The USDA threw the traders a curveball yesterday with a bullish September 1st stocks report and wave of unexpected revisions. This helped add some much needed life into the markets and should add support moving forward. While the old crop stocks dropped, early indications on the 2020 crop are much better than expected. I continue to receive reports of record yields in MO, IL, IA, MN and WI. The common theme in all of these reports is test weight! I have been charting test weights for the last 6 years and each of the last five years we have continued to drop. In 2015 the average test weight was 57.4 while the 2019 crop averaged 53.4. Early indications are that this years crop is going to bounce back to the 56+ range which will add up quickly and add to producers production and bottom lines. Each producer will have to monitor his or her own situation but a 5% increase in bushels due to test weight will add up fast in your bins and may result in the need to make more sales this fall.
Yesterday’s rally showed the funds adding 40,000 corn and 30,000 soybean contracts to their already long position. The funds are currently long 111,000 corn and 216,000 soybean contracts.
Harvest should progress nicely over the next couple of weeks with dry/cool weather prevailing across the Midwest through the weekend. However, the ridge/trough pattern will progress east allowing the ridge return to the central US bringing with it warmer/dry weather next week.
Have a Safe Day!