Grain Marketing Highlights – September 2, 2011

Carl German, Extension Crops Marketing Specialist;

Linn Group Reduces Estimates For 2011 U.S. Corn and Soybean Production
Linn Group, a brokerage firm, cut its outlooks for the U.S. corn and soybean harvests, predicting farmers will harvest fewer bushels this fall than they did last year. The Chicago-based firm pegged the 2011 corn crop at 12.391 billion bushels, with an average yield of 149.1 bushels per acre. That is below the U.S. Department of Agriculture’s latest estimate of 12.914 billion bushels, with an average yield of 153 bushels an acre, and the 2010 harvest of 12.447 billion bushels.

The firm estimated the soybean crop at 2.997 billion bushels, with a yield of 41 bushels per acre. The USDA last estimated the soybean crop at 3.056 billion bushels, with an average yield of 41.4 bushels an acre, down from 3.329 billion bushels in 2010.

The estimates make Linn Group the latest private firm to cut its harvest estimates due to poor weather. Earlier this month, it estimated corn output at 12.775 billion bushels, with an average yield of 152.1 bushels per acre, and soybean output at 3.148 billion bushels, with a yield of 43 bushels per acre.

Pro Farmer forecast the U.S. corn crop at 12.484 billion bushels and the soybean crop at 3.083 billion bushels. Their soybean production estimate was above USDA’s August forecast.

FC Stone and Informa’s estimates will likely be issued over the next couple of days. USDA will update their supply and demand estimates on September 12.

Market Strategy
The move to historically high price levels for new crop corn and soybeans has traders now suggesting that reduced yield expectations being forecast by private firms have already been factored into the markets, at least for the time being. We can expect sideways market activity until the release of the September 12 report. Demand rationing is now occurring. Recent end user bids for old crop corn exceeded $8.00 (+) per bushel. Additionally, prices at these levels are sure to bring the necessity for end users to take protection in their cash bids for corn and soybeans, meaning, we are likely to see basis bids widen. Currently, Dec ‘11 corn futures are trading at $7.60; Nov ‘11 soybeans at $14.53; and July ‘12 SRW wheat at $8.31 per bushel.

For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.

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