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Excessive moisture in the central U.S. the past month put rivers out of their banks and flooded fields -- placing 2008 plantings prospects in major flux, ahead of the U.S. Department of Agriculture's (USDA) annual acreage report on June 30. After a cool, wet spring that delayed corn planting to its third-slowest pace since 1993, many Midwest producers will be facing some hard choices in how to best utilize their land this year.
If you cannot view the U.S. Corn Progress chart,
go here.
If you cannot view the U.S. Weather Map, go here.
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Earlier this year, producers reported their intentions to plant 86 million corn acres to the USDA. However, the relative price strength of corn vs. wheat, other feedgrains and soybeans this spring prompted country indications that 2008 corn seedings could rise by 2 million from their earlier intentions. Getting a good handle on this year's U.S. plantings will be difficult, particularly in the heavily affected states of Iowa (with 8% of corn acres and 7% of soybean acres still flooded), Missouri, Illinois, Indiana and Wisconsin. However, we are expecting next week's report to show a 1.3 million acre decline in U.S. corn plantings to 84.7 million, with drops in Iowa (500,000), Missouri
(400,000) and Illinois (300,000) -- but increases in the plains and the eastern U.S. will partially compensate for the central Midwest's flooding.
If you cannot view the Regional U.S. Corn Planting chart, go here.
If you cannot view the U.S. Corn: June vs March Acres chart,
go here.
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This year's excessive moisture in the Midwest will increase soybean seeding by 600,000 acres to 75.4 million. But the slow development of this year's Eastern Corn Belt soft red wheat crop (two to three weeks behind), because of cool, wet weather likely will eliminate some double-crop bean seedings from this spring's intentions. The sharp decline of spring wheat prices of more than 50% from last winter's highs also likely prompted planting switches into corn, beans and sunflowers in the Northern Plains -- resulting in spring wheat seedings of 14 million, down 330,000 from the March intentions. Durum acres will likely be unchanged from their
intentions of 2.63 million.
If you cannot view the U.S. Regional Soybeans Planting chart,
go here.
If you cannot view the U.S. Beans: June vs March Acres chart, go here.
If you cannot view the U.S. Spring Wheat Area & Yield chart,
go here.
Because of the recent highly unusual weather, the USDA announced it will try to resurvey Iowa, Illinois, Minnesota, Missouri, Wisconsin and Indiana producers, concerning their expected harvested acres this week (ahead of June 30 report). Given the current field activity, we probably won't get a clear idea of this year's corn and soybeans plantings and our possible harvestable acres until the USDA completes a wider survey during July -- and releases its results on the August 12 crop report. Given this uncertainty, this year's growing-season yield concerns and the quarterly stocks numbers released on June 30 will likely have a higher impact on corn and soybean prices than in many years.
If you cannot view the Major U.S. Planting Levels chart,
go here.
The risk of loss in trading commodity futures and options can be substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
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About the Author
Jerry Gidel is the president of Midland Research, Inc. and a research trading analyst for RJO Futures. In April 2003, he joined North America Risk Management Services, Inc. (NARMS) as an associate, specializing in the cash and futures grain markets.
With more than 30 years of experience in commodity analysis and brokerage, Jerry focuses on providing risk management services to livestock producers, grain producers, and commercial operations. He formed Midland Research in 1981 as a consulting firm working from the agricultural trading floor at the Chicago Board of Trade.
He has vast experience as a vice president and senior grain analyst at Dean Witter Reynolds, and as a grain market research analyst with several other leading commodity brokerage firms, including Paine Webber, G.H. Miller, LIT.
He earned an undergraduate degree in Ag business and a graduate degree in Ag economics from Iowa Statue University. He utilizes both fundamental and technical analysis in his market evaluation and brokerage services. Jerry and other professional RJO Futures advisers may be reached at 800-441-1616. | |
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