Here are the harvest progress numbers provided by USDA this afternoon.
Corn is at 46% complete while Beans are at 70% complete.
In going through the reports, excellent progress was made in the Western region of the Corn Belt. That fits with the weather conditions which showed that big front which touched off a large amount of rainfall, moved rather quickly out of the Western region before taking its time to clear the Eastern Belt.
Let me give you a sense of the numbers to illustrate this:
Iowa is now 81% complete on bean harvest compared to last week's meager 61% and the previous year's 85%. The five year average is also at 85% so Iowa has essentially caught up with the averages and looks to be in very good shape on the beans.
Minnesota is at 94% compared to last week's 85% and the previous year's 89%. The 5-year average is 87%. Minnesota is running ahead.
N. Dakota and S. Dakota are both well ahead of last year's pace and the 5 year average.
As one moves more towards the East, we can see the impact from the storm. Illinois is at 63% complete versus 37% last week and 83% last year. It's five year average if 77%.
Indiana is at 50% complete versus 31% last week and 76% last year. Its five year average is 75%.
Ohio is at 50% complete compared to 36% last week and 80% last year. Its five year average is 73%.
As you can see from the numbers, Harvest progress has lagged as one moves West to East. This explains the extraordinarily wide basis being seen in the meal and beans from the Eastern Belt. Processors have been scrambling to get beans over there because of the lag in getting the new crop flowing into the pipeline.
The weather however looks pretty good over in the Eastern Belt from Tuesday on through the weekend at this point with some cooler but dry conditions forecasted from what I can see at this time. There looks to be a lot of sun which should allow the harvest in that portion of the belt to begin to play catch up.
Let no one be surprised to see a sharp jump in the numbers we get next Monday. The size of these combines and the speed and accuracy at which they can operate is stunning. Look at how quickly Iowa caught up in one week's time with good weather!
At some point, once these newly harvested beans begin flowing into the pipeline, any shortage in that EAStern belt is going to be eliminated. That is when the temporary spike in meal prices - and subsequently in beans - should come to an end.
We have to keep one eye on S. American weather but right now, the rains look timely and mostly sufficient.
The corn is where harvest is lagging the most and that is perhaps the reason we are seeing more impact from this sharp rally in the meal than we might otherwise see at this stage of the season. There is nothing to indicate any damage to the crop that remains unharvest but some are sticking some premium into the corn until they see a larger % of the crop in the bin.
Farmers have been focusing on bringing the beans in and leaving the corn to dry down further.
Let's start with Iowa which is 36% complete on the harvest compared to 19% last week and 52% last year. Its five year average of 65%. Obviously it is well behind.
Minnesota, ahead on the beans, is behind on the corn with 41% complete compared to 16% last week and 44% last year. Its five year average is 63%.
N. Dakota and S. Dakota are well behind as is Nebraska.
In the Eastern Belt, Illinois is 59% complete compared to 43% last week and 71% last year. The five year average for that state is 72%.
Indiana is 44% complete compared to 31% last week and 57% last year with its five year average at 60%. Lastly, Ohio is 36% complete versus 23% last week and 46% last year. Its five year average is 44%.
I can say essentially the same thing about this as said about the remaining bean harvest - the weather for the remainder of this week looks pretty doggone good to allow substantial progress to be made.
At this point, technical-based buying generated by some initial buying based on the slower pace of harvest has now unleashed a torrent of both short covering and new longs in these grain markets. Couple the strong basis for meal in the Eastern Belt and funds have been going beserk in their buy programs. At some point, and I believe we are soon reaching that point, new crop supplies are going to start flowing in considerable size and that is going to unleash the hedge pressure that has heretofore been absent. It is the absence of that strong hedging-related pressure that has produced a pocket of air ABOVE the grain markets and allowed fund buying programs to essentially move prices unimpeded to the upside.
Simply put, the funds are not selling at the moment and neither are the big commercials ( YET) in size. Once the fund buying meets up with sufficient supply to absorb it, I believe that the grains are going to come face to face with the reality of massive supply looking for a home and competing for storage and transportation availability.
In looking through today's numbers, I cannot see any further justification for running the meal, and thus the beans, significantly higher especially given the forecast for harvest this week.
The corn might still try to keep some premium in it but a fair amount of that premium is already accounted for. With progress moving only one way at this point, and that is higher, maintaining much more of any sort of premium in corn related to harvest delays seems unwarranted.
My concern for the grains remains the same - when the funds are done buying, having chased prices to such lofty levels considering where the beans and the corn were at the start of the month, who is going to take their place on the buy side?
I guess we shall see soon enough, shall we not?
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