When it rains it pours

by Ron Sterk
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A couple promising days early last week were followed by several inches of snow and more rain across parts of the Midwest, further limiting already delayed field work in sharp contrast to what transpired in 2012. While last year’s early spring weather was nearly ideal for farmers, it’s also well known how the growing season ended — in one of the worst droughts of the last half century. It is hoped by traders and forecast by meteorologists that this year’s wet, cold start will soon evolve into favorable conditions for an expected record large corn crop and strong spring wheat, soybean and soft red winter wheat crops.

“Next week will have great weather for every acre of the Midwest,” David Salmon, owner of Weather Derivatives, a Belton, Mo., agricultural and energy consulting service, said on May 2. He added that it will take a few days for soils to dry after last week’s “record-setting crappy weather,” and that wetter conditions may return after mid-May.

A year ago corn in the 18 largest producing states was 49% planted and 14% emerged by April 28, spring wheat in the six major states was 70% planted and 3% emerged, and sugar beets in the four major states were 94% in the ground. As of April 28 this year, planting stood at 5% for corn, 12% for spring wheat and 17% for sugar beets, according to the U.S. Department of Agriculture’s latest Crop Progress report. The 18-state aggregate number for corn emerged was 2% compared with 14% last year and for spring wheat the six-state emerged number was 3% versus 26%. Soybean planting at the end of April last year was 12% completed in the 18 major states; the U.S.D.A. did not report an 18-state soybean aggregate last week because of the lack of progress.

A number of analysts have compared this year to the wet, cold start of 2011, but so far the 2013 crop progress numbers are even worse than two years ago.

Sugar beet acreage, forecast at 1.2 million acres based on the U.S.D.A.’s 2013 Prospective Plantings report, is small relative to corn, soybeans and wheat. But sugar beets so far have shown the greatest contrast between this year and last. Sugar beets account for about 36% of the total refined sugar supply in the United States (28% from sugar cane, 22% from imports and 14% carryover estimated for 2012-13), but more than 50% of the beets are grown in two states — Minnesota and North Dakota. As of May 2, no beets had been planted in either state, compared with 86% in Minnesota by April 28, 2012, (41% as the five-year average for the date) and 84% in North Dakota (38% average).

Beet growers are expected to begin planting in the Red River Valley this week, and Mr. Salmon expects strong progress once soils dry. Agronomists suggest sugar beet yields decline 1.5 tons per acre for each week planted after May 1. While most of the crop may be planted in a single week under optimum conditions, traders said planting will be two to three weeks late this year.

Ironically, that may turn into a positive for sugar as the industry currently is engulfed by a large oversupply, in part due to last year’s record high yields, that has sent bulk refined sugar prices to five-year lows. Although most beet processors have enough old crop sugar to make up for potentially lower production this year, some have “withdrawn” from the market until they have a better idea of plantings.

But corn remains “king” in the United States, commanding the largest share of crop acreage with planting intentions of 97.3 million acres this year, and often dictating both acreage and prices of soybeans, wheat and other crops. Most analysts earlier forecast a return to near normal, or trend, yields in 2013, based on ideas there won’t be another major drought. With plantings expected to be the largest since 1936, some were forecasting a 2013 corn crop around 14.5 billon bus (similar to last year’s early forecasts), well above 2012 production of 10.78 billion bus and topping the prior record of 13.09 billion bus in 2009.

With the optimum planting “window” for corn closing around mid-May across much of the prime growing area of the Midwest, attention now turns to the extent yields will be trimmed, and how many farmers will switch to soybeans, which can be planted later than corn.

The story may be written this week.

As with sugar beets, the corn picture may not be as dreary as the weather has suggested, or as the market reacted with limit 40c-a-bu gains in corn futures prices on April 29.

“Farmers will get into their fields,” Mr. Salmon said. “Corn planting will be solidly good through the middle of the month.” Soil temperatures have sufficiently warmed for germination once seed is in the ground, he added.

Farmers also may make huge strides in a short time in planting corn, although significant progress likely won’t show up until the May 20 Crop Progress report, when Mr. Salmon expects the crop will be 40% to 50% planted, compared with 96% by that date last year and around 80% as the five-year average.

Mr. Salmon sees the impact on yields as minimal, assuming most of the crop gets planted in the next couple of weeks. There may be some yield loss in southern parts of the Midwest, such as Missouri and Kentucky, he said, because late planting will push pollination into a hotter part of the summer, but the key growing areas from Nebraska through Ohio should see little negative impact on yields.

Despite the seemingly drastic negative weather for spring planting, Mr. Salmon suggested the corn crop still was on track to top 14 billion bus, although the highest forecasts probably have been lost.

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