Rapid planting, generous moisture

05/19/15 — So far in 2015 we have rapid planting of most crops (corn, soybeans, HRS wheat, barley) and generous moisture levels (in some cases dry western areas are now much too wet). Winter wheat crops in the U.S. continue to improve such that Pro Ag yield models are suggesting a record shattering yield in 2015 – and a rapidly improving crop with recent rains in the western HRW wheat country.

Crop progress and conditions yesterday, 5/18 released by USDA showed corn planting at 85% vs. 75% normally, advancing another 10% as much progress was made in Colorado (22%), Indiana (22%), Kentucky (21%), Michigan (14%), Ohio (22%), Pennsylvania (28%), and Wisconsin (16%). Note these are mostly eastern Corn Belt states that did not receive much rain over the past week, while the western Corn Belt suffered under some moderate to heavy rains. Corn emergence is at 56% vs. 40% normally, so we will get corn crop conditions next week in our report, and they are likely to be average or slightly above average.

Soybean planting is at 45% planted vs. 36% normally, with 13% emerged vs. 12% normally. Once again the western Corn Belt states were slow planting last week, while the eastern Corn Belt states made steady progress under drier weather conditions. Illinois (47% planted advancing 14%), Indiana (36% planted advancing 19%), Iowa (51% planted advancing 21%), Kentucky (25% planted advancing 16%), Michigan (50% planted advancing 18%), Ohio (46% planted advancing 23%), and Wisconsin (50% planted advancing 25%) all made significant progress last week.

HRS wheat is 94% planted vs. 65% normally, advancing 7% in a wet week that saw most moisture replenished to now be mostly saturated soils, with water running off with a very wet week in the eastern HRS wheat basin. Emergence is at 67% vs. 38% normally, with crop conditions rated 65% G/E, a bit below the normal ratings at this time. Barley planting is at 95% complete vs. 70% normally at this time, with emergence at 72% vs. 40% normally. Barley conditions are 64% rated G/E, also slightly below the normal for the start of spring.

Other crops show cotton at 35% planted vs. 46% normally at this time, with sorghum 38% planted (equal to average) and peanuts 47% planted vs. 46% normally. Cotton is the only crop behind normal in planting progress! Rice is 89% planted vs. 82% normally, with emergence 70% vs. 66% normally. Conditions of rice are 66% rated G/E, the same as last year at this time. Oat planting is 96% complete vs. 84% normally, with emergence at 83% vs. 69% normally, and conditions were steady at 73% rated G/E.

Winter wheat is 68% headed vs. 56% normally, with ratings improving 1% to 45% rated G/E, now well above last year’s 29% rating and normal. The Pro Ag winter wheat yield model rose the most of any week this year, up .35 bu/acre to 48.4 bu/acre, well above USDA’s 43.5 bu/acre estimate in May and trend of 47.26. If realized, this would be a new record large winter wheat crop, beating the old record of 47.8 bu/acre in 1999. It is becoming clear that the winter wheat crop is getting better, not worse as we head towards harvest. So all the talk about disease and other crop problems in U.S. winter wheat country are just made up as reasons why wheat prices are rising.

They are rising due to the U.S. Ag attache’s last week revision of Chinese crop production potential reduced 5 mmmt (about 200 mb) and Chinese demand hiked 8 mmt (about 320 mb). This is a huge change, and the 32c gain that occurred that day didn’t even come close to digesting that demand and supply news (more like a dollar is needed or more to digest this Chinese news if correct). So wheat prices continued to rise yesterday (but were lower overnight in response to the U.S. winter wheat conditions). Ironically, prices are rising on the Chinese news while U.S. wheat crops continue to improve. It’s likely USDA will need to hike their U.S. winter wheat yield nearly 5 bu/acre, or about 220 mb (more than the reduction in the Chinese crop by the U.S. Ag attache). So we will get some bearish news ahead in the U.S. crop that could be negative once the Chinese news is built into the market.

The forecast today 5/19 keeps the western Corn Belt and HRW wheat areas wet the next week, with the eastern Corn Belt dry so that planting might near completion in this region. Temps will remain below normal, perfect weather to mature winter wheat crops as the crop is likely to keep getting bigger. It is raining in the western HRW wheat belt today, including Colorado, western Kansas/Oklahoma/Texas, and New Mexico.

Look for a mixed week ahead, with grain prices adversely affected by the strong dollar, but the Chinese wheat news supporting the market. Can we rally wheat another 50c on the Chinese news, and get some sales made at these levels?