USDA wheat estimates, planting going well

Farm Forum

5/10/16 — Grain prices have slipped lower the past week, with KC July wheat falling to new lows yesterday. The pressure has been applied because winter wheat crop conditions are rated quite high, and the Kansas wheat tour reported a very good crop (48.6 bu/acre).

Planting progress is going great guns, with 64% of the corn crop planted on the U.S. vs. 50% normally at this time (5 year average), so we are well on our way to getting corn up and out of the ground early this year. However, we still are slightly behind last year’s early corn planting (which was at 69% at this time). Corn is 27% emerged vs. 17% normally at this time. Soybean planting progress is 23% planted, up from 16% normally but a bit behind last year’s 26% done this week. So basically, we don’t have any planting problems yet, and prices sure reflect the good conditions thus far, especially in corn. We’ve hardly done much of anything in corn since bottoming at near 2-3 year lows in March, and farmers are still looking at some pretty hefty losses in corn for 2016.

Cotton planting is right at the 5 year average of 26%, still a bit ahead of last year’s 23% planted but on average none the less. Sorghum is 30% planted vs. 31% normally, but there still is plenty of time to plant the sorghum crop. Sugarbeets are 94% planted vs. only 60% normally, so the lack of snow cover and relatively dry conditions in North Dakota and Minnesota have helped sugarbeets to get planted quite early this year. Peanuts are 27% planted vs. 23% normally, so even in the South planting is starting to catch up and even surpass normal progress.

Perhaps one of the big surprises this year is the excellent condition of the winter wheat crop to date. As of the week ending May 8, winter wheat was rated a very high 62% good/excellent, quite a bit higher than normal and up 1% from last week’s already high level of 61%. That is compared to only 44% rating last year when the crop only yielded 42.5 bu/acre. This year, the Pro Ag yield model is topping all years at now nearly 49.5 bu/acre, up another 0.24 bu/acre from last week and continuing the march higher. If realized, it would shatter previous record large yields in 2013 of 47.3 bu/acre by over 2 bu/acre! While USDA will provide their first estimate of the year in the USDA May report, it’s unlikely they will go as high as our yield model is currently indicating. Instead, its likely they will go above trend yields of 47 bu/acre or so, maybe somewhere around 48 bu/acre or even higher. Winter wheat is 57% headed, well ahead of the normal 44% headed so we are even on tap for an early harvest as well as an above average yield. Double barrel bearish news, and prices are already plenty cheap!

HRS wheat is also well ahead of average planting, with 77% planted already vs. only 51% normally, with 39% germinated and emerged vs. only 25% normally. So the Northern Plains are ahead of nearly all crops including sugarbeets, HRS wheat, and barley. Barley is 79% planted, well ahead of the normal 60% planted at this time, although last year we were ahead of even that pace at 84% planted already. Barley is 47% emerged vs. 30% normally, but still behind last year’s rating of 53%. Oats planting is 88% complete vs. 74% normally and 91% last year at this time.

The difference between last year and this year is we have better moisture conditions along with our early planting. Soil subsoil moisture is 86% rated adequate/surplus, the same as last week and quite a bit better than last year’s 73% adequate/surplus. Topsoil moisture is also rated quite good, at 86% rated adequate/surplus (down 1% from last week), and vs. 78% last year at this time. But the soil moisture is basically better than last year nationwide, which combined with early planting makes this year look like it could be another above average crop year for yields.

So for now, the market continues to struggle, especially wheat. We remain at low price levels (especially corn and wheat), and await a better opportunity to sell.