Tuesday, May 10, 2011

Late Spring 2011 US Agricultural Outlook

US Crop Progress: Farmers Make Huge Strides In Corn Planting
Farmers made huge strides planting corn in the western Midwest last week after cold, wet weather delayed earlier field work, according to government data.

The crop was 40% planted as of Sunday, up from 13% a week earlier, the U.S. Department of Agriculture said in a weekly crop progress report. That beat expectations that plantings would be about 30% complete but still lagged the average of 59% for that time of year.

Warmer, drier weather in the western Corn Belt allowed farmers to make significant progress. In Iowa, the country's top corn-producing state, farmers had sown 69% of the crop as of Sunday, up from 8% a week earlier and on par with the five-year average. Farmers had planted 57% of the crop in Nebraska, up from 15% a week earlier and behind the average of 62%.

"We made some historic strides in Iowa. You planted 61% of the crop in just a few days," said Don Roose, president of U.S. Commodities, an Iowa-based brokerage firm.

Yet, farmers in the eastern Midwest continued to struggle with poor weather. Indiana's crop was just 4% planted as of Sunday, below the average of 49% for that time of year, and Ohio's crop was 2% planted, below the average of 54%, according to the USDA.

The lack of progress in the eastern Midwest will likely keep the corn market on edge, as traders worry that planting delays will reduce the size of next fall's harvest, Roose said. Traders will continue to watch weather forecasts closely for signs of improving weather.

Development of the crop also still lags behind normal. Overall, 7% of the country's corn had emerged as of Sunday, up from 5% a week earlier and below the average of 21% for that time of year, according to the USDA.

Farmers need to harvest a large crop next fall to replenish inventories that are expected to drop to a 15-year low this year. Concerns about strong demand draining supplies pushed corn futures to record highs last month.

"It truly is the eastern Corn Belt vs. the western Corn Belt," Roose said.

Farmers are less concerned about planting soybeans because that crop can be sown later in the spring without risking yield losses. Corn tends to produce lower yields in many areas if it is planted past the middle of May.

Soybeans were 7% planted as of Sunday, below the average of 17% for that time of year. In Iowa, 10% of the crop was in the ground, behind the average of 18% for that time of year. The USDA did not report nationwide data for soybeans last week.

Spring wheat planting also advanced after a slow start due to cold, wet weather in the northern Plains. Planting was 22% complete as of Sunday, up from 10% a week earlier and down from the average of 61%.

In North Dakota, the top producer of spring wheat, farmers had planted 7% of the crop, up from 1% last week and below the average of 51%. More progress was made in South Dakota, where planting was 59% complete, up from 22% a week earlier and below the average of 85%.

Spring wheat, prized for its high protein content, is milled into flour used to make bread and blended with other, lower-quality varieties of wheat. Users of the grain worry farmers will sow fewer acres of spring wheat than previously expected due to the planting delays.

The condition of winter wheat, meanwhile, continued to deteriorate due to a severe drought in the central and southern Plains. Overall, winter wheat was rated 33% good to excellent, down one percentage point from last week and from 66% a year ago. In Kansas, the country's top winter-wheat-producing state, the good-to-excellent rating dropped to 18% from 21% last week. Kansas and other Plains states grow hard red winter wheat, which is milled into flour used to make bread.

The bottom line: More progress in planting is a bearish leaning sign for corn as uncertainty about crop levels is being reduced. Selloff potential is limited by the steep losses seen yesterday and last week. But conditions for soybeans and wheat remain below normal for this time of year.

Source: CME News for Tomorrow
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