Ag Minute: Mid-October Harvest Update in Central Illinois
Mid-October is here and so is the most important, most tiring, and oftentimes most rewarding time of year for Central Illinois farmers. Long days in the combine and late nights running the grain dryer are how a full season of work finally makes it to the bin. While farmers focus on getting the crop out, the USDA is busy measuring it. Through the weekly Crop Progress report and the monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, the USDA gives the market regular updates on how harvest is moving and how big the crop is shaping up to be.
Going into harvest, farmers were told to prepare for a wetter fall than normal. In early September, Nutrien’s Eric Snodgrass told Prairie Farmer that a record-setting El Niño would raise the odds of a wet fall across Illinois, with extra rain starting in mid to late September. September itself started out warm and fairly dry across central and southern Illinois, and it finished as the warmest September on record in the state at an average of 73.0 degrees. However, conditions turned later in the month with more rainfall and cloud cover. Northern Illinois was exceptionally wet, with nearly 15 inches of rain in parts of the northwest, and Extension reports noted dry-down slowing as rain and cooler weather moved in. Some lodging and stalk quality issues revealed themselves in later planted corn as harvest was delayed and moisture persisted. Yet, much of Central Illinois crop yields proved resilient to these issues with yields generally good, just not nearly as strong as last year.
Illinois harvest progress has been relatively strong through this weather. As of October 11, the USDA reported 51 percent of Illinois corn harvested, ahead of the five-year average of 44 percent, and 48 percent of soybeans harvested compared to an average of 46 percent. Both crops are rated 60 percent good to excellent. The October 9 Crop Production report pegged Illinois corn at 208 bushels per acre, down from 214 last year. That trails Iowa at 219 but tops Indiana at 200 and Nebraska at 188. Soybeans are the bright spot, with Illinois forecast at 68 bushels per acre, up nearly 9 percent from last year and 5 bushels ahead of both Iowa and Indiana. Nationally, the USDA raised its corn yield expectations by 2.7 bushels from September to 181.2 bushels per acre, for a 16.0 billion bushel crop, and raised soybean yield 0.3 bushels to 53.1 bushels per acre nationally.
Traders in most places were expecting a small cut to the national corn yield in the October report, so the increase caught the market off guard. Reports of stalk quality issues, slower than normal harvest progress, and the droughty conditions that the plains faced this year fueled a notion that nation expectations would decrease. So when the USDA raised expectations, largely because of a big jump in yield projections for Nebraska, a state with over 9 million corn acres, December corn futures fell 20 cents to $4.79 on October 9. That was the lowest close since mid-August and 13 percent below the three-year high of nearly $5.50 set in early September. Soybeans fared better, with ending stocks up just slightly, the yield expectation adjusted marginally, and futures ended up finishing the day higher.
These reports reach the local elevator too. Basis, the difference between your cash bid and the futures price, reflects how much grain is coming in compared to local demand and storage space. University of Illinois research shows Illinois corn basis typically weakens about 19 cents per bushel at harvest, bottoming in mid-October as harvest passes the halfway mark. USDA’s state numbers provide buyers and sellers a regional supply picture no single farmer or elevator could build alone, with national figures enabling better information for futures traders. For these reasons, USDA figures are extremely important, particularly in the Fall. Research summarized at Virginia Tech found USDA reports increase corn futures volatility by about 28 percent from August through October, compared to about 12 percent the rest of the year. Traders are eager for better and more information to trade on, and USDA reports generally fit the criteria.
With half of the Illinois crop out of the field, farmers have worked through a fall that brought record heat, heavy rain in the north, and slower dry-down than many hoped for. Corn yields look good if not quite at last year’s level, and soybeans are shaping up to be a standout. The USDA will keep releasing Crop Progress each week, and the next WASDE report is due November 10. Those updates will continue to shape both the futures market and the cash bid at the local elevator, making them worth watching right through the end of harvest.
For more information on September weather in Illinois, follow the link below;
For more information on the El Niño fall outlook, follow the link below;
For more information on late-September crop conditions across Illinois, follow the link below;
For more information on harvest progress and crop condition, follow the link below;
For more information on state yield forecasts, follow the link below;
For more information on the October WASDE report, follow the link below;
For more information on the market reaction to the report, follow the link below;
For more information on harvest-time basis in Illinois, follow the link below;
For more information on how USDA reports move markets, follow the link below;
For more information on the role USDA reports play in price discovery, follow the link below;
