Though this year’s corn harvest is still more than three weeks behind, all indications are that yields will in fact make for the second-largest year of corn production on record. Now, it’s the quality of the corn that has folks scratching their noggins.
“The central and western Corn Belt is reporting very good yields and generally good quality, although grain-moisture levels are above average. However, the eastern and northern corn growing regions are finding fields with lower-than-average test weights and a range of disease issues,” says Frayne Olson, North Dakota State University crops marketing economist. “There are reports from Indiana, Illinois and the hail-damaged regions of Iowa of low test weights, mold damage within the seed and moderate levels of mycotoxins. Vomitoxin is the most commonly reported mycotoxin.”
In his most recent “Market Advisor” column, Olson explains quality variability this year will likely shift marketing patterns. “Higher-quality corn will be pulled into those regions with quality problems to be blended with the lower-quality corn or to replace the lower-quality corn. The basis and quality discounts within these problem areas likely will increase because of the added cost of transportation and blending or the cost of moving the lower-quality corn into alternative markets,” Olson says.
As local cash discounts increase for low quality corn in order to adjust to quality variance, historical basis patterns will likely change, too.
So, when it comes to the corn market this fall, Olson says, “Watch your local basis levels and discount schedules closely because they likely will change as more information about the quality of the U.S. corn crop becomes available.” Click here to view the entire column.
Incidentally, the quality wonderment may also be a factor in slower-than-expected corn exports. Analysts for CME Group’s Daily Livestock Report explained last week, “…On the demand side, the market still is grappling with the implications of a slower-than-expected export pace. Despite a weak U.S. dollar, U.S. corn shipments are running behind USDA projections. This may be due to the slow pace of harvest as well as quality issues with this year’s crop. Foreign buyers may also be biding their time, hoping for a break given the rally in corn prices during the past three months.
“The rally in corn prices likely was further exacerbated by the fact that currencies of some large buyers of U.S. corn have yet to show major gains vs. the U.S. dollar. While U.S. corn exports to Japan are up 4% for this calendar year, exports to Mexico are down 21% and exports to South Korea are down 31%. Also, feed demand in some markets has suffered due to reductions in animal units. US corn exports to Canada in 2009 are down 39% compared to the same period a year ago…”
For the week ending Nov. 29, according to the National Agricultural Statistics Service:
Corn – 79% is harvested, 15% less than a year ago and 18% behind average – more than three weeks behind. The most significant progress came in North Dakota where producers combined 19% of their crop during the week. Despite the active harvest pace in recent weeks, overall progress is more than three weeks behind normal in Minnesota, North Dakota and South Dakota and more than five weeks behind normal in Illinois.
Soybeans – 96% has been harvested, 2% behind last year. The most significant delay is in North Carolina where above-average precipitation in recent weeks had slowed harvest.
Winter wheat – 96% has been seeded, which is two points behind last year and the average. 89% has emerged, 5% behind last year, and 4% behind normal. Despite double-digit emergence in Arkansas and Indiana, overall progress remained over 19 points behind normal. 63% is rated as Good to Excellent.
Sorghum – 87% is in the bin, 6% less than last year and the average. Above-average temps and mostly dry weather allowed producers in Kansas and Texas, the two largest sorghum-producing states, to harvest 9% and 17% of their crop during the week, respectively.