U.S. Corn, Soybean Planting Window Could Narrow
With recent winter storm systems delivering additional cold temperatures and snow through the upper Midwest, it is likely there will be planting delays for the upcoming season.
Large amounts of acres may end up being planted in a narrow window of time. Typically about 40% of the U.S. corn crop is planted in April. That does not look likely this year.
Does it matter? If so, what are the consequences?
In recent years, we would say consequences are little. Yet, ask any veteran farmer and he will tell you that early planting provides the best chance for high yield. In recent years, late-planted crops have had the luxury of near-ideal weather. Is this something farmers should count on again this year? Only time will tell.
The ability to plant a corn crop has sped up dramatically over the last decade. Outstanding equipment, efficient tillage practices, and dedicated farmers can put most of the crop in the ground in about half the time, as compared with 20 years ago.
Recent years indicate more than 30% of the crop is able to be planted in a week.
During mid-May 2013, 43% was planted in one week, which was a record. The only problem we see is that this creates a boom-or-bust environment.
Most of the crop will mature in the same time window, and unless farmers switch varieties to shorter day maturity, most of the crop will be subject to the same weather.
Good weather during the growing season could see spring weather negated and high yield. However, poor weather during the growing season could set the stage for a significant downturn in yield.
An undercurrent of strong demand and a less-than-ideal start to the planting season could make for an exciting year of active price volatility.
A balancing act for producers is to market enough at levels that make sense for the farm, yet not too much if prices rally on a weather-related event.
Consider a balanced approach, which would suggest forward contracting up to a level you are comfortable with, and covering the remaining unpriced bushels through the use of put options. Cover forward sales through the use of call options.
If you would like a strategy for your farm, contact Top Farmer at 1-800-TOP-FARM, ext 129.
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