A Bearish Forecast

February 22, 2017 02:00 AM
A Bearish Forecast

Experts agree odds favor another year of above-trendline yields

Weather experts agree farmers are likely to see delayed planting followed by higher-than-trendline yields this year. That’s bearish news for a market desperate for a price increase. 

“Right now, it looks like a weak El Niño is trying to form, meaning slightly higher yields than last year and unlikely recovery of corn and soybean prices,” says Elwynn Taylor, a professor of ag meteorology at Iowa State University. 

El Niño could also mean planting challenges in some parts of the country, says Joe D’Aleo, chief forecaster for New York-based WeatherBELL Analytics. Early planting could be out of the question for much of the country. 

“Fields might not be too wet, but cold temperatures could cause a delay,” D’Aleo says.

Take note of the significant fog events that popped up throughout the Midwest in January, Taylor says. “Tradition says that if you have extensive Midwest fog in the winter, it increases the chances of having wet conditions at planting time,” he says. 

The theory is mostly folklore, he says, but it’s partially based in reality. Winter fog in the Midwest results from warm, moist air that flows north from the Gulf of Mexico. If seasonal winds change their prevailing direction for the summer pattern and a southerly flow occurs, it could bring moisture earlier in the season. 

Conversely, farmers “naturally feel overdue for drought to return,” Taylor acknowledges. The 2012 drought marked the first significant event of its kind in the Midwest since 1988, and because the market is full of grain, some producers are hopeful a weather shift will occur. A Midwest drought this summer is possible but not likely, Taylor says. 

If El Niño fully develops and sticks around through the summer months, farmers can expect increased yields. Yet record yields will only matter if farmers can get the crop out of the ground, and some models D’Aleo has reviewed early this year show wetter-than-normal weather during harvest, too. 

Is 90 Million the Magic Number? 

Producers and grain marketers alike are anxiously awaiting USDA’s Planting Intentions report on March 31. Will soybeans reach the rumored 90-million-acre mark? Maybe. 

“I think it’s a long shot,” says Chip Flory, host of “Market Rally Radio,” part of the Farm Journal Media family. “We’re working closer to that 87 million to 87.5 million range.” 

To get to 90 million acres of soybeans, farmers would have to grow the grain on pretty marginal acres, Flory says. It isn’t out of the question. “Look at all of the hard red winter wheat acres we lost. Those guys grew soybeans in 2016 like they never thought they could, and now they think: ‘Hey, we’ve got the program in place. We’re going to do it again,’” he says. At the same time, “2016 might have been a once-in-a-lifetime chance for Kansas farmers to see Iowa-like soybean yields.”

The 90-million-acre figure is a doable one because of the profitability of soybeans, acknowledges Mark Gold of Top Third Ag Marketing. 

“I think we’re going to see a lot of corn acres that don’t necessarily want to go [into soybeans], but banks may make them,” Gold says. “Bankers we work with are telling their farmers that they have to take a hard look at why they’re growing corn this year.”


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