to Kansas because of all the reports of bad looking crops in Missouri that I would drive south and through central Missouri on state and county roads. Normally, it takes about 4 ½ hours to 5 hours to drive across Missouri from St Louis to Kansas City. Last Saturday I drove close to ten hours. What I saw compared to the crop condition report on Monday was as good the crops across Interstate 70. There was a lot of corn that was tasseled and except for a few fields of soybeans, the majority were rows just about to canopy over, or were canopied. Since I didn’t drive the entire state, like everyone I just will have to take the results of the survey, but one thing is for certain, there are a lot of farmers in Missouri hoping somebody has poor crops, so basis can improve in their area where crops look more to the excellent side than just good.
For what I saw, I have no doubts at all that the U.S. Midwest crops are starting out better than many previous years. It was amazing how big, beautiful and lush crops looked and the speed and to the heights they grew in one month. Driving east to west, it was more like the middle to late July than June 20th to 23rd.
A year ago, I noticed a change in some fields of corn and again this year I observed the same sort of difference in quite a few fields of corn. By far, the vast majority of fields are deep green with big healthy growth. The kind of stalks that would compete at the county 4-H show for a Blue Ribbon. However, like a year ago and I especially noticed it in early September when I drove from Kansas to northern Minnesota, there are fields lacking in color and condition. It still looks very good but nowhere near excellent and often the change was easy to see from one field across the road from the other.
When I noticed it a year ago, there were others reporting the same occurrence and I am sure many doing surveys later this summer will also see it happening. A year ago, many reports claimed it was the lack of water and heat that hurt corn and soybeans. However, this year with plenty of water, it is happening again. Yes, there were extremely high temperatures in June, but night time temperatures cooled off so high temperature stress should not be a problem at least for now. Some will say it is too much water. I don’t think it is the problem
It appears nitrogen isn’t enough for some of the fields that lack the deep green. But what can explain one field 25 feet from another being so different? Two different farmers. I believe last year and this year there are close to 20% of farmers that are having financially hard times and skimping on nitrogen and other nutrients. We know there were bankers that discouraged planting corn and some that allowed operating loans for soybeans and not for corn. (It was explained in a previous report). Now because some corn may be too tall and some fields too wet, there are farmers concerned they will not be able to get more nitrogen on corn, but for those that want to do it, I am sure they will find a way.
It will be interesting to see how this big beautiful crop will grow through July and August. Is the corn crop made? Far from it. As the saying goes, corn is made in July and soybeans are made in August. Yes, most crops are ahead and doing better than previous years at this time, but it is a long time before combines start harvesting.
Two years ago, report after report claimed that a La Nina would hurt crops and drove prices higher. Last year, a late spring/early summer drought in the Dakotas drove prices higher. Both times nothing happened to the majority of U.S. crops and prices dropped.
Now, China and other countries say they will place tariffs on soybeans, along with other crops and meats from the U.S. Now, the market is anticipating what will happen to exports and what it will do to grain prices. Before all the trade war talk, soybeans and corn prices were dropping. With the whopping soybean crop in Brazil, 119 million metric tonnes, what else could happen and should have been expected? China over the past year has purchased more soybeans from Brazil than the U.S. It isn’t or hasn’t been a secret. China has many trade agreements with Brazil as well as other countries. Many Chinese companies have been big investors in Brazilian infrastructure. Several times I have reported that China knows they need to source commodities of all kinds from many countries. Mexico over the past year is following China’s example.
Possibly above all, now is a perfect time to put tariffs on US commodities. The world knows the U.S. crops are as the saying goes, growing like weeds. Every year, countries buying soybeans, corn and wheat switch business to the southern hemisphere. For years, until U.S. farmers became a storing agricultural nation, grains moved from harvest through July. Unfortunately with all the storage available, U.S. farmers now want to sell twelve months out of the year and with Brazil taking over the soybean trade, it isn’t a good idea. But for China, to place tariffs now, it is a perfect opportunity. BUT, it should be remembered a Chinese financial minister said in March, they need U.S. soybeans, but if they must, they can source them from other countries. By harvest, a lot can happen.
Currently U.S. grain prices are now being hit from many sides. Where is the bottom? With the current negative grain climate, it is a guess, but I certainly wouldn’t suggest selling now. For soybeans, it will be an unknown that pulls them out of the hole. For corn, look for a demand driven market as I have talked about in many past reports.
For speculators I suggest adding to the spread by buying three corn and selling one soybean.
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