Warm up instills hope for early spring

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Farm Forum

03/10/15 — Last week we wrote about how hope springs eternal, and the hint of a warm up in the forecast was present, with temps forecast above normal for the long-term period. Well, the heat finally arrived and most of the country is basking in above normal temps this week that were a fine change from the bitterly cold February that most of the country suffered through. This warm up is bringing hope to those who would enjoy an early spring.

Usually a fast start also means a bumper crop is possible as long as rains keep coming throughout the summer. However, this year a dry western Corn Belt and relatively warm weather could provide a worry of drought. Warm weather in early spring is typically bearish, though, as that means an early start to planting progress. However, if the dry period hangs on through the summer, drought will become a real worry and then the dry/warm weather would become bullish. It all depends on the conditions the crop is in, and how it develops over the summer.

In mid-March, warm weather is probably bearish as it means an early start to the spring’s work. Fertilizer can be spread and spring’s tillage can be done, all a precursor to the planting season which if weather allows gets farmers that much closer to getting their planting done. Early planting is generally bearish, as it allows a full season for crops to develop and takes the frost risk down in the fall.

Today we get crop updates from USDA on South American production and U.S. supply/demand updates. Expectations are for a hike in Argentina production of corn and soybeans which will be offset by a decline in Brazil. U.S. ending stocks are expected to be cut for soybeans 10 mb due to higher exports (my guess is a 25 mb hike in exports). Wheat and corn ending stocks are expected to be about unchanged.

There is no question that U.S. soybean exports are well ahead of the pace needed to meet current USDA projections, so Pro Ag expects a 25 mb hike in exports this month, and a similar cut in ending stocks that might continue for the next few months as it seems clear that U.S. exports of soybeans are on a pace well ahead of current USDA projections. Current Pro Ag projections are more than 100 mb larger than current USDA projections, so clearly the soybean export figure needs to be hiked considerably in future reports.

March is not a big month for USDA reports, though, and typically holds the least excitement of all reports for the year. The South American production numbers are usually the most important numbers in this report, but with South American weather mostly favorable this year, there is not expected to be any large changes in South American production prospects in this report. Instead, it looks like it could be a “ho-hummer” of a report today.

So as the northern hemisphere gets ready to plant crops this spring, weather might be the greatest factor in the mix for influencing crop prices this spring. An early spring would be bearish for prices, and it looks like with the western Corn Belt warming to well above normal early this month that most of the snow will be melted. That typically means an early start to planting as black dirt absorbs heat, and without snow cover it might mean an early start to planting there.

The next big report will be the end of March planting intentions report, with intended acreage of corn, soybeans, and wheat providing the market the next big numbers. However, Pro Ag notes that the dollar continues to trend higher, making all commodity markets sluggish as this uptrend continues unabated. Perhaps weather will share the spotlight along with the dollar this spring?—