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This Crop Season Could Be Just What the Supply Doctor Needed, Analyst Says
While corn has taken the lead in the market rally this spring, soybeans and wheat have basically tagged along for the ride so far.
The horrible planting season for corn propelled grains higher in the past month. Yet, the past month has also been horrible for soybean planting, and we are just now getting a picture of how bad it has been for soybeans, too.
Weather now shifts to the growing season, as essentially the planting season is over (it is June 25). With soils currently so wet, dry weather for a few weeks would be beneficial to corn and soybeans along with warmth. But the forecast is relatively warm and wet for the next two weeks.
Above-normal precip is forecast the next seven days centered in Iowa, Wisconsin, and Michigan with mostly normal precip surrounding it. There are some areas with below-normal precip as well – mostly in perimeter areas surrounding the Corn Belt. Temps are above normal except the cool Delta and in Texas the next seven days, and it turns cooler in the eight- to 14-day forecast. Not really ideal weather for growing out of soggy/cold soils. So weather, so far, isn’t much better for the growing season than it has been for the planting season.
Crop progress came out yesterday, with USDA reporting that corn planting increased 4% from June 16 to June 23 to 96%. Corn planted after June 17 will yield virtually nothing anyway – this had to be either because farmers quit trying (thus 80% planted became 100% planted, of which 20% is PP) or they planted it for silage.
More than likely it’s a mix of both.
But that 4% certainly isn’t going to yield 166 bushels an acre! Mercifully, we won’t have to look at this data anymore, as we are finally over 95% complete (which is when USDA finally stops).
Corn emergence is 89% for the crop that’s been planted. What does corn yield that isn’t emerged by June 24? Since 11% is in that category, it is very telling about the yield prospects of 2019 U.S. corn.
The corn condition rating is telling: Only 56% is rated G/E, down 3% from last week and well below last year’s 77% G/E. This crop is in trouble, with the Pro Ag yield model dropping another bushel to 163.8, below USDA’s 166 by 2.2 bushels per acre, or about 175 mb.
Soybeans have an even worse planting situation than corn, with horrible weather the past month in the important states of Missouri, Illinois, Indiana, Ohio, Michigan, and Wisconsin.
Nationally, planting progress is only 85% vs. 97% normally, with Illinois 79% planted, Indiana 75%, Michigan 53%, Ohio 65%, and South Dakota 84%. Ironically, South Dakota planted 14% of its crop last week (June 17 to 24). And what will South Dakota soybeans yield when planted June 17 to 24? I have a hard time believing that, and instead believe at least half that progress was simply giving up and taking PP. I would frankly be surprised if any South Dakota farmer would even bother trying to plant soybeans after June 24!
Soybean conditions, nationally, were 54% rated G/E, well below last year’s 73% rating. The Pro Ag yield model is at 46.7 bushels per acre, a full 2.8 bushels per acre below USDA’s 49.5 yield estimate.
That eliminates about 220 mb of production – about 20% to 25% of the current carryout estimate – and we haven’t subtracted the 7 to 9 million acres that won’t even get planted! Essentially, by the horrible planting season, we have eliminated virtually all the corn projected carryout, and half the “insurmountable” soybean carryout. Now, what happens if we make a trade deal with China this summer?
It is amazing how quickly our “burdensome” carryout can go away with a problem growing season. While the genetics of corn and soybeans certainly have gotten better, these crops still have to grow in the weather environment we get. Mud is not a good seedbed, and cold/wet soils are not ideal to start the year. Yet that is exactly what we were presented in 2019.
Other crops are faring a bit better than corn and soybeans, with cotton 96% planted vs. 98% normally.
Sorghum is 84% planted vs. 91% normally, so not nearly as delayed as the corn/beans. Sorghum conditions are 72% G/E, actually much better than last year’s 56% as the wet weather helps the typically dry sorghum areas.
Winter wheat is only 15% harvested vs. 34% normally, so it is well behind normal development. But the yield potential is pretty high as wheat likes cool/wet weather if it can remain disease-free. Winter wheat ratings are 61% G/E, down 3% from last week but still well above last year’s 37% rating.
HRS wheat is only 7% headed vs. 29% normally so the late-planted crop is well behind normal development, making it susceptible to late-season heat/drought. But, so far, ratings are still good at 75% G/E, down 2% from last week.
While the rest of the peripheral crops are doing OK, it’s the corn and soybeans that have suffered the most in the central Corn Belt states of Missouri, Illinois, Indiana, Ohio, Michigan, and Wisconsin. South Dakota also had its share of difficulties, and there will be significant prevent plant in all these important states – mostly corn and soybean prevent plant. The acreage that was mudded in late (which is significant as well) is not going to yield well.
There is no question that U.S. production will be down significantly, but just how much will it be?
Ray can be reached at firstname.lastname@example.org.
Ray is pPresident of Progressive Ag Marketing, Inc., a top-ranked marketing firm in the country.
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