Slow Harvest Boosts Price Volatility

“This year’s corn harvest is really a tale of two crops,” says Darrell Mark, University of Nebraska agricultural economist. “One crop

“This year’s corn harvest is really a tale of two crops,” says Darrell Mark, University of Nebraska agricultural economist. “One crop is getting dried down and will store well for a long period and be exportable. The other crop is going to be stored in less than ideal conditions: high moisture, large ground piles, and possibly with some quality issues. It will be hard for cattle feeders to compete for the former, but they are in a competitive position for the latter.”

In either case, prices for a crop estimated to be the second largest in U.S. history have remained higher than plenty of stockers and feeders anticipated.

Weather conditions delaying harvest are a major factor, Mark reported in last week’s In the Cattle Markets newsletter. But he also points out atypically high moisture content for this time of year is pressing commercial and private corn drying capacity, slowing delivery along the way.

“As if these problems aren’t enough, many areas are finding corn with molds, mycotoxins or other disease problems that could result in rejection or substantial quality discounts (particularly if it is above thresholds safe for livestock consumption),” Mark says.

Mark believes there is still a reasonable possibility for a modest decrease in corn prices and basis before harvest is complete.

“More probable than a price drop, though, is pressure on basis,” he says. “The large, high-moisture crop is already causing bottlenecks with drying capacity, and ground piles of corn are starting to emerge across the Western Corn Belt. As those things occur, basis typically weakens, which is beneficial to cattle feeders and other corn buyers. Omaha, NE, corn basis has already dropped from around -$0.15/bu in mid-October to -$0.32/bu this week.”

For the week ending Nov. 15, according to the National Agricultural Statistics Service:

Corn – 54% is harvested, 23% less than a year ago and 35% behind average – more than three weeks behind. Producers in Illinois, Indiana, Iowa, Minnesota and Ohio utilized more than five days suitable for fieldwork to harvest 20% or more of their crop. As harvest surpassed the halfway point during the week, 67% of the corn crop was reported in Good to Excellent condition, down slightly from the prior week.

Soybeans – 89% has been harvested, 6% behind last year and 7% – 12 days – behind average. Harvest was active throughout most of the major growing regions, but progress remained behind the average pace in all estimating states except North Carolina and Ohio.

Winter wheat – 90% has been seeded, which is six points behind last year and 5% behind the average. Seeding was most active in Arkansas, California, Illinois, Indiana and Missouri where producers seeded 12% or more of their crop during the week. 77% has emerged, 9% behind last year, and 10% behind normal. The most significant delays were evident in Arkansas, Illinois, Indiana and Missouri. 64% is rated as Good to Excellent, which is 2% less than the same time last year.

Sorghum – 97% has reached maturity, 2% behind last year and the average. The sorghum crop was mature everywhere except Illinois, Nebraska, Oklahoma and Texas. Harvest advanced 12 points during the week. 68% is in the bin, 8% less than last year and 16% less than average. The most significant delay was evident in Nebraska where harvest was 43 points – nearly 3 weeks – behind normal.