Investors Face Average Crop Season, Analyst Says

It has been an interesting planting season thus far. Early in the season, it looked like things would go smoothly for planting, then we ran into some planting adversity in the first half of planting and fell behind normal with cool temperatures and wet conditions in many areas. But a good start to May pushed us back on schedule, and planting now is on schedule in the Corn Belt and actually ahead of schedule now in the Northern Plains with HRS wheat, barley, oats, sugar beets, and sunflowers on or ahead of schedule. So far, this doesn't look like a record-breaking yield year like last year – but not a disaster, either. It’s actually a planting season that looks about average and, thus, the reluctance of the market to move much.  

According to this week’s Crop Progress Report, corn planting was at 84%, just 1% behind the five-year average of 85%. Many eastern Corn Belt states that were furthest behind the normal pace got a lot accomplished last week. (Ohio and Pennsylvania, for example, planted 24% of their corn crop last week.) Corn emergence is 54%, 1% behind the average 55%. Soybeans are 53% planted, 1% ahead of the average pace of 52%. Soybeans are 19% emerged, 2% behind the five-year average. So the main two crops the market is focused on for planting this spring are basically on schedule. That makes this spring look fairly benign so far.  

In the Northern Plains, things started out well behind normal. In the past two weeks, producers have quickly caught up to and surpassed the normal planting progress for this time of year. It was a great two-week period for planting, and much was completed in the first half of May. HRS wheat is now 90% planted, 6% ahead of the average pace with 62% emerged and 3% ahead of normal. Barley is 88% planted, 1% ahead of the average, 87% planted, with emergence 59%, which is 5% behind average. Oats are 95% planted, 2% ahead of average, with emergence at 83% (2% ahead) and 26% headed (2% behind). Oat conditions improved 1% to 63% G/E – still well below last year’s 73% rating. 

Cotton is 52% planted, 2% ahead of the five-year average. Sorghum planting is 37%, 4% behind the five-year average. Sunflowers are 20% planted, 6% ahead of the 14% average planted at this time. Sugar beets are basically completed with planting, with the progress ahead of normal as we completed the season.  

While it was a struggle to plant in some regions due to wet conditions, the benefit of fighting through it is that we have plenty of soil moisture as an insurance cushion against drought this year. Currently, topsoil moisture is rated 88% adequate/surplus, 2% higher than last week (as it was a wet week) and still above last year's 85% rating. Subsoil is 88% adequate/surplus, 1% ahead of last week and 3% higher than last year. So soil moisture levels are relatively high for this time of year. In fact, they are making it difficult for some areas to get planting completed. Should a drought come this summer, the soil moisture levels will tend to minimize the damage the drought would do at this point. 

There is a fair amount of scattered rain across the U.S., with the heaviest amounts in the eastern Corn Belt and southeast Delta today. The seven-day forecast has kept the wet forecast for the eastern Corn Belt and the central portion of the western Corn Belt. Some drier areas now emerge in the northern and southern portions of the western Corn Belt in that seven-day forecast. Temperatures the next seven days remain below normal. Cold weather in spring generally does not bring the best crop conditions, though, and so far this May, it has been a relatively cool month. That could limit the yield potential of this year’s corn and soybean crops, especially in northern growing regions.  

The eight- to 14-day forecast calls for normal to below-normal temperatures across the U.S., with a bit more precipitation in the eight- to 14-day forecast such that we will see some areas with above-normal precipitation. Overall, the eight- to 14-day forecast offers a bit more chance of some planting to be completed than the next seven days, but it still might be a struggle. The forecast still isn’t ideal for crop development, with mostly cool springtime temperatures and relatively wet soil-moisture levels. It isn’t a disaster this spring, either. In fact, so far, it looks like about an average spring, with yield potential probably near trend yields for now. Of course, that can change as quickly as the weather!

Weekly export shipments yesterday were strong at 45 mb corn, 12.8 mb soybeans, and 24.8 mb wheat, so that did support the market yesterday. However, the weekly Crop Progress Report was a bit negative along with winter wheat crop conditions (which improved 1%). Winter wheat is 72% headed, 5% ahead of average, and conditions are 52% rated G/E, up 1% and the poor/very poor declined 2% to 15%. This is still well below last year's rating of 62% G/E, but the Pro Ag yield model rose a large 0.42 bushels per acre this week to 49.9 bushels per acre vs. USDA’s last estimate of 48.8. So the winter wheat crop improved significantly, leading to lower prices overnight.

If the cool and relatively wet conditions continue in winter wheat country (as we had last week), crop yield potential could continue to improve. Last year had early ideal conditions, with a 55.3 bushel-per-acre yield for winter wheat the result (a record-shattering yield). While that is unlikely this year, so far the winter wheat yield does look like it could be average or slightly above average. Of course, we may have lost some acreage due to the western Kansas snow event this spring, but that is also quickly being factored into projections.

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

Tip of the Day

Agronomy Tip: Create a Weed Control Plan

Water hemp in a field. While weed control is a big problem every year, you can incorporate herbicide products into your plan that have multiple modes of action... read more

Talk in Marketing