Next week is a big week for corn planting as USDA's prevented planting deadline approaches in many areas, says Jerry Gulke. The trade is resigned that acres won't reach 92.2 million acres, but how close we get is the big question.
By most accounts, planting progress this past week was significant in many areas of the Corn Belt. It just may be too little too late, says Jerry Gulke, president of The Gulke Group.
When Monday’s USDA Crop Progress and Conditions Report, the trade largely expects planting progress to be between 80%-85% complete, Gulke says. In a year when every acre is needed, any loss of acreage is significant, but even losing a small portion of that remaining 15%-20% could have major market impacts, as evidenced by the nearly 80 cent increase for the July contract this week. (Click here for the July '10 corn chart.)
"What I’ll look for is that 15% of 92 million acres is 10-12 million acres. Is 10% of that not going to get planted? What are the odds that all of that will get planted and where is it? If it’s in North Dakota, we’re very near that May 25 date when they can take prevented planting. In the Eastern Corn Belt, will they stay wet into June 5th?"
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Considering the risk involved in today’s crop production with high input prices and volatile markets, the 60%-70% revenue assurance from prevented planting is very attractive to farmers. That may factor into the final soybean acres this year.
The problems persist beyond the Dakotas, as well. In North Dakota, intended acres according to USDA’s March 31 Planting Intentions Report were 2.5 million total acres. In Illinois, for example, Gulke points out that as of last week there we still more than 4 million acres that were not planted as of last Monday.
Meanwhile, new crop soybean prices increased nearly cents this week as some areas are switching soybean acres to corn. (Click here for the November '10 soybean chart.)
"Linn Group came out with their acres and they have Iowa planting an additional 900,000 acres of corn and taking that right out beans. From that 92.2 million acres the government had in March, Linn Group is down to 89.5. They think we’re going to add acres in the Western Corn Belt, but lose it in the east."