Evening Report (VIP) -- April 9, 2013

April 9, 2013 09:45 AM
 

WHAT'S CONSIDERED 'LATE?'... Most of the Midwest still has soil temps below the 54-degree (four inches deep) threshold needed for seed germination. This is causing some anxiety about a "late" start to planting season and raises questions about "what's considered late?" Crop consultant Dr. Michael Cordonnier details the following threshold dates for corn planting in the central Corn Belt:

  • If corn is planted after May 10 to May 12, then lower yields may occur.
  • If corn is planted between May 15 and May 20, then generally the yield declines 0.5 bu. per acre a day for each day planting is delayed.
  • If corn is planted between May 20 and May 25, the yield declines 1.0 bu. per acre a day for each day planting is delayed.
  • If corn is planted between May 25 and May 31, the yield declines 1.5 bu. per acre a day for each day planting is delayed.
  • If corn planting is delayed until June 1 or later, the yield declines 2.0 bu. per acre a day for each day planting is delayed and the loses accelerate if the planting is delayed further into the month of June.
     

Even given these considerations, Dr. Cordonnier says it's not a guarantee that late-planted corn will yield less than earlier planted corn. "It all depends on the summer weather of course. Late-planted corn can do just fine if the summer weather cooperates and we have a late fall," he reminds. "Conversely, early planted corn may not be the best yielding as exemplified by last year when the corn was planted at a record pace, but the nationwide corn yield fell to 123 bu. per acre." As for current conditions, Dr. Cordonnier feels the benefits of rains across the Corn Belt outweigh the negatives of planting delays at this point.

 

 

NWS 6-10 DAY POINTS TO PLANTING DELAYS... The National Weather Service forecast for April 15-19 calls for above-normal precip across the Corn Belt, with the best chance of heavier-than-norma rains in the eastern Corn Belt. The forecast also calls for below-normal temps. The forecast for cooler- and wetter-than-usual conditions don't bode well for a "normal" start to the Midwest planting season. Click here to view the maps.

 

 

 

WHAT'S CONSIDERED 'LATE?'... Most of the Midwest still has soil temps below the 54-degree (four inches deep) threshold needed for seed germination. This is causing some anxiety about a "late" start to planting season and raises questions about "what's considered late?" Crop consultant Dr. Michael Cordonnier details the following threshold dates for corn planting in the central Corn Belt:

  • If corn is planted after May 10 to May 12, then lower yields may occur.
  • If corn is planted between May 15 and May 20, then generally the yield declines 0.5 bu. per acre a day for each day planting is delayed.
  • If corn is planted between May 20 and May 25, the yield declines 1.0 bu. per acre a day for each day planting is delayed.
  • If corn is planted between May 25 and May 31, the yield declines 1.5 bu. per acre a day for each day planting is delayed.
  • If corn planting is delayed until June 1 or later, the yield declines 2.0 bu. per acre a day for each day planting is delayed and the loses accelerate if the planting is delayed further into the month of June.
     

Even given these considerations, Dr. Cordonnier says it's not a guarantee that late-planted corn will yield less than earlier planted corn. "It all depends on the summer weather of course. Late-planted corn can do just fine if the summer weather cooperates and we have a late fall," he reminds. "Conversely, early planted corn may not be the best yielding as exemplified by last year when the corn was planted at a record pace, but the nationwide corn yield fell to 123 bu. per acre." As for current conditions, Dr. Cordonnier feels the benefits of rains across the Corn Belt outweigh the negatives of planting delays at this point.

 

 

BEEF AND PORK EXPORT TONNAGE DECLINED IN FEBRUARY... The U.S. Meat Export Federation (USMEF) says trade barriers and other obstacles emerged in February to slow U.S. beef and pork exports in terms of volume. While beef exports managed a 5% increase in value ($430 million) over February 2012, volume of 86,367 MT reflected a slight drop from year-ago. February pork exports of 178,510 MT were down 5% from year-ago and the value of those exports ($494.6 million) was 6% below year-ago.

The USMEF says while the long-awaited change in beef access to Japan helped to boost sales to the country in February, trade barriers and economic obstacles contributed to the overall decline in tonnage compared to year-ago. It notes the ractopamine impasse with Russia has had a dramatic impact on beef exports and pork demand in South Korea continues to be hampered by sluggish consumer spending. Click here for more details.

 

FARMLAND OUT-PERFORMS STOCK MARKET... Generally, investing in farmland outperforms investing in the stock market, but, like most things, timing is everything. An update of research conducted by Iowa State University's Dr. Mike Duffy again shows that farmland tends to out-perform the S&P Index over the long haul.

His research covered three time periods - 1960, in 1970 and 1980. Purchases made in 1960 and 1970 out-performed the S&P significantly. But as you'd guess, purchases made in 1980 (one year before the previous peak and then collapse in farmland values) did not compare favorably with the stock market.

The runup to the 1980s collapse in farmland values was preceded by several years of rising farmland values and declining percentage returns as cash rents failed to keep pace with the rise in farmland values. While Duffy points to the positive record farmland investing has versus the stock market, he cautions that the recent return to rising farmland values and declining percentage returns is a potential warning sign for investors. Click here to read "Your Precious Land" by LandOwner Editor Mike Walsten.

 

2012 CROP INSURANCE INDEMNITIES CONTINUE TO RISE... Indemnities for 2012 crops hit $16.161 billion as of April 8, with the overall loss ratio edging up to 1.46, according to data from the Risk Management Agency (RMA). Corn remains the dominant payout for 2012 at $10.781 billion, which moved the loss ratio on corn to 2.50 (for each dollar of premiums paid in, $2.50 has been paid out). The 2012 payouts are record-setting so far, and this marks the first year since 2002 where the loss ratio for the program as a whole has been above 1.0, though it falls falls short of the 3.27 mark registered for the 1993 crop. That pattern also holds for corn as the loss ratio following 2002 when it reached 1.38 hasn’t been higher than 0.81 in 2008 and was as low as 0.35 in 2009. While 2011-crop payouts hit a record, the loss ratio for the program was at 0.90.

The loss ratio and payouts on corn are likely to rise soon as payouts under the Group Risk Income Protection (GRIP) policies are expected to roll out, with indications that corn payouts could be sizable under this insurance option. So far, only $12 million has been paid out under GRIP with no amounts yet registered for corn.

 

CROP INSURANCE INDUSTRY RELEASES 'CROP INSURANCE: JUST THE FACTS'... As crop insurers prepare for the farm bill and funding deliberations in the future, National Crop Insurance Services (NCIS) has released a detailed question-and-answer resource laying out the facts about crop insurance and dispelling some of the most common arguments against crop insurance put forth by its critics. "Crop insurance is the single most important risk management tool available to farmers today, and the public needs to understand why it is so valuable, how it benefits taxpayers and how it helps maintain a stable agriculture for the benefit of consumers," says Tom Zacharias, president of NCIS. He notes that farmers spent more than $4.1 billion out of their own pockets last year purchasing crop insurance and that it is the risk management tool of the future, but there is a lot of misinformation and misrepresentation about the program. Learn more.

 

GAS PRICES PREDICTED TO AVERAGE $3.63 DURING SUMMER DRIVING SEASON... The Energy Information Administration (EIA) expects regular gasoline prices to average $3.63 per gallon during the April-September summer driving season. Gas prices are forecast to fall from an average of $3.69 in May to $3.57 in September. For 2013, EIA expects gas prices to average $3.56 and decline to an average of $3.39 in 2014, down from $3.63 in 2012.

 

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