What to Know This Week: Weather, Markets Dominate
What's big in agriculture this week? Weather and markets. The week started off with a bang for the latter, with USDA's annual Prospective Plantings report. For the former, there are a lot of concerns about whether the cool, damp weather will allow planting to start in the Corn Belt anytime soon.
No 'sharply lower corn prices' this year? That's the main takeaway from analysts after Monday's USDA Prospective Plantings report. Think in terms of $4.25- to $4.50-per-bushel corn, says University of Illinois Extension ag economist Darrel Good.
"Since corn closed with an upside reversal today after trading sharply lower, the technicals are pointed higher for corn now and should see some follow-through strength. That means maybe we can capture another 10 cents or so before making additional 2014 sales," says market analyst Ray Grabanski.
Monday's data showed fewer corn acres for this year. Much of the resulting bullishness is starting to be driven by nerves about how a slow start to spring might adversely affect overall corn planting progress, one analyst says.
"When will this weather ever warm up for field work?" says Successful Farming magazine Crops Technology Editor Gil Gullickson when asked what the biggest story on his radar is this week. But, not everywhere. "The farmers I've been talking to in central Iowa are worried about [low moisture levels]," adds Assistant Agronomy Editor Kacey Birchmier. "A large section of the Midwest is either abnormally dry or in a moderate drought."
Forecasters said they expect a move back toward an El Niño pattern, which could foreshadow more cooler, damper weather conditions. "A quick look at climatology tells us this should favor a wetter pattern for portions of the Midwest and Plains by the summer, which is generally a positive influence on crop yields," according to Freese-Notis Weather's commentary on Wednesday.
So, if El Niño comes back, there's the potential for stronger corn yields. But, that also depends a lot on the right plant populations for corn, a hot topic this week. "You either need to figure out how to improve the success of stand establishment or you need to use a higher seeding rate," one expert says.
So, seed cost is a big factor in finding that "sweet spot" for plant populations. And, that cost hasn't gone down as much as many believe the current grain market dictates it should have. But, on the other hand, farmland values have fallen, and new evidence shows that trend could be in place for a while.
An inclement start to planting season in the Corn Belt and some market-moving USDA numbers top the list of what's important in ag this week.