Analyst: Will Slow Planting, Poor Forecasts Boost Prices?
Surprisingly, planting progress has fallen behind normal this spring in spite of some relatively warm temperatures since March began. But weather patterns seem to be shifting to one of cooler temperatures and more rainfall, and that is stalling planting progress as we move into mid-April. This is typically the center of planting for corn and small-grain crops, but thus far, progress has been slow to date.
Crop progress and conditions came out Monday afternoon like they will every Monday this spring and summer, and planting progress was surprisingly behind schedule in spite of a relatively warm spring so far. Corn planting was only 6% complete vs. 9% normally, with cotton 8% planted vs. 9% normally. HRS wheat was only 13% planted vs. 21% normally the past five years, with barley only 13% planted vs. 28% normally. Sorghum is about the only major spring crop ahead of normal at 21% planted vs. 20% normally. Sugar beets are only 19% planted vs. 28% normally, with oats 45% planted vs. 52% normally. Emergence for oats was 29% vs. 35% average.
The late planting so far this year is friendly corn and HRS wheat, but perhaps a bit negative soybeans as it might mean more soybean acreage if corn is behind planting all spring. The one negative in yesterday's report was the improving winter wheat condition, up 1% to 54% rated good/excellent, as frequent scattered rains continue to hit the HRW wheat area. That improvement in conditions translated into an improvement in the Pro Ag winter wheat yield model to 49.7 bushels per acre, up 0.13 bushels per acre from last week and above ‘trend’ yield of 48.35. Still, we are well below last year’s record-shattering yield of 55.3 bushels per acre. Still, that is a bit negative wheat, and our sharp drop in wheat prices yesterday reflected that expected improvement.
Today it’s raining in the Upper Midwest and Northern Plains, including North Dakota, Minnesota, and parts of Nebraska, Iowa, and eastern South Dakota. U.S. weather forecasts for the next 14 days are still wet and a bit cooler today than yesterday. The next seven days will bring above-normal precipitation to the northern three fourths of the U.S., with cool temps in the eastern Corn Belt and above-normal temps in the western Corn Belt. The eight- to 14-day period is cooler and with more precipitation – a less favorable planting forecast than yesterday.
South American (SAM) weather has a wet forecast for all of Brazil for the next 14 days but has dried out the forecast for Argentina such that it now has normal to below-normal precipitation for the entire period. Temperatures will remain below normal in Brazil, but normal to above normal in Argentina.
The slow planting progress to date and worsening forecast for planting the next two weeks should support corn and wheat prices today. We'll see if we can gain on these markets throughout the day on this support.
Overall, markets have mostly rallied since the April 11 USDA monthly Supply/Demand Report, when they basically hiked SAM production of corn and soybeans. It seems the market had already built in the larger SAM crop, and once the numbers were reported, those short the market covered their positions as they must have felt there was no more negative news to hit the market from SAM.
Now, spring planting is under way across the northern hemisphere, and that will draw the attention of the market as well as the weather patterns in the U.S. and other top-producing areas of the world. We already know what the planting intentions are in the U.S. Now we need to watch the weather to get some indication of what kind of yield we can expect from that acreage.
We sure could use some positive, bullish information in markets, as prices have slid lower since January in most grains. Soybeans have dropped $1.50 or so since that time, so any positive price movement would certainly boost the spirits of farmers who are just now going to fields to begin planting.
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.
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