May 14, 2009
Allendale Inc is well aware of the latest corn planting progress report suggesting 48% of the 2009 corn acres are planted vs a year earlier progress of 48% and a five year average of 71%. At first blush this year’s progress may appear as less than alarming when compared to year earlier levels and aware the 2008 corn yield at 153.9 bushels per acre was the second largest dating back to 1999.
However the nation’s second largest corn producing state of Illinois is entering a cross roads period of the planting season as it continues well below its recent historical pace. At no time dating back to 1999 has the states pace of planting been as far behind as it presently struggles with.
As you are able to view via the chart
, Illinois pace of planting at 10% (May 10th
) is more than a third off its weakest campaign of 2002 and 59% below the state average dating back to 1999. At 10% planted it compares to the 1993 Midwest flood year of 4%. Neighboring Indiana, typically the Midwest’s fifth largest corn producing state is a meager 11% planted and finding it difficult to put two consecutive days of planting in a weeks worth of time. Rains this week, mid and late are likely to continue delays and frustration.
How long could it take to “catch-up” to projected targeted 2009 planted acres for Illinois and Indiana? The answer is there may not be enough time on the calendar. Estimating Illinois has 10.98 million acres remaining to be planted and Indiana has slightly more than 5 million acres, it will likely take Illinois more than four and a half weeks and Indiana slightly more than two weeks, IF it stops raining.
Allendale Inc finds it extremely interesting the USDA has already reduced yield potential for 2009 corn production as a result of the slow planting pace but did not adjust projected planted acres. Allendale Inc suggest both yield and acres need to be reduced in the month of June WASDE. By reducing trend yield potential for 2009 via the May WASDE, the futures market reaction was one of surprise to see projected end stocks of 1.145 billion bushels, 28.5% lower than 2008/09 end stocks. What if USDA has a repeat performance up its sleeve of its actions one year ago and ignores the 48% planting progress, increases acres planted as they did in the June 2008 Planted acres report by 1.3 million (five year average increase has been 1.74% increase), reduce yield from 153.9 to 148.9 from May to June WASDE, and then again from June to July WASDE by another .5 bu/acre. Then the major surprise of a yield increase from July to Aug of 6.6 bpa then retrace by 2.7 bpa into the Sept WASDE. It was not until the October 2008 WASDE when USDA decided to reduce planted acres to 85.9 million vs its earlier forecast. Needless to say, some very interesting adjustments through the heart of the 2008 summer growing season.
USDA is presently estimating yield of 155.4 bpa on 85 million acres and suggest 1.145 billion bu of end stocks. If USDA were to use a similar yield reduction from the May to June WASDE as it did a year earlier, look for end stocks to shrink by 35% to a level of 752 million bushel.
What are your thoughts regarding the pace of planting? Are you switching full season corn varieties to a shorter season? Are you preparing to switch from corn acres to soybeans or does the gross per acre still favor a fight for corn acres? Do you have your 2009 marketing plan in place, with room for price action adjustment? Contact an Allendale representative for a marketing plan comparison utilizing risk management alternatives.
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