Jul 31, 2014
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June 2014 Archive for 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: Conditions Improve Despite Continued Severe Weather

Jun 30, 2014

Hail, rain, strong winds, and tornadoes continue to be a weekly threat as much of the Corn Belt continues to deal with severe weather. The majority of Iowa and Nebraska received two to four inches of rain last week. The 10-day forecast estimates higher than average rainfall for the upper Midwest, with the 30 and 90-day forecasts suggesting above average rainfall in the west and average rainfall through the rest of the Corn Belt.

The USDA estimated corn conditions at 75% of the crop rated "Good" or "Excellent", a 1% increase from the previous week and a 8% increase from last year. 20% was considered "Fair" down 1% from last week, while only 5% was considered "Poor" or "Very Poor." Corn silking was reported for the first time this year with 5% reported in the silking stage. This is a 2% increase from last year, but 4% behind the five-year average.

Soybean emergence was reported at 94%, a 4% increase from last week and even with the five-year average. Soybean conditions were reported with 72% of the crop in "Good" or "Excellent" condition, unchanged from last week, but up 5% from last year. 23% was reported in "Fair" condition, while only 5% was reported as "Poor" or "Very Poor." Soybeans blooming was reported for the first time this week, 10% of the crop was reported bloomed, up 7% from last year, and even with the five-year average.

The winter wheat crop was reported 43% harvested, up 10% from last week, but 5% behind the five-year average. There were no changes in the conditions report for wheat, 30% rated "Good" or "Excellent", 26% rated "Fair", and 44% rated "Poor" or "Very Poor."

July futures for corn closed the week at $4.24 per bushel, a 4.5% decrease from last week. July soybeans ended the week at $14.00, a 1.7% decrease from last week, and July wheat ended the week at $5.64, a 2.6% decrease from last week. Year-to-year corn prices are down 35.1%, soybeans are down 7.4%, and wheat is down 16.9%.

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

Corn vs. Soybeans, the Battle for Acreage

Jun 30, 2014

Soybean planted acreage was estimated 3.30 million acres more than the already record estimate from the March 31st Planting report. Increased moisture and favorable economics have forced operators to plant soybeans at corn's expense.

Pockets of the Corn Belt, predominantly the northwest Corn Belt, have received over half their average yearly rainfall in just two short weeks. As the corn planting window disappeared, operators switched to soybeans; all was not lost as soybean prices were trading at 2.5 times or greater compared to corn.

Acreage Report

Crop

Estimated 2014 Planted Acres (Million Acres)

Final 2013 Planted Acres (Million Acres)

Corn

91.6

95.37

Soybeans

84.8

76.53

Wheat

56.5

56.16

Source: USDA

Planted corn acres for 2014 were estimated at its lowest level since 2010, 91.6 million acres, 3.77 million acres below the final 2013 planted acreage.

Soybean planted acres were estimated at 84.8 million, a 10.8% increase from last year's final planted acres of 76.53 million. The USDA estimated a record 84.1 million acres will be harvested, which would demolish the previous record of 76.7 million acres.

All wheat planted acres were estimated at 56.5 million, an increase of less than 1% from 2013. Winter wheat planted acres were estimated at 42.2 million, a 2% decrease year over year.

Quarterly Stocks

Crop

USDA (Billion Acres)

Analysts Range (Billion Acres)

Average Estimate (Billion Acres)

Corn

3.850

3.046-4.050

3.724

Soybeans

0.405

0.334-0.450

0.387

Wheat

0.590

0.561-0.715

0.603

Source: DTN and USDA

USDA reported 3.85 billion bushels of corn on hand as of June 1, 2014, a 39% increase year over year. Of the total stocks, 1.86 billion bushels were stored on farms, up 48% from 2013. Off-farm stocks were estimated at 1.99 billion bushels, an increase of 32% from a year earlier. The March 2014 to May 2014 disappearance was 3.15 billion bushels, compared to 2.63 billion bushels a year ago.

Soybean stocks decreased 7% compared to last year with 405 million bushels stored in all positions as of June 1, 2014. Stocks stored on farms totaled 109 million bushels, a 36% decrease from last year. Off-farm stocks increased to 296 million bushels, up 12% from last June. March 2014 to May 2014 disappearance was 589 million bushels, an increase of 4% from last year.

All old crop wheat stocks decreased by 18% from last year with 590 million bushels being estimated on June 1, 2014. On-farm stocks were estimated at 97 million bushels, a 19% decrease from last June. Off-farm stocks were down 18% from last year, coming in at 493 million bushels. The March 2014 to May 2014 disappearance was 467 million bushels, down 10% from June of 2013.

Outlook

Most will look forward to the World Agriculture Supply and Demand Estimates in July to see a more accurate assessment of the severe weather and rain that has been affecting the upper Midwest throughout June. The USDA reported acres that have been flooded for much of the past two weeks as "planted", similar to the USDA counting prevent plant acres planted in 2013 in their June acreage totals. The result will be a delay in market reaction as traders wait to see what kind of damage was caused by the June storms.

The National Oceanic and Atmospheric Administration estimate above average rain fall in their 30 and 90 day outlooks for Nebraska and South Dakota. Hopefully wet areas of Iowa, Illinois, Minnesota, and Wisconsin will be provided with an opportunity to dry out but there is little confidence that it will be in time for farmers to replant drowned out areas.

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

USDA Weekly Exports: Soybean Sales Rise Sharply

Jun 26, 2014

Soybean sales increased to their highest level since February and have increased each of the last three weeks. The USDA Grain Stocks report is expected to come out on Monday with the lowest soybean stocks estimates since 1978. U.S. soybeans have continued selling at a record pace throughout the 2013/2014 marketing year. Corn sales and exports both saw increases, while soybean exports decreased. Wheat sales decreased, but exports increased.


Severe weather and continuous rainfall has plagued much of the upper-Midwest resulting in many acres underwater. Despite the positive conditions report, a slight increase was seen in the price of corn and soybean over concern that the flooding would result in lower yield potential.
Weekly U.S. net corn sales for the week ending June 19th in the 2013/2014 marketing year were 321,400 metrics tons (MT), a 195% increase from the previous week, but a 34% decrease from the prior 10-week average. Increases were reported from Japan, South Korea, Vietnam, Spain, Egypt, and the Netherlands. Decreases were reported from unknown destinations, China and Israel. Exports were 1,154,500 MT, a 3% increase from the prior week, but a 5% decrease from the prior 10-week average. The primary destinations were Mexico, Japan, South Korea, Israel, Spain, Vietnam, and Costa Rica.

Weekly net soybean sales in the 2013/2014 marketing year were 317,200 MT, a 224% increase from the previous week and a 458% increase from the 10 week average. Increases were reported from unknown destinations, Mexico, Thailand, Taiwan, and Vietnam. Decreases were not reported. Exports were 98,200 MT, a 49% decrease from the prior week and a 53% decrease from the prior 10-week average. Primary destinations were Mexico, Japan, Indonesia, Taiwan, and Canada.

Weekly net wheat sales for the week ending June 19th in the 2014/2015 marketing year were 359,400 MT a 4% decrease from the previous week, but a 41% increase from the prior 10 week average. Increases were reported from South Korea, Brazil, the Philippines, Chile, Jamaica, and Japan. Decreases were reported from unknown destinations, Vietnam, Burma, and Costa Rica. Exports were 587,100 MT a 12% increase from the prior week and an 11% increase from the prior 10-week average. Primary destinations were Japan, Indonesia, Brazil, Guatemala, Chile, Mexico, and Nigeria.

6 26 14 Sales
Source: USDA Foreign Agricultural Service

6 26 14 Exports 
Source: USDA Foreign Agricultural Service

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

Rural Economy Continues to Grow Despite Decline in Grain Prices

Jun 24, 2014

The growth in the rural economy was slowed by falling grain prices over the last month. Farmland prices continue to decline according to the respondents, but they are expected to show signs of increasing by next month. Investors are reportedly purchasing a smaller share of farmland compared to the same time last year.                                                                

The Rural Mainstreet Index (RMI), ranging between 0 and 100 with 50.0 representing growth neutral, decreased to 53.6 from 55.6 in May. The RMI has remained above growth neutral since March. RMI levels are short of where they were last year, but this should be expected with crop prices significantly lower than this time last year.

Ernie Goss, Ph.D, Economics Professor at Creighton University stated, "The overall index for the Rural Mainstreet Economy indicates that economic conditions of the areas of the nation highly dependent on agriculture and energy are positive, but somewhat weaker compared to this time last year."

RIM June 2014 Rural Mainstreet index

Source: Rural Mainstreet Index Creighton University

The farmland price index increased to 49.1 from 46.7. This is the fourth consecutive month that the index has increased, though the index remains below growth neutral. Goss is confident the index will continue to rise. "Stronger farm commodity and grain prices over the last several months appear to have put a floor under farmland prices. I expect the index to move above growth neutral next month."

RIM June 2014 Farmland Price index

Source: Rural Mainstreet Index Creighton University

The farm equipment sales index increased to 35.0 from 33.6. Goss said, "Despite improving economic activity on the regional farm, agriculture equipment and implement dealers in the region are experiencing very weak sales to farmers in the region. On the other hand, farm equipment manufacturers continue to experience positive growth due to healthy sales abroad."

This month bankers were asked what percentage of farmland purchases were cash sales and what percentage of farmland sales were made to non-farmer investors. Bankers reported that farmland purchased by cash fell 5% from last year, suggesting purchasers are using more debt to finance farmland purchases. The report also showed that the share of land sold to non-farmer investors fell from 19.7% in 2013 to 14.4% in 2014.




Table 1: Rural Mainstreet Economy Last Two Months and One Year Ago: (index > 50 indicates expansion)

 

June 2013

May 2014

June 2014

Area economic index

60.5

55.6

53.6

Loan volume

66.7

75.4

74.6

Checking deposits

48.5

54.8

50.9

Certificates of deposit and savings instruments

33.6

40.3

39.4

Farmland prices

58.4

46.7

49.1

Farm equipment sales

53.2

33.6

35.0

Home sales

78.1

63.9

66.1

Hiring

61.4

64.0

63.2

Retail business

53.9

51.7

51.8

Confidence index (area economy six months out)

60.0

51.6

55.5

Source: Rural Mainstreet Index Creighton University

Survey

This survey represents an early snapshot of the economy of rural, agricultural and energy-dependent portions of the nation. The RMI is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. 

Crop Progress Report: Severe Weather does Little to Impact Crop Conditions

Jun 23, 2014

Areas of northern Iowa, southern Minnesota, and southern Wisconsin saw anywhere from four to twelve inches of rain over the past week resulting in flooded fields that have left a number of corn and soybean acres underwater. Severe weather in western Iowa and eastern Nebraska produced hail and tornadoes that also affected farmland in those areas.

The USDA estimated corn conditions at 74% of the crop rated "Good" or "Excellent", a 2% decrease from the previous week and a 9% increase from last year. The report falls on the high side of analyst estimates, who expected somewhere between 71-74%. 21% was considered "Fair" up 1 % from last week, while only 5% was considered "Poor" or "Very Poor."

Soybean planting continues to be slowed by rain as the USDA releases the final planting report of the season. 95% of acres were estimated planted, a 3% increase from last week and 1% ahead of the five-year average. Soybean emergence was reported at 90%, a 7% increase from last week and 3% ahead of the five-year average. Soybean conditions were well above last year’s estimates; 72% of the crop is considered to be in "Good" or "Excellent" condition, down 1% from last week, but up 7% from last year. 23% was considered in "Fair" condition, while only 5% was reported as "Poor" or "Very Poor."

The winter wheat crop was reported 96% headed, a 4% increase from last week and 2% ahead of the five-year average. The USDA estimated 33% of the winter wheat crop has been harvested, up 17% from last week and 2% ahead of the five-year average. Farmers were able to continue to harvest this past week following significant rain two weeks ago that left fields too wet to work. There were no changes in the conditions report for wheat.

July futures for corn closed the week at $4.44 per bushel, a 0.7% increase from last week. July soybeans ended the week at $14.24, a 0.1% increase from last week, and July wheat ended the week at $5.79, a 0.2% decrease from last week. Year-to-year corn prices are down 32.0%, soybeans are down 5.8%, and wheat is down 14.7%.

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

Crop Progress Report: Wet Conditions Frustrate Farmers

Jun 16, 2014

Precipitation has been a nuisance for farmers planting soybeans in the north and those harvesting wheat in the south. Minnesota, North and South Dakota, and Western Wisconsin received anywhere from one to two inches with Kansas and Northern Oklahoma seeing similar rainfall. Wheat prices began to rebound slightly today as the wet weather in the grain belt is slowing the harvest. Rain at harvest time can spell trouble for wheat as water can swell the kernels which yield less flour.

The USDA estimated corn emergence at 97%, a 5% increase from last week and 1% ahead of the five-year average. Farmers are sounding very confident about the corn crop thus far. Corn conditions remain extremely positive with 76% of the crop rated "Good" or "Excellent", a 1% increase from the previous week and a 12% increase from last year. 20% was considered "Fair" while only 4% was considered "Poor" or "Very Poor." Despite the delay in planting a good combination of rain and sunshine has the USDA expecting a record crop this year for both total yield and bushels per acre.

Soybean planting was slowed by rains over the past week. 92% of acres were estimated planted, a 5% increase from last week and 2% ahead of the five-year average. Farmers in the Dakotas are struggling to replant soybeans in troubled areas. Many beans that were planted early did not emerge because of the cold and heavy rainfall they received. Those farmers who waited are also struggling to get fields planted because of continued rain in the region. Soybean emergence was reported at 83%, a 12% increase from last week and 6% ahead of the five-year average. Soybean conditions are well above last year’s estimates; 73% of the crop is considered to be in "Good" or "Excellent" condition opposed to 64% last year. 23% was considered in "Fair" condition, while only 4% was reported as "Poor" or "Very Poor."

The winter wheat crop was reported at 92% headed, a 6% increase from last week and 2% ahead of the five-year average. Rain throughout much of the wheat belt has slowed the harvest, and left farmers wondering where the rain was six weeks ago. The USDA estimated 16% of the winter wheat crop has been harvested, up 7% from last week, but 3% behind the five-year average. There were no changes in the conditions report for wheat.

July futures for corn closed the week at $4.41 per bushel, a 2.2% decrease from last week. July soybeans ended the week at $14.22, a 2.4% decrease from last week, and July wheat ended the week at $5.80, a 1.0% decrease from last week. Year-to-year corn prices are down 34.0%, soybeans are down 6.0%, and wheat is down 14.7%.

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

USDA Weekly Exports: China Continues Creating Market Uncertainty

Jun 12, 2014
The Chinese have suspended U.S. import permits for Dried Distiller Grains (DDG’s) a high protein animal feed that is a byproduct of ethanol production from corn. The move was reported as "Temporary" by the USDA yesterday, they expect exports to China to continue by the end of the month. The suspension piles a long list of setbacks for U.S. corn imports into China over the past eight months due to China not accepting the corn trait MIR-162.
 
Wheat and soybean sales increased significantly from last week’s report both increasing over 100%. Corn sales fell for the second consecutive week. Exports were down for corn, soybeans, and wheat this week.
 
Weekly U.S. net corn sales for the week ending June 5th in the 2013/2014 marketing year were 409,700 metrics tons (MT), a 26% decrease from the previous week and a 31% decrease from the prior 10-week average. Increases were reported from Japan, Egypt, Mexico, Vietnam, and Colombia. Decreases were reported from unknown destinations, Guatemala, and South Korea. Exports were 1,070,500 MT, an 8% decrease from the prior week and a 15% decrease from the prior 10-week average. The primary destinations were Japan, Mexico, Egypt, Taiwan, Colombia, South Korea, and Vietnam.
 
Weekly net soybean sales in the 2013/2014 marketing year were 86,700 MT, a 110% increase from the previous week and a 64% increase from the 10 week average. Increases were reported from Indonesia, Mexico, Taiwan, Vietnam, and the Philippines. Decreases were reported from unknown destinations. Exports were 147,100 MT, a 31% decrease from the prior week and a 52% decrease from the prior 10-week average. Primary destinations were Mexico, Indonesia, Japan, Venezuela, and Taiwan.
 
Weekly net wheat sales for the week ending June 5th in the 2014/2015 marketing year were 570,100 MT. A total of 2,120,600 MT sales were carried over from the 2013/2014 marketing year. Exports of the 2013/2014 marketing year were calculated at 30,113,000 MT, a 14% increase from the prior year. Exports to start the 2014/2015 Marketing year were 570,100 MT. Primary destinations were Brazil, Japan, Indonesia, Taiwan, and South Korea.
 
6 12 14 Sales
Source: USDA Foreign Agricultural Service
 
6 12 14 exports
Source: USDA Foreign Agricultural Service
 
For daily articles on farmland and agriculture, visit http://www.farmlandforecast.com/
 

 

WASDE: Record Corn Crop Remains Predicted

Jun 12, 2014

Domestic corn balance sheets were unchanged this month as reports continue to favor a record crop this year. Favorable planting and growing weather at the end of May and beginning of June have operators optimistic for the upcoming crop. U.S. corn yields are expected to average 165.3 bushels per acre, breaking the 2009 record of 164.7.

The unchanged corn report comes to no surprise as the USDA has not amended their production or yield estimates in the month of June for several decades. The combination of the release of the June 30th Quarterly Grain Stocks report and the amount of time until harvest leaves many variables inhibiting an accurate estimate.

Corn

U.S. corn production for the 2014/15 crop season was estimated at a record 13.935 billion bushels, unchanged from last month. Corn yield estimates also remained unchanged at a record 165.3 bushels per acre, surpassing the previous record of 164.7 in 2009. The 2014/15 season-average farm price for corn was unchanged at $3.85 to $4.55 per bushel, compared to $4.45 to $4.65 per bushel for 2013/14.

Increased estimates of corn production in Brazil and India for 2013/14 increased beginning stocks for the 2014/15 season. 2014/15 global corn production was raised 2.0 million tons due to increases from Russia, European Union, and Ukraine.

Soybeans

The 2014/15 U.S. ending soybean stocks were decreased 5 million bushels to 325 million. The 2013/14 ending stocks were also decreased 5 million bushels to 125 million. The reduction in ending stocks primarily reflects an increase in soybean crush usage. The 2014/15 season-average farm price for soybeans was unchanged at $9.75 to $11.75 per bushel.

Wheat

Due to an expected reduction in the 2014/15 U.S. winter wheat production from poor crop conditions, total wheat production was decreased from 1.963 billion bushels to 1.942 billion bushels. Exports for the 2014/15 marketing year were reduced 25 million bushels due to tighter supplies and stronger global competition. Ending U.S. stocks for 2014/15 were increased 34 million bushels to 574 million. The 2014/15 all wheat average price range was lowered 30 cents on both ends of the range to $6.35 to $7.65 per bushel.

World wheat supplies for the 2014/15 marketing year were increased 4.1 million tons due to increased foreign production. World production is estimated at 701.6 million tons, a 4.6 ton increase. Primary increases were from Russia, India, European Union, and China.

Outlook

A record corn crop is being predicted for the upcoming season, but any shift in weather conditions could change the outlook. Crop conditions early in the season are not always fair indicators for yields in October. Looking back to the 2012 crop year, when operators planted their crop in record fashion and predicted a large crop, farmers were hit with a major drought in early July that decreased yields significantly.

For more articles on farmland and agriculture, visit http://www.farmlandforecast.com

Crop Progress Report: Corn & Soybean Conditions Set High Expectations

Jun 09, 2014

Grain prices continue to fall as the outlook for the 2014 crop continually improves due to favorable weather. The major corn and soybean growing areas of the U.S. received anywhere from 2-8 inches of rain last week. Analysts continue to forecast high planted corn acres due to the lack of farmers following through on switching to soybeans over feared planting delays. Drier weather quickly allowed farmers to make up for late planting.

The USDA estimated corn emergence at 92%, a 12% increase from last week and 2% ahead of the five-year average. In speaking with farmers around the Corn Belt, despite earlier concern of northern corn acres switching to soybeans most were able to get their corn planted with very few having to switch any of their acres. Corn conditions remain extremely positive with 75% of the crop rated "Good" or "Excellent" opposed to 63% at this time last year. 21% was considered "Fair" while 4% was considered "Poor" or "Very Poor." Severe weather peppered parts of Iowa and Nebraska with hail last week, impacting corn conditions in those areas. Strong winds were reported in areas of Illinois, Iowa, Minnesota, and Nebraska last week, although winds did not impact conditions due to how short the crop was.

Soybean planting continues to progress with 87% of acres estimated planted, a 9% increase from last week and a 6% increase from the five-year average. Well ahead of last year’s planting season, farmers continue to project finishing the soybean planting before the June 15th final crop insurance planting day. Soybean emergence was reported at 71%, a 21% increase from last week and 9% ahead of the five-year average. Soybean conditions were reported for the first time this week. 74% of the crop is considered to be in "Good" or "Excellent" condition with only 4% reported as "Poor" or "Very Poor."

The winter wheat crop was reported at 86% headed, a 7% increase from last week and 1% ahead of the five-year average. Harvesting began last week, but was slowed by rain. 9% was reported harvested, down 3% from the five-year average. There were no changes in the conditions report for wheat.

July futures for corn closed the week at $4.51 per bushel, a 3.0% decrease from last week. July soybeans ended the week at $14.56, a 2.9% decrease from last week, and July wheat ended the week at $6.14, a 1.0% decrease from last week. Year-to-year corn prices are down 30.6%, soybeans are down 3.6%, and wheat is down 10.9%.

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

USDA Weekly Exports: Wheat Closes 2013/14 Marketing Year

Jun 05, 2014

Wheat closed the 2013/2014 marketing year with a marketing year low for sales. Corn and soybean sales were also down. Soybean exports increased significantly following consecutive weeks of decline. Corn and wheat exports both decreased.

The USDA Crop Progress report released this week showed significant improvement in corn and soybean planting across the U.S. Emergence for both crops was also at or above the five-year average. Wheat conditions remained stable, but yield expectations are well below average. Recent rain in wheat growing areas has arrived too late in the drought stricken Wheat Belt.

Weekly U.S. net corn sales for the week ending May 29th in the 2013/2014 marketing year were 550,700 metrics tons (MT), a 11% decrease from the previous week and a 19% decrease from the prior 10-week average. Increases were reported from Japan, Colombia, Egypt, South Korea, Vietnam, and Portugal. Decreases were reported from unknown destinations, and China. Exports were 1,159,500 MT, a 4% decrease from the prior week and an 8% decrease from the prior 10-week average. The primary destinations were Japan, Colombia, Mexico, South Korea, Egypt, Taiwan, and Vietnam.

Weekly net soybean sales were 41,300 MT, a 32% decrease from the previous week and a 51% decrease from the 10 week average. Increases were reported from Japan, Mexico, Taiwan, Canada, and Indonesia. Decreases were reported from unknown destinations. Exports were 213,400 MT, a 79% increase from the prior week, but a 41% decrease from the prior 10-week average. Primary destinations were Mexico, Japan, South Korea, Indonesia, and Taiwan.

Weekly net wheat sales were 2,000 MT, a 98% decrease from the previous week and a 99% decrease from the prior 10-week average. Increases were reported from Brazil, Taiwan, Ghana, Congo, Nigeria, and Senegal. Decreases were reported from unknown destinations, South Korea, and Italy. Exports were 493,000 MT, a 7% decrease from the prior week and an 11% decrease from the prior 10-week average. Primary destinations were South Korea, Brazil, Taiwan, Mexico, Nigeria, and Venezuela.

6 5 14 Sales
Source: USDA Foreign Agricultural Service

6 4 14 exports
Source: USDA Foreign Agricultural Service

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

Crop Progress Report: Corn Planting Near End as Farmers Turn Focus to Soybeans

Jun 02, 2014

Corn planting closed its final week of reporting ahead of the five-year average. Northern Corn Belt states continue trying to plant corn, but more reports are suggesting that many farmers are changing unplanted corn acres to shorter maturing soybeans.

The USDA estimated 95% of corn acres were planted across the U.S. as of June 1st, a 7% increase from the prior week and 1% greater than the fiver-year average. This is the first time this year that planting progress has exceeded the five-year average. Good weather throughout all of last week allowed farmers to continue to chip away at the remaining corn acres left to plant this season. Laggard northern Corn Belt states were able to make up the most ground as Michigan, North Dakota, and Ohio planted the most ground this past week, increasing 28%, 19%, and 19% respectively. Corn emergence was reported at 60%, a 20% increase from last week and even with the five-year average. Corn conditions were reported for the first time this week. 63% of the corn was reported in "Good" or "Excellent" condition, with only 7% reported to be in "Poor" or "Very Poor" condition.

Soybean planting also took advantage of the nice weather reported last week. Soybean planting was reported at 78%, a 19% increase from last week and 8% greater than the five-year average. With many farmers having finished their corn planting for the year, most have switched their focus to their soybean crop. Farmers in Michigan, North Dakota, and Ohio were the most productive, each increasing their progress by 32% this past week. Soybean emergence was reported at 50%, a 25% increase from the prior week and 5% greater than the five-year average.

Winter wheat conditions were slightly changed from the past week. The USDA reported that wheat rated "Excellent" increased 1%, and wheat rated "Good" decreased 1%. The conditions report continues to be on par with the previous year, but farmers continue to be concerned that the harsh winter will greatly impact yields this year. Wheat headed was reported at 79%, a 9% increase from the past week and 1% greater than the five-year average. 70% of the wheat was headed, 1% ahead of the five-year average.

Corn prices closed today at $4.65, soybeans closed at $14.98, and wheat closed at $6.20. Year-to-year corn prices are down 29.1%, soybeans are down 2.2%, and wheat is down 12.6%.

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

Favorable Conditions for May Planting

Jun 02, 2014

Spring planting was delayed due to wet conditions and cooler than average temperatures throughout early May, but favorable weather conditions across the Corn Belt helped U.S. farmers catch up to historical averages. The successful planting season thus far has put downward pressure on grain prices with an outlook for bumper corn and soybean crops. The northern Corn Belt has been unable to fully recover from high amounts of precipitation in May, which may lead farmers to switch corn acres to shorter maturing soybeans.

The demand for food is growing each day as the world's population expands and diets evolve to a higher protein base, and so is the demand for protein producers. In late May, food producers JBS's Pilgrim's Pride and Tyson Foods made respectively unsolicited offers of $5.6 billion and $6.1 billion to acquire Hillshire Brands. The potential acquisition comes one year after Shuanghui International Holdings purchased U.S. based pork producer, Smithfield Foods for $7.0 billion.

Grain Prices

Corn prices declined by 10.4% throughout May and the July contract closed at $4.65 per bushel. The USDA estimated 2013/14 ending corn stocks 185 million bushels lower to 1.146 billion bushels. The average U.S. corn yield was estimated at a record breaking 165.3 bushels per acre by USDA. Ideal planting conditions throughout mid to late May helped farmers make up for early planting delays and the outlook is now very strong for the U.S. corn crop.

Soybeans traded sideways in May, closing down 1.3% at $14.93 per bushel. The USDA decreased the 2013/14 ending soybean stocks by 3.7% to 130 million bushels due to higher than expected exports, which have now already surpassed the USDA marketing year estimates. The current stocks-to-use ratio is at a record low 3.8%.

Fundamentally, the soybean market is very tight, fueled by strong demand. Chinese domestic soybean prices are at their highest premium compared to imports, which could spark new purchases. The delayed planting in the northern Corn Belt could also force farmers to switch some of their delayed acres from corn to soybeans which could subside any immediate rally.

Wheat prices decreased by 13.0% this month to $6.27 per bushel. Throughout late winter and early spring, the U.S. winter wheat crop condition continued to worsen, but the spring wheat planting has been timely and the global supply of wheat is high. Russia's 2014/15 wheat crop was estimated up 3.7% this year to between 53 million tons and 55 million tons, according to R.J. O'Brien. Exports are expected to rise 13.7% by the Russians as well. The USDA estimated 2013/14 U.S. ending wheat stocks at 583 million bushels, unchanged from the April WASDE, but the 2014/15 U.S. ending stocks were estimated at 540 million bushels, the lowest since 2007/08.

Crop Progress

A slow start to the planting season meant farmers were already well behind to start May, and for some areas, fear over whether farmers would get their crops in at all was apparent. At the start of May, 29% of corn had been planted, opposed to the five-year average of 42%. Despite continued cold and wet weather across many areas, farmers were given enough favorable weather to get their corn planted. As of the last week in May, corn planting progress had reached 88%, even with the five-year average.

Soybean planting was not as affected by the cold and wet weather in early spring due to its later planting season. As of the last USDA Crop Progress report, soybean planting and emergence were on schedule with the five-year average.

Winter wheat continues to be downgraded following a harsh winter that severely impacted the crop. 44% of the U.S. winter wheat crop is in poor or very poor condition, which is equal to in 2013. Only 58% of the crop is headed, compared to 69% at this time last year.

Farmland Values

Farmland values increased moderately over the last twelve months in the Seventh and Tenth Federal Districts, which make up the majority of the Midwest. In the Tenth District, non-irrigated farmland values increased 4.4% and irrigated farmland values increased 6.4% over the last year. In the Seventh District, farmland values increased by 1.0% over the past 12 months, although quarterly valuations declined by 1% in the first quarter of 2014.

Despite the quarter-to-quarter decline, the majority of bankers and analysts are confident that farmland values will increase or remain stable in 2014. Ernie Goss, Economics Professor at Creighton University, commented, "Recent gains in agriculture commodity prices are boosting the farm/rural economy. Stronger farm commodity and grain prices over the last several months should put a floor under farmland prices in the months ahead. I expect the index to move above growth neutral before Labor Day."

Outlook

The weather outlook is favorable for U.S. farmers to finish up planting their corn and soybean crops on time and focus on post emergence spraying in the upcoming weeks. We will closely monitor the weather in the northern Corn Belt and wait to analyze USDA estimates for planted acreages in the June 30th report. We will continue to monitor the unrest in Ukraine. Any changes in port control could greatly affect the world's corn and wheat supplies coming out of eastern Europe.

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

 

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