Todd's Take
It's That Farm Show Time of Year
Fresh back from the 2019 Farm Progress Show near Decatur, Illinois, I have several thoughts spinning through my head, mostly the result of talking to customers and others who were kind enough to stop by the twice-a-day talks I conducted with DTN Senior Meteorologist Bryce Anderson at DTN's building on Lot 360.
This year, Anderson spent much of his time reviewing how bad planting conditions were in 2019, pointing out large areas of prevented plantings on satellite maps and describing in thorough detail the lack of maturity in this year's corn crops. While Bryce does not see signs of an early frost in the forecast pattern, he quickly explains the risk for many states is that a normal frost arrival could spell trouble for this year's late-planted, slow-developing corn crop.
Among our informal conversations, customers gave us their own reports on what they're seeing in their areas, and for the most part their stories echoed variations of what Anderson described. A common theme was that where crops got planted early, they were looking good and should do well.
However, in many areas where fields did not get planted until June, the development is painfully slow and concerns are high about whether or not crops will be able to fully mature. By the way, the farmers we spoke to were not just from Illinois, they came from a wide range of areas around the central and eastern Midwest.
Building on Anderson's foundation of crop concerns, I described USDA's 13.9 billion bushel (bb) estimate as a best-case scenario. My current guess is that a 13.5 bb estimate is closer to where this crop actually is and we still need cooperative fall weather to prevent further declines.
USDA's field-based surveys should provide a more accurate yield assessment on September 12, but the conditions of 2019 are so abnormal that a surprise could be lurking. Harvest anecdotes will spread quickly through the grapevine, but USDA may not have an accurate crop assessment until the January World Agricultural Supply and Demand Estimates (WASDE) report, helped by the findings of the December 1 Grain Stocks report.
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It was no surprise that many of our visitors were still scratching their heads over how USDA estimated 90 million acres of planted corn, and that disappointment seemed universal. As many said to me, they've been through bearish times before and have to believe there will be a way to get through this one.
In addition to new questions about the 2019 crop, the oldest and most frequent question that always pops up at farm shows is what to do with the old-crop corn currently being stored.
I have to be up front and explain that DTN's Market Strategies recommended the final sale of old-crop corn on May 28 when DTN's National Corn Index was near $3.93 a bushel. With cash corn now 40 cents lower, we can't go back and sell the higher price, so I try to explain our approach instead.
The main reason I recommend customers consider getting out of their old-crop corn by May 31 every year is there is a long track record of losing money when they don't.
One of my favorite charts shows that owning cash corn from May 31 to November 30 every year for the past 26 years has lost a total of $7.41 a bushel. Corn didn't lose money every year, but in 18 of the past 26 years, there has been a loss, and the overall losses have far outweighed any gains.
On May 31, 2019, DTN's National Corn Index was priced at $4.00 a bushel and it won't surprise me if this year turns out to be the 19th loss in the past 27 years.
When I asked folks why they didn't take advantage of June's high corn prices, the answer most often heard was, "Well, I heard from some other adviser that prices were headed higher, so I held on."
This week's Farm Progress show was time well spent and I enjoy hearing from customers about how their year is going. I can't always explain why USDA does the things it does and don't always agree with its calls. However, I have plenty of tips as to how to get a better selling price for your grain and am glad to share that advice.
If you would like more practical tips about how to get a higher selling price for your crop, sign up for Wednesday's (Sept. 4) webinar at noon CDT at:
Todd Hultman can be reached at Todd.Hultman@dtn.com
Follow him on Twitter @ToddHultman
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