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Planting progress eyed-Ray Grabanski
We talked last week about how the market was focused on only the bearish side of the market.
That reasoning was supported by the expectation that prices had already allocated out the short crop from 2010 by cutting demand due to the high prices offered at the time, with $8 corn effectively limiting the market demand for ethanol, exports, and potentially even feed use. The market was intent upon focusing on the negative news items, and ignored the bullish aspects of the late planting to date in the US.
Corn accelerated to 63% planted last week vs. 75% normally at this time, but a few key states continued to lag in planting progress across the region. North Dakota, SD, MN, and the eastern Corn Belt states of OH, PA were lagging the most, and were holding planting progress back from 'normal'. But perhaps even more telling was the HRS wheat planting progress, where ND lagged at only 15% planted vs. 68% normal. People are rightly starting to worry about prevent planting ratios of from 10-25% of the ND entire cropland area! Soybean planting was 22% nationally vs. 31% normally, but once again it was the same states that lagged in planting progress, and after all, it is late May now!
While this week might once again see rapid planting progress across the dry central portion of the US (IA, MN, WI, ILL, IND, ND, SD), we have some heavy rains expected to move into the western Corn Belt that will effectively close that ever so brief planting period that has been opened this week for most growers. While IA and NE growers may be nearly done planting everything, most of the rest of the country will have to grin and bear it while we spend possibly another week waiting for soils to dry out. This is getting critically important for corn producers now, as planting must get done soon in the northernmost areas to have a chance to mature the corn before the first fall freeze.
Already we are also hearing of problems in other areas, especially Germany where the spring has been unusually dry. Concerns are starting to arise that the world could have another series of crop failures this year, with the US in the middle of a real disaster for HRW wheat areas. Drought has also impacted the western HRW wheat belt as well as Germany, and now the trade is starting to recognize the potential damage form the adverse weather to date.
There is also concern about Canadian planting progress, which once again has fallen well behind the normal pace of planting there. That could impact final yields for crops planted in June, as there is more production risk and risk of heat during pollination that could adversely affect the crop. So we have a bevy of worries this week that has pushed prices higher, with sharply higher gains on Wednesday.
Ironically, for ND producers who finally got into fields this week, prices
also have shot sharply higher on planting concerns that has been on farmers minds for at least a month! But just when planters started rolling, the market decided to pay attention. This seems so much like a fake out on the bulls part, as we may see the most aggressive planting pace yet for 2011 in this week's report expected next Monday. Its likely we'll see a significant advance in planting progress especially in MN, ND, SD, and WI this week as well as ILL and IND. OH has had lingering showers into mid-week, but later week may also see a dry pattern emerge and a brief planating window open up.
It might be surprising how much gets planted in this ever so brief window, as many farmers are working long hours (or simply working 24 hours/day if they have the labor supply) to keep planters rolling. It will be interesting to see just how much got done this week, but in the mean time, the market has finally started to take notice of the planting delays, and markets are back to wanting to test their recent highs.
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