CME: Crop plantings off to a strong start

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click image to zoom With spring weather (some would say summer weather) across the Midwest, crop plantings are off to a strong start. But as the chart to the right shows, even with all the news stories of early plantings, today we are still near the levels we saw back in 2010. USDA reported that for week ending April 15, US farmers had planted about 17% of the corn crop. This compares to 5% planted for the same period last year and 5% for the five year average 2007-11. Trade reports indicate that market participants were anticipating plantings to be somewhere between 17—20% so the survey results will likely could be construed as neutral to maybe slightly bullish by futures markets. Market participants in the grain complex will be following closely the day to day changes in weather and the impact this could have on both field work as well as on the crop that was planted much earlier than normal and could be subjected to any late freezes. Much of the advanced plantings has taken place in the Eastern Corn Belt (ECB). Illinois plantings currently stand at 41%, compared to just 8% a year ago and 6% for the five year average. Indiana plantings are at 24% compared to a mere 2% last week. Western Corn Belt plantings, which includes big corn producing states such as Iowa, are not as far along. Iowa plantings are currently pegged at just 5% compared to 1% last year and 3% for the five year average.

For livestock producers, the early start of field work and lack of any weather pressures to this point certainly are good news. Also positive from a livestock producer point of view is the good progress in the wheat complex, which should bring more wheat into the feed complex later this summer. For the last two weeks we have been hearing about the great shape of the wheat crop and the fact that the crop was heading much earlier than normal. The latest USDA report appears to support the anecdotal reports. For the week ending April 15, 29% of the US winter wheat crop was reported to be heading. This compares to 11% last year and just 8% for the five year average. This is tremendous progress which could bring a wheat crop to market much earlier than before and could help boost supplies IF there is no weather event in the next few weeks. A crop that is heading this early is vulnerable to a late April freeze but should this not occur, the chances of a bigger than expected supply become more realistic. At this point, the market is pegging new crop corn at a $5.30/bushel for December. The debate in the trade is whether the market has properly accounted for the risk of weather disruptions or if the fact that extra long positions among both producers and funds makes the market vulnerable to a downward correction should weather continue to be a non-event. At this point, the crop progress is welcome news for livestock producers but there is plenty that can happen between now and July that could affect the crop. USDA will issue its first official forecast of the corn crop on May 10., a forecast that will likely account both for the early plantings, the expanded acres and a baseline yield, likely doubling ending stocks of 2011/12.



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