THE April 28 numbers from the U.S. Department of Agriculture's weekly "Crop Progress" report showed a larger increase in acres planted compared to prior weeks, but several thunderstorms last week continued to slow the pace of planting progress, creating concern about how much will actually get planted and whether yields will be affected.
According to USDA, 19% of corn had been reported as planted, compared to only 6% the week before. While the pace is still considered slow, some states were able to make some headway during the week ending April 28.
For example, the percentage of corn acres planted in Illinois rose considerably from the week before, from 5% to 32%. Nebraska increased its corn acres from 4% to 20% planted, and Missouri increased from 26% to 47%.
Though minimal, states like Michigan, Ohio and Minnesota went from having no considerable acres planted to 1%, 4% and 4%, respectively, before wet conditions returned.
The corn market continues to be influenced by two major fundamental factors, according to University of Illinois agricultural economist Darrel Good. One, he said, is the ongoing high rate of consumption, particularly the magnitude of export sales.
"Export commitments as of April 17 accounted for 97% of USDA's projection of exports for the (marketing) year that has just over 19 weeks remaining," Good noted. "The major concern is that 38% of those sales have not yet been shipped and could be subject to cancellation or rolling into the next marketing year."
The second factor is the slow start to the planting season. Referring to the April 20 "Crop Progress" report, Good said only 6% of acreage in the 18 major corn-producing states was reported as planted. While that number increased in the April 28 report, last week's round of rain forced farmers out of the fields once again.
"Delayed corn planting could have implications for the magnitude of acreage that gets planted and for the average U.S. yield," Good said. "Over the years, both topics have been analyzed and discussed extensively so that there may be few new insights to offer. Still, there is some obligation to discuss the topic again in the context of the current situation."
For acreage, Good said the concern is that a late corn planting season could result in a reduction in corn acreage in favor of crops that do not need to be planted quite as early.
"In most cases, that would mean a switch of intended corn acres to soybeans or other oilseeds. With extreme delays, prevented planting also becomes an issue. The switch away from corn is based on expectations that corn yields could be adversely impacted by late planting, with late planting generally defined by agronomic research that correlates planting date to yield," he said.
According to Good, the yield response to planting date is not linear, as the yield penalty is small over a wide range of planting dates and then generally becomes greater the later the planting dates are. "For major corn-producing states, the yield penalty tends to become steeper for planting dates sometime after mid-May."
The effect of late planting is generally related to the percent of the crop planted after a certain date, as shown in USDA's weekly "Crop Progress," Good explained.
"Based on our analysis of yield response in the Corn Belt, we have defined late planting as occurring after May 30 before 1986 and after May 20 since 1986," he said.
According to Good, from 1996 through 2013, an average of 16% of corn was planted after May 20 (in a range of 4% to 37%). In seven of those years, 20% or more of the crop was planted late. Planted acreage was less than March intentions in six of those seven years. The difference was extremely small — at 32,000-691,000 acres — in five of those six years, he said. Acreage was 1.9 million less than March intentions in 2013.
"Oddly, acreage exceeded March intentions by 1.4 million acres in 2009, the year with the second-most acreage (29%) planted after May 20," he said.
Prevented corn plantings were reported at 1.9 million acres in 2009 and 3.6 million acres in 2013.
In general, Good said the acreage response to late corn planting since 1996 has been smaller than anticipated, with meaningful differences (but in opposite directions) in only two years.
Additionally, he pointed out that more corn acres might be planted after the date for optimum yields if corn prices increase enough relative to other crops to offset the potential yield penalty.
"Compared to the ratio on March 31, when USDA released the 'Prospective Plantings' report, the ratio of November 2014 soybean futures to December 2014 corn futures now favors soybeans more than corn. It appears that the market is not yet concerned about the loss of corn acreage this year," he said.
Good noted that data from past years suggest that summer weather, not timeliness of planting, is the major determinant of the average U.S. corn yield.
"With over three weeks until corn planting is considered late by our definition, it is difficult to anticipate the potential impact of delayed planting on the magnitude of planted acreage," Good said. "Without a more favorable corn price response, however, it would not be surprising for acreage to fall short of intentions, particularly in northern growing areas. Yield prospects will be up in the air until later in the season."
As for the weather outlook, Planalytics reported last week that temperatures will be cooler than normal for the beginning of May, but the first weekend will be warmer and closer to normal, especially in the Plains and western Midwest.
"Mainly dry conditions will hold through about May 6 before renewed storminess returns" by May 7-8, the firm reported.
The weather report suggested that accelerated corn planting is expected from the Plains to the Ohio Valley during the first six days of May, which will allow planters to hit the fields (Map).
Rain in the Midwest had the largest impact on the markets last week, especially the corn markets.
Corn was stable at the start of last week, but by last Tuesday, prices began rising as storms hit many of the major corn-producing states.
Last Monday, nearby corn closed at $5.0775/bu., but by Tuesday, the market rallied to $5.1575/bu., the highest for a lead contract in eight months. Profit-taking and an improving weather outlook, however, sent prices lower on Wednesday and Thursday. May corn contracts settled at $5.0325/bu. last Thursday.
"Should planting delays continue and jeopardize this year's harvest, old-crop stocks become more valuable," explained Bob Burgdorfer, senior editor for Farm Futures.
The effect of weather on the 2014 planting season, combined with tighter stocks for corn and soybeans, will really come into play over the next couple of months as the growing season begins to unfold.
Soybean markets were also higher at the beginning of last week due to a few different factors but took a significant hit last Thursday as prices plunged below $15.00/bu.
"A lack of fresh (soybean order) cancellations from China, some bullish export news and past news of a strong domestic crush supported soybeans," Burgdorfer said last Monday.
Tight supplies continued to lend support to the soybean markets. This, combined with strong soybean meal demand, held nearby prices higher for the first part of the week. New-crop prices, on the other hand, were lower as the trade waited for the first USDA soybean planting report.
Last Thursday told a completely different story for the markets. Arlan Suderman, senior market analyst at Water Street Solutions, said a combination of things caused the lower prices.
"The July soybean chart put a bearish double-top on Tuesday, and traders observed heavy put option buying on Wednesday following the double-top," Suderman explained.
Additionally, he said Thursday brought a sluggish weekly soybean export total and some deliveries against May soybean meal contracts.
"All these factors came together to unleash fund selling in a market that had been leaning hard to the bullish side," he said.
Suderman said losses accelerated as prices dropped through areas of chart support.
Nearby soybean prices closed at $15.0825/bu. last Monday and had climbed to $15.3075/bu. by Wednesday. May soybean contracts plummeted on Thursday, however, closing at $14.735/bu.