Should the Corn Market Stop Worrying about Planting Delays?
May 13, 2014
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Corn planting progressed quickly last week with a 30% jump in acreage planted. This was at the high end of market expectations and is not only 33% ahead of last year, but also 1% ahead of the 5-year average. Should the market stop worrying about planting delays at this point?
At first glance the lasts crop progress report would suggest that planting delay concerns and fears that we will not get corn planted should be behind us. After all we are quite a bit further along this year then we were last year and we planted more corn acres last year. But, as we dig into the state by state breakdown the picture changes a bit. Some states made quick progress last week and are now ahead of the 5-year average while other states continue to have big issues.
The I States (Illinois, Iowa, Indiana) are now on par with or ahead of the 5-year average. Illinois is 78% planted compared to 53% on average and 16% last year. Iowa is 70% planted compared to 70% on average and 14 % last year. Indiana is 61% planted compared to 45% on average and 27% last year.
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However, the northern states continue to lag behind. Minnesota, the 4th largest acreage by state is 31% planted compared to 62% on average. Wisconsin and Michigan are both 20% planted compared to 41% on average. North Dakota is by far faring the worst at only 3% planted compared to 33% on average and 16% last year. This is where we could run into a big problem. We are expected to plant 18.25 million acres in these 4 states, 3 million acres in North Dakota alone. And, these are areas with a shorter growing season meaning that the window of opportunity to plant is smaller. So, major progress needs to be made in the next 2 weeks or some of those acres may get switched to another crop or prevent planted.
At the moment the forecast looks dry enough for some field work to get done in the next 7-10 days but cool temperatures could make drying out a slow process. So we will expect to see a jump in planting progress next week but how much will be key. It seems likely that some acres will be lost, especially in North Dakota, but the big question will be how much.
Some of the potentially lost acreage in the far northern reaches of the corn belt may be offset by more acreage in the states that are ahead of the 5-year average. Planting progress has been good any corn planted could keep rolling. There is also the idea that there is still 1.5 to 2 million acres that the USDA did not account for on the Planting Intentions report and that a good chunk of that could go to corn. But, will this be enough to offset acres lost in the north?
In a year where we are expecting to plant less corn every acre makes a difference. Less acreage in lower yielding areas could help the national average yield but it doesn't totally compensate for lost acres. Also, with beginning stock for next year shrinking to 1.15 million bushels (from what was once thought to be 2 billion bushels) there will be a lot of pressure to have a near perfect corn crop this year to hit the current USDA projections.
With corn planting now 1% ahead of the 5-year average after being 13% behind last week the market seems to feel like there is less to be concerned about. However the northern states continue to struggle to get corn planted and this could still have a large impact on corn production and ending stocks this year. The jump in corn planting is certainly a step in the right direction, but we are not out of the woods yet.
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July Corn Daily chart:
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July Wheat Daily chart:
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