The recent hot-button issue getting a lot of attention is the apparent record low pace of corn plantings. Indeed, the 9 percent planting pace of corn is news worthy, but it is not a new record low. The corn planting pace in 1983 and 1993 was also 9 percent in the 18 states which make up 92 percent of the total volume of corn.
The initial report released by the USDA for 1983 indicates end stocks to use of corn were 26 percent., This number fell to 8.8 percent the following January, as stated in the USDA’s key annual report. Counter-intuitively, the season average farm price during the same period of time fell 9 percent.
In the first official forecast of 1993, the USDA indicated end stocks to use at 24.9 percent with a season average farm price of $2.60 per bushel. By the time the following USDA January annual report was released, the end stocks to use had fallen to a level of 10.4 percent with a season average farm price falling to a level of $2.19 per bushel.
In both 1983 and 1993, the poor pace of spring corn planting partially impacted both years’ end stocks to use. However, the season average farm price fell by 19.1 percent in 1983 and 17.8 percent in 1993.
Let’s now discuss an actual low planting pace…that of this years spring what crop. As of April 24, the six states which accounted for 99 percent of the 2010 total wheat produced had 6 percent of their spring wheat crop planted. At no time, dating as far back as 1981, has the pace of spring wheat planting been 6 percent. The previous weekly planting pace low was 13% in 1997. The initial July 1997 USDA report projected end stocks to use of 36 percent with a season average farm price of $3.66 per bushel. When the USDA released its annual report the following January, end stocks to use were reported at 48 percent and the season average farm price for other spring wheat was $3.44.
Even though the end stocks to use were reduced in corn, due in part to a slow planting pace, the season average farm price was less in the January annual report. The planting pace of spring wheat this year is at a record low. However, if history is to repeat itself, there is no guarantee of higher season average farm prices by the time the USDA releases is January annual report.
MGEX welcomes your questions.........Joe Victor
Information used to compile this update is from publicly available sources. Nothing contained herein should be construed as a trading recommendation of MGEX, its employee or its members. For informational purposes only.