Weather vs. USDA reports: Weather wins
When will corn rationing begin? What's going to happen when the snow in the Dakotas starts melting this spring? Will the drought-ravaged Plains wheat bounce back and make a crop?
These are all questions raised now that USDA has spoken, releasing its annual Prospective Plantings and quarterly Grain Stocks reports Thursday morning. The numbers sent the corn and soybean markets skyward when the trade opened 2 hours after USDA released its planting and stocks data, though many agree that the market's focus will quickly turn to Mother Nature.
- See more from Thursday's USDA reports
- Talk about the grain trade's reaction
- VIDEO: Analysts respond to USDA's numbers
Weather, Weather, Weather
But, the weather focus isn't on the typical "sweet spot" for corn and soybean production of the Midwest. Instead, it's the weather in other parts of the nation -- and how it might affect corn plantings and wheat progress in the Plains states, says NARMS Futures Trading market analyst Jerry Gidel. He points to projected expansion in corn acres in North and South Dakota as an example; USDA projects an 850,000-acre expansion in South Dakota's crop and 450,000 more acres in North Dakota this year. But, Mother Nature may have a little more to say about that type of expansion in corn acres in those states, Gidel says.
"That's 1.4 million of this 4 million-acre increase. Considering where we are right now, if they could get half that, I'd be very impressed," he says. "We are probably worse off, weather-wise, in eastern North Dakota and South Dakota this year than we were at this time last year. They still have snowpack up there."
Moving forward, Gidel and Price Futures Group market analyst Jack Scoville agree the weather will be key, and not just in the southwest and northern Plains, the areas under the most pressure from Mother Nature right now. The Delta and mid-South, the latter region that will see some of the biggest increases in corn and soybean plantings this year, Scoville says, will need to have a good start to planting season soon.
And, the rain that's typically an issue in that area needs to fall on the Plains wheat crop. And soon, Gidel says.
"The weather's going to be crucial. Into western Kansas and the Texas Panhandle, a lot of indications here are that if we don't see a lot of rain in the next 10 days to 2 weeks, we could start to see significant losses and abandonment of acres," he says. "It's going to be a seesaw battle, and we're going to have to watch the weather and a lot of things. That corn stocks number is not going away. It's important now that we have the South get that crop in. We need to get the Delta started now."