KANSAS CITY — Farmers across the Midwest anxiously awaited improved weather conditions last week that would allow them to plant corn and other crops. For many it was the second consecutive year of delayed spring planting.
"Nationwide 5% of the 2009 corn crop was planted, 1 point ahead of last year but 9 points, or slightly more than a week, behind the five-year average," the U.S. Department of Agriculture said in its Weekly Weather and Crop Bulletin for the seven days ended April 18.
A year ago conditions went from wet to wetter, ending with massive floods in eastern Iowa, Minnesota and surrounding states that sent corn and soybean prices to record highs in late June and early July. Although some effects lingered, conditions rapidly improved and U.S. corn production and yield per acre still were the second highest on record. By December corn prices had dropped more than 50% from mid-year highs.
For soybeans, which tend to be planted later than corn and instead of corn when it gets too late, acreage last year was record high and production was the fourth largest ever. Prices also dropped about 50% from record highs in late June.
It would appear the market made too much out of spring planting delays for corn last year. Farmers have pushed preferred planting dates earlier over the last couple of decades to get the most ideal weather for pollination before hot, dry summer weather and for the filling of kernels as the summer progresses. But at the same time corn hybrids have improved and many appear tolerant of planting dates and weather, although there is little doubt earlier is better for corn.
Farmers typically only need a few dry days to plant massive areas. Minimum tillage farming has reduced the amount of time farmers need to prepare fields. As much as a quarter of a state’s corn may be seeded in a single week because of today’s large equipment and farming practices.
Old crop corn futures prices this year have struggled to breech $4 a bu and last week were trading around $3.75 for the May contract and $3.90 for September.
Maybe the market learned not to make so much out of early spring weather. Or, more likely, other factors are influencing grain markets, especially corn, more than weather at the current time.
Since last spring, the world economy has been in a tailspin. The U.S. ethanol industry, which uses about 30% of annual corn production, is struggling, export sales for the marketing year through April 16 are 35% behind the previous year’s pace and carryover stocks on Sept. 1 are expected to be up about 76 million bus from 2008. At one time there was concern about corn supplies this year as 2008-09 started (Sept. 1, 2008) with 622 million bus less than the previous year due mainly to much lower corn production in 2008. But a drop of 588 million bus in feed and residual use, due to sharply lower livestock and poultry feeding, and a 736-million-bu decline in projected exports, quickly allowed stocks to build. Even a gain of 674 million bus from a year ago for corn used in the production of ethanol was trimmed from earlier projections.
A similar case may be made for spring wheat grown mainly in the Upper Midwest region of the United States and the Canadian Prairie provinces directly to the north. Flooding along the Red river, which flows north into Canada, and its tributaries, along with cool, wet weather across the growing region, has the market worried about spring wheat planting. The U.S.D.A. said only 6% of spring wheat was planted as of April 19, well behind 21% as the 2004-08 average for the date.
Prices at the Minneapolis Grain Exchange on April 22 shot as much as 20c a bu higher on those concerns, and led other wheat futures higher.
But carryover stocks of hard red spring wheat on June 1, the beginning of the 2009-10 marketing year, are projected at 173 million bus, up 105 million bus, or 154%, from a year ago due mainly to a 100-million-bu decline in exports in 2008-09.
Weather will continue to be a primary market-moving factor for grains and oilseeds through the spring and the reproductive growing period of the summer, but this year, the influence appears to be reduced by outside factors. And as Midwest temperatures shot into the 80s and even 90s last week, quickly warming soil temperatures, especially in the western part of the Corn Belt, the fear that "it’s too late to plant corn" should be allayed or greatly reduced as farmers rush into their fields.
This article can also be found in the digital edition of Food Business News, April 28, 2009, starting on Page 27. Click