Content ID

257520

Analyst: U.S. Corn Planting Pace Just Average

It’s early April and the first third of the month is flying by with very little planting progress so far in the U.S. Soils need to warm up, for the most part, and weather has mostly been cooperative on the temperature side, but precipitation amounts have also been average to above average so far. That leaves some planting completed across the U.S., but, for the most part, we are only about average in planting progress to this point in spite of early snow melt and warm early spring temperatures.

U.S. weather forecasts as of 4/11/17 for the next seven days still show above-normal temperatures for most of the U.S. (except the Pacific Northwest), with precipitation above normal for all but the Southeast and a band including the states of MN, SD, WY, and CO. The eight- to 14-day is cooler (below-normal temperatures) for the northern third of the U.S., but above normal for the southern half of the U.S. The warm temperatures will help soils to warm up in many areas, but the precipitation chances will slow planting where moisture falls.

South American (SAM) weather forecasts today have shifted a bit wetter for the next seven days, with normal to above-normal precipitation forecast for most of South America now. The eight- to 14-day precipitation forecast is for above-normal precipitation in Brazil, but mostly below-normal precipitation in Argentina. Temperatures are forecast normal to below normal for all of SAM for the 14-day period. This will slow harvest the next seven days in Argentina, but the eight- to 14-day forecast is more favorable for harvest. 

USDA’s April monthly report showed an increase in SAM corn of 3 mmt (2 mmt in Brazil to 93.5 mmt; 1 mmt in Argentina to 38.5 mmt) and SAM soybeans of 3.5 mmt (3 mmt in Brazil and 0.5 mmt in Argentina). These totals were 1.7 mmt more corn production than expected by the trade, and 1 mmt more in soybeans than expected so the initial reaction today (April 11) was negative. But the market is rallying after the initial losses at 11 a.m., so perhaps now the bearish, large SAM crop is finally built into the market. World ending stocks were hiked in all three major grains, with corn up 2.3 mmt to 223 mmt, soybeans up 4.6 mmt to 87.4 mmt, and wheat up 2.4 mmt to 252.3 mmt. In summary, the world is awash in grains, but then most farmers know that is why prices are so low.  

Crop Progress Reports out yesterday, which was Monday, April 10 showed U.S. corn planting at 3% complete, equal to average. HRS wheat planting, however, was behind normal at only 5% planted vs. 11% normally. Barley was 9% planted vs. 16% normally, with oats only 33% planted vs. 41% normally. So, for the most part, spring-planted grains are at or slightly behind normal planting progress at this time. 

Winter wheat was 9% headed, ahead of the 6% normally headed at this time (which shows that winter wheat might be susceptible to freeze damage if a cold snap occurs late in April). Winter wheat crop ratings are at 53% rated G/E, up from 51% last week but below last year’s 56% rating. The rains last weekend helped to improve winter wheat ratings at a critical time in its development. Our Pro Ag yield model was at 49.55 bushels per acre this week, above trend of 48.35 but well below last year’s record shattering yield of 55.3 bushels per acre. So early in the year, it looks like winter wheat might be another above average crop, especially if conditions continue to improve.  

Sorghum planting was 18% complete, ahead of the 15% normally planted at this time. Cotton is 6% planted, equal to average so apparently the Southern states are seeing progress a bit ahead of normal so far.  But the warm temperatures are probably warming soils ahead of the average pace, and relatively dry weather has allowed some planting to occur.  

Overall, planting is a bit ahead of the normal pace in some crops, but in many it is at or slightly behind normal planting progress. It looks like about an average start so far to planting in 2017, so thus far we are getting little read about how the 2017 year will play out yieldwise for crops based on the developments so far. 

Since January/February, grains have leaked lower, with the worst losses in soybeans as the May contract has lost $1.40+ from high to low in that period. We've hit the support level of $9.40 May futures and tested it, and so far that support level has held at last fall's lows. But with expected revisions higher in South American soybean crops and the larger U.S. acreage (89.5 million acres intended soybean acres in the March 31 USDA report), we could see another test of that price level.

This is not the time of year when prices usually deteriorate; in fact, typically a price premium for weather is put into the market this time of year, as much can happen when we have a new crop year. Yields could be anywhere from 10% above trend to 10% below trend (and even outside that range), and weather, of course, is the giant player determining those yields. So far, the weather year looks average, but much will be determined over the next three to four months weather.  Stay tuned, there could be some excitement yet in the grain markets coming up the next few months.
 
Ray Grabanski is president of Progressive Ag Marketing, Inc., the top-ranked marketing firm in the country the past eight years. See http://www.progressiveag.com for rankings.

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. 

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. 

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that advice we give will result in profitable trades.

Read more about
Loading...

Talk in Marketing