Grain markets this morning are all in the red as the hangover from a bearish ProFarmer crop tour last week sets in.
“Strength and compassion are not mutually exclusive.” – Robert Kiyosaki (American Author)
Bearish US Crop Tour Hangover Continues
Grain markets this morning are all in the red as the hangover from a bearish ProFarmer crop tour last week sets in. Soybean prices are leading the complex lower with double-digit losses this morning as thoughts of a potential record American crop linger.
Also impacting grain markets this morning is the likelihood of a NAFTA agreement being announced between two of the three players: the USA and Mexico.  The key player missing here is Canada, who has been left out of the talks. The question remaining is what sort of deal will Canada get despite Prime Minister Trudeau repeating that he won’t just sign any deal that the US and Mexico agree to. 
Finally, later today we’ll get the weekly USDA crop progress report. Expectations are for crop ratings for corn and soybeans to come in sideways, if not possibly a little lower. There are some good rains in the forecast that most of the Midwest are seeing though, giving fields one last drink. 
As we know this year’s crop is quite advanced, two things to keep in mind are the 5-year averages for soybeans dropping leaves is 7%, while the percentage of corn dented is 40%. Last week alone, 44% of the US corn crop was considered already dented.
Crop Tour Sees Records
Last week, the ProFarmer Crop tour offered little optimism for a downturn in production and yield expectations. Despite reports of significant variability in corn yields across the Corn Belt, no numbers jumped out to suggest that the USDA’s record yield expectation is a pipedream.
At the end of its crop tour, ProFarmer estimated average US corn yields across the country at 177.3 bushels per acre, more than a full bushel below the USDA’s record-breaking 178.4 estimate today.
If the ProFarmer yield is realized, it puts total U.S. corn production at 14.501 billion bushels, or about 500 million bushels less than what the USDA predicted in their August WASDE report.
Looking forward, the range of final nationwide average yields will come in somewhere between 175 bushels and 180 bushels.
For soybeans, the crop tour showed big year-over-year changes in soybean pod counts in all seven states surveyed. Nebraska alone has seen a 15% jump in soy pods compared to the survey numbers collected last year.
At the end of the crop tour, ProFarmer estimated that nationwide average soybean yields would come in at 53 bushels per acre.
This would be a new record and solid jump from the USDA’s current forecast of 51.6 bushels per acre.
If realized, this would put soybean production at 4.68 billion bushels, or about 90 million bushels more than the current forecast for the USDA (however, this assumes a 500,000-acre reduction in US soybean acres by ProFarmer, versus the current USDA number).
The crop tour seems to confirm the current USDA yield estimate, and traders see the possibility of even higher yield due to better weather.
Canola Prices Lose Double
While canola prices have been pulling back thanks to the broader sell-off In grain markets, we know that the futures price is just one-half of the cash price equation. Basis levels have been trending lower over the past month, despite rumors of a smaller Canadian canola crop. Below is one of the three charts we shared with our GrainCents canola readers this weekend, as we dug deeper into the structure of canola prices.
This Friday, August 31, we’ll be getting Statistics Canada’s first production estimates of the 2018 crop. Given that the survey took place in July though, there are a lot of doubts about the idea that StatsCan’s numbers on Friday will account for the heat stress that Western Canada saw in August.
Alberta Agriculture updated their estimate of the province’s canola yields, pegging the number at 39.4 bushels per acre. This would be a slight bump from the 39.1 BPA forecasted at the beginning of the month.
However, this is still more than 6%% below StatsCan’s 4-year average for Alberta canola yields of about 42 bushels per acre.
For the record though, over the past 4-years, Alberta Agriculture has understated Alberta’s average canola yields, relative to StatsCan’s final yield released in December, by 11%. If this trend continues, Alberta’s canola final average yield from StatsCan would be around 43.5 bushels per acre (and clearly, above-average).
Ultimately, at this time of year with so many different crop tour and yield estimates coming at you, who do you believe?
Dec Corn: -2.3¢ (-0.63%) to $3.605 USD or $4.704 CAD
Nov Soybeans: -12.5¢ (-1.46%) to $8.428 USD or $10.998 CAD
Oct Soybean Meal (per short ton): -$5.00 (-1.59%) to $309.50 USD or $403.88 CAD
Oct Soybean Oil (cents per lbs): -0.13¢ (-0.46%) at 28.15¢ USD or 36.73¢ CAD
Dec Oats: 2.5¢ (0.95%) to $2.663 USD or $3.475 CAD
Dec Wheat (Chicago): -6.8¢ (-1.27%) to $5.298 USD or $6.914 CAD
Dec Wheat (Kansas City): -7.0¢ (-1.28%) to $5.398 USD or $7.044 CAD
Dec Wheat (Minneapolis): -3.5¢ (-0.59%) to $5.868 USD or $7.657 CAD
Nov Canola: -$3.00 (-0.60%) to $11.467/bu / $505.60/MT CAD or $8.804/bu / $388.21/MT USD