Late planting, but disappearing drought
4/16/13 – Late planting is a reality as Pro Ag has been warning for weeks as the cold weather keeps planters at bay across the U.S. So far crop progress reports out yesterday confirmed Pro Ag’s suspicion that we are falling further behind in progress, with corn only 2% planted vs. 7% normally, and HRS wheat only 6% planted vs. 13% normally. Barley is 18% planted vs. 15% normally, actually ahead due to Idaho and Wash. that are ahead of normal. Cotton is 8% planted vs. 10% normally, sorghum is 24% planted vs. 22% normally (actually ahead!), and sugarbeets are 13% planted vs. 17% normally. Rice is 23% planted vs. 31% normally, but the most behind in planting is the north central region where recent heavy snow fell (N.D., S.D., and Minn.), with virtually nothing done here and nothing likely to get done in the near future.
A bright spot was winter wheat conditions which were unchanged from last week’s 36% G/E, with the Pro Ag yield model stable at 45.78 bu/acre (actually up .034 bu/acre last week – stable) vs. trend yields of 47.27. We do have a below average winter wheat crop, with the most trouble in the western HRW wheat country where conditions are very dire. But the rest of the country continues to see the drought melted away by the recent cold/wet conditions. The most recent improvement was in Neb., S.D., N.D., Minn., and Iowa where precip has fallen generously the past few weeks. Western N.D. received the most recent precip, albeit in the form of snow (which they didn’t necessarily want at this point in time). But the precip of over 1″ (in the form of 10-15″ of snow) was welcomed.
Now we just need to warm up temperatures to allow the spring to actually begin in most of the Midwest – essentially 1 month behind the calendar date! Currently the 8-14 day forecast includes a warming trend back up to near ‘normal’, and that will mean the beginning of spring planting as we typically know it. That will be good news indeed for corn producers, who might be already thinking about potential switches from corn to soybeans if we get much latter. That should support corn prices, and pressure soybeans, as this late spring unfolds.
Monday’s sharp losses in gold prices put pressure on grains, with new lows in gold and silver followed by new lows in new crop soybeans as well (due to expectations of more acres). However, wheat and corn so far did not experience the new lows as the lows from the stocks report held. But we are on the verge of running to new lows in these crops as well.
As we said last week, Pro Ag has forewarned producers and traders about the potential for $11 soybeans yet this spring as we move towards summer, and also the potential for $4 corn by harvest time. These two price levels look ever the more possible with the recent descent after the USDA stocks report. We hope producers took protection in the form of crop revenue insurance or puts/hedges, or both for the more aggressive sellers!
As we move towards spring planting, the warming temps will eventually allow planting, and it will be into soils that for the most part have recharged topsoil moisture conditions from the dire drought of 2012. Total soil moisture levels in the eastern corn belt have now fully recovered, and the western corn belt states have also seen dramatic improvements in topsoil moisture levels over the past few months. That is becoming more bearish for new crop potential, as if we can get the crop timely planted with the warming temps, then crop conditions could be better than many realize.
I have heard some dramatic stories of terrible winter wheat conditions, and in the western HRW wheat belt these stories are probably all true. Yet winter wheat conditions haven’t worsened since last fall (when they started badly). Pro Ag yield models are actually holding fairly steady so far at 1.5 bu/acre below ‘trend’, not a disaster but not a good crop, either. The cool weather might be a blessing for winter wheat producers, who if they can catch a few rains might actually end up with a decent crop.