Spring Planting Delays Unfolding
Once again in 2014 we have delayed planting similar to in 2013, as most progress numbers are very similar to the slow start in 2013. It's the delayed planting that is supporting the market, as we are unsure if planting will be done on a timely basis. Recall that in 2013 over 40% of the corn crop was planted in one week in early May, and the market bears are hoping that progress can be repeated if we get a planting window opened sometime in May.
In yesterday's weekly report, corn planting was only 6% done vs. 14% normally, so this is starting out to be another poor planting year (a lot like 2013 when only 4% was planted). Cotton planting is only 9% complete vs. 12% normally and 10% last year. Oats planting is only 20% complete vs. 55% normally and 41% last year. Sorghum is 23% planted, equal to normal but behind last year's 25% complete. Sugar beets are 11% planted vs. 29% normally and 16% last year, so many crops are actually behind last year's poor progress. Rice is 32% planted, equal to last year but well behind the 44% normally done. Winter wheat is only 9% headed vs. 17% normally and 7% last year, so it too is behind normal development due to the cold spring we've had thus far. Winter wheat conditions are 34% G/E, the same as last week and only 1% behind last year's rating.
The Pro Ag winter wheat yield model stabilized at 46.26 bushels per acre, about unchanged from last week. But it does indicate that the decline has ended, and we were on a rapid decline from the week before so to stabilize the yield model is a victory for the bears. HRS wheat planting progress is only 10% complete vs. 19% normally and only 7% last year. Barley planting progress is 25% complete, ahead of average pace at only 23%, and ahead of last year's 22% planted. Most of the progress is in ID and WA, two western states where the spring has been warmer.
In the U.S., we desperately need an open window of planting to allow for planting progress to catch up to normal. This window of planting opportunity may be in the offing as the eight- to 14-day forecast is hinting at a potential window in early May. That would be just what the doctor ordered for producers, and we are holding out hope that we can still get this crop planted on time. However, the cool temps that are still locked in as a weather pattern (continuing the bitterly cold winter weather pattern) are concerning. Can temps stay below average for the entire spring planting? It would seem unlikely, but so far that is definitely happening.
While the uptrend has stalled in recent weeks for corn and wheat, soybeans ran to new highs last week in another strong performance. Once again, our target of $15 soybeans was hit again last week and early this week, giving us another opportunity to make catch-up sales of soybeans. Our target for advancing corn sales is $5.40 nearby corn futures, and $7.50 CBOT wheat futures for completing sales of these two crops.
For new-crop markets, $5.07 December corn and $12.06 November soybeans were our last targets to be hit for 2014 corn and soybeans, where we advanced sales another 25%. We hold out the last 25% of 2014 crop for the market top to be hit. We expect to make new sales in the next month before the USDA's first projections at 2014 corn and wheat carryout in May, and the June projection, which is the first for 2014-15 soybeans. It's likely that the early projections will include another hike in corn carryout to near 1.9 billion bushels, and soybeans are likely to be near the 300-mb carryout level or higher given the March planting intentions. It is due to the higher projected carryouts that we will be completing 2014 sales and adding to 2015 and beyond sales. If the planting season would straighten out and allow for average planting progress (at least), then this rally would be over.