Early planting of corn, soybean, and wheat could equal higher yields, analyst says
It’s finally spring! Weather is warming, snow is diminishing, and it’s time to get back to planting and growing a crop.
With spring, also comes the annual USDA acreage and stocks reports. Acreage intended is by far the most important factor as we look ahead to the new year. This is the time when focus moves from South American (SAM) production to the U.S./Northern Hemisphere. Since the United States is the world’s largest exporter of all crops, it becomes an important factor for the market. It looks like the U.S. will have an early planting year, as weather is warming and drying up, which will allow the Corn Belt to get going on planting early this year. We could have most of the corn planted in April.
Weather is calling for below-normal precip and above-normal temps over most of the U.S. the next two weeks. Specifically, it will be driest in the northwest 75% of the Corn Belt, and more normal precip in the southeast 25% the next seven days, and then the eight- to 14-day has below-normal precip in the northwest half of the Corn Belt, and normal in the southeast half. Temps will be mostly above normal the entire 14-day period in the Corn Belt, with only the southeast seeing some normal temps in the next seven days as the heat moves in from west to east.
South America (SAM) is seeing mostly below-normal precip in the southern 75%, but normal in the northern 25% (the Amazon area). Temps will be mostly below normal in Brazil and above normal in Argentina – not good weather for the late, second-crop corn.
Finally, after nearly a week, the Suez Canal is cleared. It takes only one ship to block an entire important port, we’ve learned.
On Wednesday, March 31, we get the much anticipated USDA March 31 acreage and stocks report. There likely will be some surprises, but the difficult thing is predicting the unpredictable USDA… What will they get right this time, and what will they get wrong?
Farmers are planting more of everything – wheat, corn, and soybeans – but mostly corn and soybeans.
With wheat prices sagging recently, Pro Ag will bet USDA will miss some of the shifting from HRS wheat to corn/soys. With early planting likely in the coming few weeks of warm/dry weather, corn acreage might be higher than USDA guesses this time.
Private estimates are showing higher corn and soybean acreage than the February USDA estimates as well. It’s likely acreage will be above the February USDA numbers as prices have remained high another six weeks since that report.
Bottom line: Planting is likely to be early given the forecast, and early planting means higher corn, soybean, and HRS wheat yields.
Also, more acreage planted (less PP) and possibly more corn and less soybeans with early seeding. The weather improved tremendously since mid-January in both the U.S. and SAM. So, the supply outlook has improved, which is why prices are now drifting lower. I expect more of the same – unless a drought kicks in after planting. If 2% to 5% more is planted, but yields are 5% to 10% lower, supplies are still down. The one constant so far is that demand remains strong from China.
Ray can be reached at email@example.com.
Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country. See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com.
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 thiscommunication 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 THISCOMMUNICATION 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.