May Brings Hope of Planting Progress
Finally, after a horrid March and April across most of the U.S. Corn Belt, May has arrived along with some farmers out in the fields. Some planting has been done, but we are woefully behind the normal pace of planting of corn, oats, spring wheat, barley, and sugar beets. Weather is starting to warm and drier weather is arriving, so it looks like the next few weeks will provide a planting window for the Corn Belt and HRS wheat belt to get some work done. We really need it, as current planting progress is 10% behind normal in corn and oats. Sugar beets are 25% behind, barley 18% behind, and HRS wheat 26% behind normal. These are pathetic numbers, but will likely improve in the coming two weeks if the forecast is accurate.
Weather forecasts include a bit drier forecast for the Corn Belt over the next 14 days, which should allow some planting to take place. Most of the Corn Belt will see below-normal precip the next seven days (except Iowa, parts of Illinois, Wisconsin, and Michigan).
Then the eight- to 14-day forecast has mostly above-normal precip for HRW and the southeast U.S., with the northern half of the Corn Belt below normal precip. That will open up a window of planting opportunity for the northern Corn Belt especially, and with temps warming up now that it’s May, soils might actually be warm enough to plant corn. Temps will be above normal in the entire U.S. the next seven days, but will cool to below normal in the eastern half of the Corn Belt in the eight- to 14-day forecast (still above normal in the western Corn Belt). If the wet forecast verifies in the coming days for the eight- to 14-day forecast, that would also be beneficial for the HRW wheat belt.
SAM weather is still adverse in southern and central Brazil, with virtually no rain forecast for this region in the next two weeks. That is trouble for the second-crop corn, especially considering the forecast is getting drier, not wetter, for each period. This pattern might be settling in for a while, and it could be essentially a crop failure for the second-crop corn in Brazil (at least in the central and southern portion). Crop progress was out yesterday afternoon, showing corn planting at 17% complete, a full 10% behind normal. Corn emergence is only 3% vs. 6% normal, so we are behind. Soybean planting is 5% complete (equal to normal), mostly in Southern states. Cotton planting has fallen behind normal at 12% complete vs. 14% normal, only planting 2% last week. Sorghum is 26% planted, falling back to normal with only 2% planted last week.
Northern crops are most behind normal, with sugar beets 24% planted, a full 25% behind the normal 49% planted at this time. Oats are 39% planted, also 25% behind a normal 64% planted. Oats emergence is 29%, 15% behind normal. Oats are often an indicator of corn planting progress later on, as most oats are now planted in Corn Belt states (more in the west than east). HRS wheat planting is 10% complete, a full 26% behind the normal 36% complete. Barley is 26% planted, 18% behind normal with barley emergence at 7%, 10% behind normal. These are pathetic planting progress numbers for the northern Plains states.
Winter wheat conditions actually improved last week under the cool weather, with G/E ratings up 2% to 33% rated G/E. The Pro Ag yield model rose slightly, up 0.14 bushel per acre to 46.95 bushels per acre, still well below 'trend' at 48.95 bushels per acre (about 2 bushels per acre below trend). It is still well below last year’s rating of 54% G/E. Winter wheat is now 19% headed, 11% behind normal, so this crop is late as well due to the cool weather the past three to four weeks. If it turns warm in late May and June, this could spell trouble for a late-maturing winter wheat crop.
Corn rallied to the old highs (and even into new recent high territory) yesterday, so Pro Ag recommended a 10% sale of new-crop corn at $4.17-18 Dec., and also priced 10% of remaining 2017 corn (and to make catch-up sales there as well). This is a much-improved cash price from last year, as the basis has improved to the point that we haven’t seen in well over a year. So cash prices are actually better than they’ve been in well over a year – not a bad place to start making cash sales again.
That doesn’t mean we are bearish corn; it just means we finally have reached an acceptable level to start pricing corn again. With a 40¢ basis, we are at $3.60 cash price for corn, which is a whale of an improvement over last fall (from $2.60 to $2.80 cash price depending on basis). Some farmers might even be profitable again at current cash prices, an important development, indeed! If adversity continues in this crop, Pro Ag can see where corn could rally more, with the $4.50 area becoming a target, and if we break above those three-year highs, then $5 plus is also a possibility (but this would take a real problem to get there).
It seems many are surprised by the strength in grains, but all winter our battle cry was prices would likely do nearly nothing all winter, and then with a new growing season come new possibilities. This while so-called experts kept talking about the large U.S. carryout, and how prices would never go higher again! As a new planting season approaches and arrives, all the risks of producing another crop will rise to the surface, and premium will be put into markets for perceived as well as real risks. And voilà! Prices can become acceptable again. We are soon approaching that point in all grains!
Ray Grabanski can be reached at firstname.lastname@example.org.
Ray Grabanski is President of Progressive Ag Marketing, Inc., the top
Ranked marketing firm in the country the past 8 years. See
http://www.progressiveag.com for rankings and link to data from Top
Producer Magazine and Agweb.com.
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