Late corn planting?
4/08/14 — The planting season is upon us as spring finally might be arriving, with the bitterly cold winter so far extending itself into spring. This has been a cold start to spring, with snow falling in northern areas and the delayed thaw is sure to mean at least no early start to planting. The chilly spring means the thaw of frost from the ground is occurring later than normal, and that means a potential late spring planting season. A lot still depends on April and May weather, so a turn in the weather now could still salvage a good spring planting season. But we are running out of time for the thaw to occur, with temps needing to warm up from the still chilly forecast (temps still are forecast to be 2-8 degrees below normal in the central and eastern corn belt the next week or two).
The next 2 week forecast continues to keep the cold temperatures in the central and eastern corn belt, but a thaw may occur in the western corn belt which cold allow some planting to occur. The 8-14 day forecast today also calls for warming conditions – the first hint of normal or even slightly above normal temperatures in about 4 months! If it occurs, perhaps our deep freeze is finally over?
The market continues to hold up pretty well, with prices advancing significantly this past winter from the lows in mid-January to now. Corn, wheat, and soybean prices have all rallied significantly on a plethora of bullish news, starting with the strong world demand for grains on the export side, expanding feed demand and ethanol use, and the unrest in Ukraine (more border cities with Russia are demanding to be annexed as well like Crimea). HRW wheat conditions have also declined significantly under the stress of the bitterly cold winter. Now Kansas wheat conditions are only 29% Good/Excellent, with Okla. only 15% G/E and Texas only 13% G/E. The first winter wheat ratings of the year for the country were delayed one day, so this afternoon they’ll probably be released and it’s likely they, too, have declined under the bitterly cold winter conditions.
We are getting closer to some potential targets for advancing sales at the $15 mark for soybeans, $5.40 nearby corn futures, and $7.50 CBOT wheat futures. For new crop markets, $5.07 December corn (which was hit 4/1) and $12.06 November soybeans (also hit 4/1) are some targets which would be sales opportunities. For now, the market continues to hold the bull markets, but if spring finally arrives, who knows when that will end?
As we’ve stated before in the past few months, Pro Ag has been looking for a rally from January of this year into spring, and we have actually had a little stronger rally than we expected into the end of March. Let’s hope this rally can continue, but the outlook for new crop harvest prices is not good compared to current price offerings. It’s likely once this spring rally is over, we will need to be aggressive sellers of grains of all kinds (wheat, corn, and soybeans) to end up with some profit in 2014.
The good news is that profits can be had at current prices, as the average cost for corn production in the U.S. is estimated at $4.14, and currently corn futures are trading around $5 for new crop 2014 corn. Even 2015 and 2016 corn is offering a profit at these price levels, so producers do have opportunities now that seemed like they were not possible in January of this year. The trick will be to make some sales at these levels and above, before the market collapses under the weight of another production season (and another chance to replenish stocks – especially in the case of soybeans).