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Planting pains continue
Planting struggles continue across the Corn Belt, with only 95% of the corn planted on June 10 vs. 98% normally at this time. Iowa (92% planted), Minnesota (90% planted), North Dakota (89% planted), and Wisconsin (81% planted) continue to be the states that lag the normal progress the most. Corn is usually mostly planted by this time, so the continued delays are likely meaning a switch to soybean acreage or an outright abandonment of the corn acreage via prevented planting. Pro Ag doubts that much more of the corn will get planted other than for silage, as it's getting quite late to get optimal yields of grain corn.
Soybean planting is also continuing to lag the normal progress, with only 71% planted now vs. 84% normally. States more than 10% behind normal planting include Illinois (62% planted), Iowa (60% planted), Kansas (66%), Kentucky (48%), Minnesota (72%), Missouri (48%), North Carolina (46%), North Dakota (69%), Tennessee (47%), and Wisconsin (55%). States more than 10% behind the normal pace of emergence include Illinois (only 43% emerged), Iowa (39%), Kansas (43%), Kentucky (30%), Minnesota (38%), Mississippi (70%), Missouri (31%), Nebraska (71%), North Carolina (35%), North Dakota (25%), Tennessee (29%), and Wisconsin (28%). That leaves a tremendous amount of soybeans left to be planted in these important states. Especially troublesome is the low percentage planted in northernmost states including Wisconsin, Minnesota, North Dakota, and Iowa, where they seem to have the greatest difficulty amongst all states. We will need to keep those soybean acres, even though the crop insurance final planting date for soybeans came and went on the June 10 date for these states. That means that some of the unplanted acreage could just go to prevent plant, meaning these acres will not get planted!
While the late planting is troublesome, weather is finally improving somewhat, with drier-than-normal weather along with warming temps across most of the U.S. (except for a band of rain forecast to fall across the Central Corn Belt the next five days). The improving weather is keeping the market in check for now, but the critical planting period is rapidly ending, and we desperately need to get these last few acres planted, as 29% of the soybean crop is yet to be planted! While that number seems critical, with just a few days of planting progress, many of the U.S. producers can get that amount of planting done in just three to four days with the right window of opportunity to show up. The U.S. desperately needs these acres, and it will be a photo finish on the final planted acreage number once we know what will be planted and what will not.
Crop conditions continue to suggest a deteriorating wheat crop, with winter wheat crop conditions dropping to 31% G/E, with the Pro Ag yield model declining to 44.7 bushels per acre, now down relative to USDA's last report of 45.4 bushels per acre. They will likely need to lower the winter wheat yield estimate once again in the June report Wednesday. It's likely the U.S. will harvest a crop well below normal in 2013. HRS wheat planting progress also continues to lag normal pace at only 87% planted vs. 96% normally at this late date. North Dakota is only 77% planted and 58% emerged, and we have reached the final planting date for all locations. Many producers still want to plant the crop, though, and especially since they all have moisture. But what is scary is that they now have the option of prevented planting, and typically in North Dakota the economics suggest that collecting PP payments is superior from planting late and taking yield reductions (and coverage losses of 1% per day the planting is late). This keeps the pressure on markets to remain jittery until the planting can be completed.
Other crops' planting progress: Oats at 96% planted vs. 99% normally, barley at 88% planted vs. 96% normally, sunflowers at 29% planted vs. 61% normally, sorghum 69% planted vs. 72% normally, and cotton 88% planted vs. 92% normally. Crop conditions of corn are only 63% G/E, suggesting a Pro Ag yield model of 153 bushels per acre, well below current USDA projections of 158 bushels per acre, and the Pro Ag trend yield of 158 bushels per acre.
Despite the late planting progress, Pro Ag remains bearish as supplies in 2013 will much exceed supply even with planting problems. Specs and hedgers can now sell corn, soybeans, and CBOT wheat again, putting on hedges for 2013, 2014, 2015, or 2016 crops. Downside price targets remain $4.50 Dec corn, $10 November soybeans, and $6 Chicago July wheat.
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