Are We Going to get Corn Planted This Year?
May 08, 2014
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As of May 4th the USDA NASS is reporting 29% of the corn crop planted. This is 13% behind the five-year average of 42% and has been the driver of stronger corn prices. The concern is that planting delays could translate into lower planted acreage for corn and loss of yield potential. So, the question is - will we get corn planted in time?
At face value the planting progress number is not overly concerning. Yes, we are 13% behind the five-year average but we are 18% ahead of last year and we managed to plant 95.2 million acres of corn last year compared to the 91.7 million acres that the USDA estimated on the Prospective Plantings report. So, we have more corn planted this year and less to plant. The problem this year however, is where we are behind.
Many key states are at or near the average planting pace. Illinois for example it at 43% compared to 41% on average. Indiana is 20% planted compared to 34% on average and Nebraska is 44% planted compared to 45% on average. And, many states that were behind have had good opportunities to plant this week. So, it is possible that we are setting up for a big jump in planting progress on the next crop progress report. At first glance it seems like corn will get planted in a timely fashion this year. However, there is cause for concern.
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The 5 states that are the farthest behind are mostly in the far Northern areas of the corn belt. Minnesota is expected to plant 8.6 million acres of corn this year, the 4th most acres per state, and they are currently only 8% planted compared to 46% on average. Wisconsin, the 8th most acres per state, is only 2% planted compared to 23% on average. Ohio is only 9% planted compared to 32% on average. Michigan is 3% planted compared to 23% on average. North Dakota, which we are already expecting a 1 million acre shift from corn to soybeans, is 0% planted compared to 19% on average. These 5 states account for almost 22 million acres or 24% of overall planted acreage.
To make matters worse the weather forecast is not very friendly in the next 10 days. It looks likely that many of the far northern areas, especially in North Dakota will not get a chance to plant corn until after May 15th. This is concerning because the northern areas of the corn belt have shorter growing seasons and windows of opportunity to plant. This could have a negative impact on yield for acres that do get planted and/or could cause producers to switch more corn acres to other crops.
This would suggest that some of the intended corn acres could be lost if weather does not get better in the short term. However, it will not likely be a huge loss. We would think that Minnesota and Ohio will get most if not all of their intended acreage in with only small losses in acres in northern parts of Michigan and Wisconsin. North Dakota however could be a different story. We currently think that as much as 800,000 acres in North Dakota could get switched to other crops or Prevent Planted if the weather forecast does not get better. Overall we would think that corn may loose 1.2-1.4 million acres as a whole. Again, there is still a chance weather gets better and all of the corn acres get in, but the forecast is not currently very optimistic.
This may not be a dire situation however. First, many of the acres that corn may loose are not the highest yield producing areas. Although this does not make up for lost acreage it could mean we have a better shot and a high national average yield. Secondly, many analysts believe there are more acres out there to get planted and that corn acreage may be increasing in some states. This may not make up for acres lost in the north, but could soften the blow. And finally, later planted years do not always have a negative effect on yields or acreage. In 2009 we were only 33% planted as of May 4th. That year we ended up planting more corn acres than were expected in the Prospective Plantings report and we ended up with a record national average yield that still stands. We had a moderate El Nino season starting in late June in 2009.
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July Corn Daily chart:
July Soybeans Daily chart:
July Wheat Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
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