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It’s corn planting season: let the rollercoaster begin
Story Date: 5/8/2013
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Source: Rita Jane Gabbett, MEATINGPLACE, 5/8/13
It happens every year. It’s too dry. It’s too wet. It’s too early. It’s too late. After last year’s unusually early planting season due to warm, dry conditions, this spring’s cool, rainy weather across the Midwest has delayed plantings significantly.
USDA reported Monday that by May 5 farmers had planted just 12 percent on the U.S. corn crop. That is the second smallest percentage planted at this time of year in the last 34 years and the lowest since 1984.
The impact on this year’s corn crop, however, is debatable.
“The slow pace of plantings may reduce the number of planted acres but it does not necessarily imply lower yields, and yields will be key going forward,” according the The Daily Livestock Report published by Steve Meyer and Len Steiner.
The DLR analysts noted corn yields in 1984 ended up 2 percent above trend even as planted acres were about 1.6 percent smaller than farmers had intended. With farmers this year indicating they intend to plant more than 97 million acres, a 2 million acre reduction may not impact final output much if yields end up anywhere close to the 164 bushels per acre trend, the analysts predicted.
J.P.Morgan analyst Ken Goldman warned, however, that this year’s near-record late planting legitimately threatens yields. While there is only a 42 percent correlation between the amount of corn planted now and the ultimate corn yield, he said yields often drop when corn plantings are very late, which they are this year.
“In fact, each of the last five times acres planted were 25 percent or under by this week, the corn yield ended up at 113.5 bushels to the acre or lower,” Goldman wrote in a note to investors.
While soybeans are an equally important feed grain for livestock producers, the focus is on corn because soybeans are less affected by late planting and are an overall more forgiving crop to weather vagaries.
Futures traders will ride the rollercoaster many times between now and harvest in the fall. Corn futures rose last week on cold, wet weather, but on Monday corn for delivery in December fell by 15 cents per bushel to close at $5.38 on the Chicago Board of Trade. The reason? The weather forecasts predicted drier, warmer weather.
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