Mid Week Comments
USDA Reports, Spring Planting - 03/30/21
Its finally spring! Weather is warming, snow is diminishing, and its
time to get back to planting and growing a crop. With spring also comes
the annual USDA acreage and stocks reports, with acreage intended by far
the most important factor as we look ahead to the new year. This is the
time when the focus moves from South American (SAM) production to the
US/northern hemisphere. With the US the world's largest exporter of all
crops, it becomes a important factor for the market. It looks like the
US will have an early planting year, as weather is warming and drying up
which will allow the corn belt to get going on planting early this year.
We could have most of the corn planted in April!!!
Weather is calling for below normal precip and above normal temps over
most of the US the next 2 weeks. Specifically, it will be driest in the
northwest 75% of the corn belt, and more normal precip in the southeast
25% the next 7 days, and then the 8-14 day has below normal precip in the
northwest half of the corn belt, and normal in the southeast half. Temps
will be mostly above normal the entire 14 day period in the corn belt -
with only the southeast seeing some normal temps in the next 7 days as
the heat moves in from west to east.
South America (SAM) is seeing mostly below normal precip in the southern
75%, but normal in the northern 25% (the Amazon area). Temps will be
mostly below normal in Brazil and above normal in Argentina - not good
weather for the late, second crop corn.
Finally after nearly a week, the Suez Canal is cleared - Wow!!! Takes
only 1 ship to block an entire important port. I'm sure all the
terrorists have taken notice, unfortunately. What if the ship was loaded
Wednesday, March 31 we get the much anticipated USDA March 31 acreage and
stocks report. There likely will be some surprises, but the difficult
thing is predicting the unpredictable USDA - what will they get right
this time, and what will they get wrong??? Farmers are planting more of
everything - wheat, corn, and soybeans but mostly corn and soybeans.
With wheat prices sagging recently Pro Ag will bet USDA will miss some of
the shifting from HRS wheat to corn/soys. With early planting likely in
the coming few weeks of warm/dry weather, corn acreage might be higher
than USDA guesses this time. Private estimates are showing higher corn
and soybean acreage than the Feb. USDA estimates as well. Its likely
acreage will be above the Feb. USDA numbers as prices have remained high
another 1.5 months since that report.
Bottom line is planting is likely to be early given the forecast, and
early planting means higher corn, soybean, and HRS wheat yields. Also,
more acreage planted (less PP) and possibly more corn and less soybeans
with early seeding. Also, the weather improved tremendously since mid-
Jan in both the US and SAM, so the supply outlook has improved which is
why prices are now drifting lower. I expect more of the same - UNLESS a
drought kicks in after planting. If 2-5% more is planted, but yields are
5-10% less - supplies are still down. The one constant so far is demand
remains strong (China).
Ray can be reached at firstname.lastname@example.org.
Ray is President of Progressive Ag Marketing, Inc., a top Ranked
marketing firm in the country. See http://www.progressiveag.com for
rankings and link to data from Top Producer Magazine and Agweb.com.
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