- Yesterday’s crop condition and plantings report showed another week of substantial progress despite what may have at first appeared to be less than optimal conditions. The progress is a further tribute to farmers and their tenacity in the face of difficulties. Spring wheat plantings at 79% are only 7 points behind average, corn plantings jumped from 71% last week to 86% completed this week, a mere 4% behind average whilst soybeans reached 44% (from 24% last week) some way behind the 61% average figure. Interesting is the fact that the corn emerged figure is 54% vs. 67% average, this may confound the harbingers of doom who are calling for significant yield reductions due to late planting. It would appear that conditions have been warm and moist enough to allow rapid germination of the late planted crop.
- Key to the total corn acreage this season will be the ability of farmers to continue planting and there are question marks over this at present. The date most commonly referred to as an “absolute” for final corn planting is 10 June, and it is expected that any corn acres not in the ground by then will be switched to soybeans. The weather forecast for the coming 10 to 14 days is not fantastic right now and there are doubts over the final 10% of corn plantings. This potential is providing some support to corn and we will be watching with interest in the coming days.
- The hard red wheat condition has not improved, continued deterioration throughout the spring has been the pattern. The poor/very poor crop proportion has increased by 1% since last week reaching 42% whilst the good/excellent rating remains at 31%. The end of May crop condition figures represent the fourth worst condition on record for the top 7 producing states with only 2006, 1996 and 1989 showing worse condition. It has to be borne in ind that the drought affected area is likely to show a decline in harvested area as abandonment rises. Unprofitable acres will either be ploughed in and replanted with an alternate crop or grazed for fodder by cattle. Early indications are that the 2013 harvested area is likely to experience some 20% due to the drought hit High Plains and notably western Texas.
- According to Hamburg based Oil World, Brazil’s pace of soybean exports is reaching record levels with May anticipated to hit 8.7 million mt as a lower end estimate, and possibly top out at a massive 9.0 million mt. This figure compares with a mere 7.3 million mt last year! Despite the slow start to the season caused by logistical issues it is expected that over 50% of the season total has been exported.
- According to Russia’s SovEcon the 2013 wheat crop is forecast at 50 million mt, up from 38 million mt last year. Their suggested export figure is 19 million mt compared with 11 million mt last year and an earlier forecast of 16 million mt. Our view is slightly more guarded given the potential for government purchases of some 5 million mt to replenish stocks which were released earlier in the season to curb escalating domestic prices.
- The ongoing cold coupled with wetter than average conditions across western Europe leave concern over the wheat crop, not in terms of quantity but over quality. The potential for a larger feed wheat crop is beginning to look very real and, if the global corn crop meets its initial early potential, prices will likely come under some serious pressure.