May 18, 2013

Farmland Forecast

RSS By: Marc Schober, AgWeb.com

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

Crop Progress: 37% Lag in Corn Planting

May 13, 2013

Wet and cold weather persisted throughout the Corn Belt last week, although some farmers have been able to plant due to improving, regional, conditions. Anxious farmers sowed 16% of the 2013 corn crop last week alone. The weather forecast moving forward is warmer with a chance of a storm system moving into the Corn Belt later this week.

As of May 12, 2013 only 28% of the U.S. corn crop has been planted. Farmers are concerned as the five year average at this point of the year is 65% planted. Corn that has emerged was at 5%, down 23% from the five year average. Soybeans planted as of May 12, 2013 was at 6%, behind the five year average of 24%.

Winter wheat conditions are at 39% of the crop in poor or very poor condition, compared to only 14% at the same time last year. Winter wheat in good or excellent condition is 32%, compared to 60% last year. Last year at this time, 51% of winter wheat had headed, but only 29% has headed this year. As of May 12, 2013, 43% of the spring wheat crop has been planted, lagging the five year average of 63%.

The July corn contract increased by 3.0% over the past week ending at $6.55 per bushel, soybean prices increased by 3.7% over the past week ending at $14.19 per bushel, and wheat prices ended the week at $7.09 per bushel, a 1.0% increase from last week. Year-over-year corn prices are up 3.1%, soybeans are up 1.0%, and wheat is up 2.0%.

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WASDE: Initial Report on 2013/14 Crops

May 10, 2013

The May WASDE marks the first report estimating the 2013/14 crops and usually packs a punch of surprises. 2013/14 corn yield was lowered from February's early projections, as expected, but was offset by increased planted acres. Soybean balance sheets for 2012/13 remain unchanged. Wheat decreased in almost every aspect of its balance sheet from year to year.

Corn

U.S. corn production for 2013/14 was estimated 3.4 billion bushels above 2012/13 to 14.1 billion bushels. Corn yields for the upcoming year were projected at 158.0 bushels per acre, a 5.6 bushel decrease from the USDA's Agriculture Outlook Forum in February. The decrease in yields is due to delays in planting in some of the highest producing corn states.

Planted acres was estimated at 97.3 million acres and harvested acres at 89.5 million. U.S. corn supplies for 2013/14 were estimated at 14.9 billion bushels, an increase of 3.0 billion from last year's drought stricken crop. The season average price for 2013/14 is projected at $4.30 to $5.10.

An increase of 16% was expected for U.S. corn use from 2012/13 to 2013/14. Feed and residual use was expected to increase 925 million bushels year over year. Corn use for ethanol was expected to elevate 250 million bushels through the end of 2013 due to a decrease in corn prices.

Exports for U.S. corn are projected at 1.3 billion bushels, an increase from last year's 750 million bushels which was the lowest level since 1970/71. Increased competition from South America and FSU-12 is expected. Ending stocks for 2013/14 was estimated at 2.0 billion bushels.

Global course grain supplies for 2013/14 were estimated to increase by 113.8 million tons from 2012/13 to 1,407.6 million tons. Large production increases are expected from EU-27, FSU-12, China, Brazil, and Argentina.

Many factors remain vulnerable to weather, especially planted acres and yield. We will keep a close eye on planted corn acreage because if it persists it will be converted to soybean and wheat acreage.

Soybeans

U.S. 2012/13 soybean balance sheets remain unchanged this month.

U.S. soybean yields in 2013/14 were estimated at 44.5 bushels per acre, a 4.9 bushel jump from 2012/13. Increased harvested area and yield for 2013/14 has soybean production at 3.390 billion bushels, a 375 million bushel increase from last year.

Due to increased supplies and competitive pricing U.S. soybean exports for 2013/14 were estimated at 1.450 billion bushels, a 100 million bushel increase from 2012/13. The projected season average price range for 2013/14 was $9.50 to $11.50 per bushel.

Global oilseed production in 2013/14 was increased by 4.7% compared to last year, to 491.3 million tons due mainly to increases in soybean production from South America.

Wheat

U.S. wheat supplies in 2013/14 were estimated at 2.917 billion bushels, a 7.0% decrease from 2012/13. Wheat production was decreased by 9.0% compared to last year, to 2.057 billion bushels. Yields for the 2013/14 crop year were projected at 44.1 bushels per acre, a drop of 2.2 bushels from 2012/13. The season average wheat price for 2013/14 was estimated at $6.15 to $7.45 per bushel.

Total U.S. wheat use for 2013/14 was decreased year over year by 7.0% due to decreased exports (down 100 million bushels from 2012/13) and a decrease in domestic use.

Outlook

While this report was slightly bearish, many factors can change due to weather within the next month to affect yield, total production, planted acres, harvested acres, etc. We will keep a close eye on the wet weather pattern in the corn belt and whether farmers will be able to plant the corn crop in time for optimal growing days.

For daily articles on farmland and agriculture, visit www.farmlandforecast.com

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Crop Progress: Planting Moving Along Slowly

May 06, 2013

Planting delays continue throughout the Corn Belt but improved weather over the next week is giving hope to a drenched region. If wet weather persists, there is cause for alarm as yields start to drop considerably as corn is planted after April.

As of May 5, 2013 only 12% of the U.S. corn crop has been planted. Farmers are concerned as the five year average at this point of the year is 47% planted. Corn that has emerged is at 3%, down 12% from the five year average. Heavy rains over the past weekend will keep farmers at bay through the middle of the week. Soybeans planted as of May 5, 2013 is at 2%, behind the five year average of 12%.

Winter wheat conditions worsened as 39% of the crop is in poor or very poor condition compared to only 12% at the same time last year. Winter wheat in good or excellent condition is 32%, compared to 63% last year. Last year at this time 64% of winter wheat had headed, but only 20% has headed this year. As of May 5, 2013 23% of the spring wheat has been planted, lagging the five year average of 50%.

Corn prices decreased by 0.9% over the past week ending at $6.78 per bushel, soybean prices decreased by 1.8% over the past week ending at $14.44 per bushel, and wheat prices ended the week at $6.93 per bushel, a 2.3% decrease from last week. Year-over-year corn prices are up 2.0%, soybeans are down 1.3%, and wheat is up 14.4%.

For daily articles on farmland and agriculture, visit www.farmlandforecast.com

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Soggy Weather Delays 2013 Planting

May 02, 2013

Extremely wet weather across the entire Corn Belt has led farmers to anxiously wait until their fields are dry to complete spring field work and planting. Increased moisture has affected more than just planting; prices of corn skyrocketed at the end of April due to the delayed planting of what is suppose to be one of the largest crops planted in over 75 years. Water levels in key transportation rivers are alarmingly high and have caused the Coast Guard to temporarily close large sections on the Mississippi and Illinois Rivers.

Planting Progress

As highlighted above, corn planting progress is greatly lagging from years past. Only 5% of the corn crop has been planted compared to 49% last year and the five year average of 31%. The top corn producing states have fared even worse.

Corn Planted in Top Five States April 2013

The weather outlook for the next few days looks unforgiving as the Midwest will see moderate to heavy rains, especially in the top two corn producing states of Iowa and Illinois. Illinois has endured double its normal rainfall over the past three weeks. With continued cold and wet weather, an increase in planted acreage is unlikely for next week's Crop Progress report. Carsten Fritsch, an analyst at Commerzbank AG, commented "The very wet weather forecast for the next few days will also make it impossible to make any rapid progress in closing the gap. Meanwhile, we are nearing the critical point when the delays can no longer be caught up and crop shortfalls will become inevitable."

South American Port Delays

The line of trucks waiting to unload oilseeds in Brazilian ports had tripled in size in late April due an abnormal increase in export demand for soybeans. The increase in demand stems from Brazil producing what could possibly be its biggest soybean crop ever. Truck lines spanned as long as 21.1 miles at the Port of Santos, according to Ecovias. The queue of ships has steadily been over 200 waiting to load soybeans throughout April.

The majority of grain is hauled via trucks in Brazil and many trucks were being diverted to alternative ports and terminals hundreds of miles further south to bypass delays. These delays cost a fortune to the producers who have to wait or travel a long way to dump the grain.

Brazil's inefficient infrastructure is causing large importers like China to cancel large orders of soybeans. Last month the Chinese trading firm Sunrise cancelled nearly 2 million metric tons of soybeans and another undisclosed firm canceled shipments this month. Brazil's government has decided to allow ports to work 24 hours a day, in order to relieve the backups at major ports.

Grain Prices

Corn prices were weak for most of the month but rallied at the end resulting in a decrease of 1.7% this month, closing at $6.83 per bushel on the front month contract. The first trading day of the month had carried over downside pressure from the late March USDA Quarterly Stocks Report. The USDA increased U.S. ending corn stocks to 757 million bushels in the April WASDE Report. Additionally, the USDA projected a 25 million bushel decrease in corn exports in the U.S. due to slow pace of shipments and expected competition from Brazil and Ukraine. Over the past seven months, analysts have felt the least bullish on corn prices, according to CHS Hedging, due to the anticipation of a record corn crop to be planted in time. If continued wet weather causes more delays in planting you will see a shift in attitude from bearish to bullish.

Soybean prices increased by 4.5% this month to close at $14.67 per bushel. Commercial and fund buyers helped support prices prior to the WASDE Report. USDA did not change the U.S. ending soybean stocks from 125 million bushels for the second straight month. Concern still lingers of a delayed U.S. corn planting season which will drag into the soybean planting season.

Wheat prices increased by 4.9% this month, closing at $7.21 per bushel. The USDA estimated U.S. wheat ending stocks 15 million bushels higher this month due to increased domestic seed usage. The condition of the U.S. winter wheat crop is very poor as exceptionally cold and dry weather caused frost damage in the Southern Plains. Tight global supplies and a weaker U.S. Dollar also helped support wheat prices.

Farmland Values

The Creighton University farmland price index dropped slightly from 67.2 in March to 66.9 in April but has been above growth neutral for a staggering 41 consecutive months. However, there are some negative results from the growth, "Increased agriculture land prices and rent cost are hurting our smaller operators as well as younger, beginning farmers," said David Callies, CEO of Miner County Bank in Howard, SD.

Bankers were asked this month in the survey what percentage of farmland transactions were purchased by nonfarm investors and what proportion of sales were purchased with cash. Only 19.8% of farmland transactions were purchased by nonfarm investors. Cash transactions made up 28.6% of farmland purchases.

Outlook

The late start to the planting season should not cause great concern unless wet weather conditions persist into mid to late May. Warmer temperatures, sun, and wind will help dry fields out quickly. We will be closely monitoring planting progress in May, along with any and all implications derived from river closings due to flood conditions in the Corn Belt.

- Colvin

For daily articles on farmland and agriculture, visit www.farmlandforecast.com

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Crop Progress: Only 5% of Corn Crop Planted

Apr 29, 2013

Corn, soybean, and wheat prices increased by double digits today due to the cold weather preventing farmers from planting. Planting delays may thwart estimates of the U.S. producing in 2013 the largest corn crop on record.

Week to week corn planted acreage only progressed by 1% resulting in 5% of the U.S. corn crop planted. This in contrast to last year at this time of 49% of the corn crop planted and the five year average of 31%. Corn that has emerged as of April 29, 2013 consists of 2% of the corn crop, down 4% from the five year average. The delayed planting is due to increased moisture from snow and rain seen throughout the Corn Belt and the forecast for the next week is not any better.

Winter wheat conditions remain bleak as 35% of the crop is in bad or very bad condition compared to only 10% at the same time last year. Winter wheat in good or excellent condition is 33%, compared to 64% last year. Last year at this time 55% of winter wheat had headed, but only 14% has headed this year. As of April 29, 2013 12% of the spring wheat has been planted but an astonishingly 70% were already planted at the same time last year.

Corn prices increased by 6.0% over the past week ending at $6.84 per bushel, soybean prices increased by 3.8% over the past week ending at $14.71 per bushel, and wheat prices ended the week at $7.09 per bushel, a 1.0% increase from last week. Year-over-year corn prices are up 3.6%, soybeans are down 2.1%, and wheat is up 9.6%.

For daily articles on farmland and agriculture, visit www.farmlandforecast.com

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