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Corn to Drop $1; Soybeans $2, Analyst Says
We have experienced rapid planting progress the past week, especially in states that previously had suffered under cool and wet conditions all spring, which had delayed planting. However, that quickly turned around the past two weeks as the best planting conditions of the spring occurred. In the past two weeks, North Dakota, Minnesota, Wisconsin, and Michigan all have caught up to normal to near-normal planting progress!
Weather forecasts are turning cooler with normal to below-normal temps the next week, and precip that remains normal to above-normal for the entire 14-day period. The cooler temps as we enter the summer months might actually be a bit bearish as it lessens the chances of a summer drought. North Dakota dodged a bullet this weekend with storms forecast to drop 2 to 3 inches of rain, and instead most areas had less than 0.5 inch. That will allow millions more acres to be planted as the weather allows planting up to the final planting date for soybeans/sunflowers of June 10.
Last week North Dakota planted 32% of its soybean crop (now 63% planted - equal to normal!!!), 19% of sugar beets (97% planted vs. 95% normally), 16% of sunflowers (29% planted vs. 39% normally), 24% of HRS wheat (83% planted vs. 81% normally), 26% of barley (now 82% planted vs. 77% normally), and 19% of corn acreage (86% planted vs. 88% normally). Essentially, North Dakota is now caught up to near-normal or even in some crops ahead of normal planting progress! That means less prevent planted acreage is possible in North Dakota, the state that struggled the most to plant the 2014 crop.
As a nation, we are now 95% planted with corn vs. 94% normally, with emergence at 80% (equal to normal). Corn conditions are also above average at 76% rated G/E vs. only 63% last year. The Pro Ag yield model is above 'trend' of 159.4 at 161.2, but still below USDA's projected 165.3 bu/acre. Winter wheat conditions were steady at 30% G/E, with the yield model dropping 0.15 bu/acre to 45.6 bu/acre, equal to its lowest of the year and well below trend at 47.68 bu/acre. Basically, we have an above-average corn crop and below-average winter wheat crop so far coming in 2014!
Soybeans are 78% planted, now ahead of normal 70% planted so that also has passed normal such that we now have an early seeded soybean crop. Soybean emergence is 50% vs. 45% normally, as the warm weather has allowed rapid germination of crops under near-ideal conditions. Cotton is 74% planted vs. 81% normally, with sorghum 56% planted vs. 57% normally. Sugar beets are 99% planted vs. 97% normally, with sunflowers 26% planted vs. 33% normally. HRS wheat is 88% planted, equal to normal while emergence is 67%, slightly behind the 72% average pace. Oats are 95% planted vs. 97% normally, with conditions rising 2% this week to 62% G/E, well above last year's 56%. Barley is 93% planted vs. 89% normally, with conditions rated 67% G/E, up from 66% last year. Overall, the last two weeks have meant improved conditions for the 2014 crop and accelerated planting progress, especially in areas that were behind normal (North Dakota, Minnesota, Wisconsin, and Michigan). That is bearish overall, and should pressure grains today with the exception of winter wheat, where the yield model declined in the past week.
Pro Ag projects we have an above-average corn and soybean crop coming in fields, and even with trend yields, we will have a projected 1.7 billion-bu corn carryout and 330-mb soybean carryout. Based on this fact, Pro Ag projects corn to drop $1 or more from recent highs (already we've dropped 60c), and soybeans to drop $2 or more by harvest. That's why we are 100% priced in 2014 and 2013 corn/soybeans. Target $6.95 July Chicago wheat to advance wheat sales.
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