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CME: Corn Plantings 'Off and Stumbling'

18 April 2013

US - To say we are “off and running” with this year’s corn planting would be somewhat of an overstatement, we think. Maybe “off and stumbling” would be a better description, writes Steve Meyer and Len Steiner.

That is our take of the first planting progress numbers from USDA’s weekly Crop Progress report that was released on Monday. Yes, it is very early in the process but for a year in which every kernel is going to be counted carefully, this is not the kind of beginning we had hoped for. That statement has nothing to do with the people involved — unless of course one includes Mother Nature in that group.

First, let’s remember that any planting progress number this year is going to pale in comparison to those of one year ago. The 16% of acres planted by mid-April 2012 was record high. The only year that gets close to that figure was in 2005 when 14% of the acres were planted by week 16 — the week number that corresponds to this week.

Second, having only 2% of the acres planted by week 16 is in no way a death knell for corn yields. That was the same figure for planting progress as at this time in 2008 and 2009. The 2008 national average yield of 153.9 bushels per acre was 3 bushels above the 1960- 2010 trend line yield and just 0.5 bushels below the 1996-2010 “biotech years” trend yield of 154.4. 2009, of course is the year of the reigning record-high national average yield of 164.7 bushels per acre.

Bottom line: Things can still turn out very good — or very bad. It is indeed a long, long while until the combines roll this fall! But Monday’s numbers were lower than the 6% expected by analysts and the 7% average for 2008-2012. Texas corn planting was right on its 5-year average of 56%. Of the other states that indicated acres have been planted, only Pennsylvania got within 1% of its 5-year
average. The mid-South states that a) had indicated intentions to plant significantly more corn acres and b) we and others had hoped would raise large crops that would help get corn users through to the end of this crop year are lagging their normal paces rather badly. Tennessee
had planted only 11% of its acres (5-yr average of 27%) as of Monday. 

Only 7% of Kentucky acres (5-yr average of 18%) were in the ground. The same is true for Kansas (3% planted vs. 10% 5-yr average) and Missouri (8% vs. 17%).  One positive note for feed supplies is that grain sorghum planting (24%) is slightly ahead of both last year (22%) and the 5-yr average (22%). Winter wheat condition was steady for the week but remains poor relative to last year with only 36% (vs. 64% in 2012) of the acres rated as good or excellent and 31% (vs. 11% in 2012) rated as poor or very poor. Summer wheat supplies are not likely, at this point, to be much help in “getting to” the new corn crop.

The importance of this year’s crops is underscored by cost and revenue projections for cattle feeders and hog producers. The top chart at right comes from the Livestock Marketing Information
Center in Denver and shows a VERY BLEAK picture for cattle feeders for the remainder of 2013. While breakeven costs are projected tl decline to near $130/cwt. live by the end of the year, losses will still be large given fed cattle futures prices of $120, $124 and $125 for the remainder of 2013. Further, those losses come on top of many $200 per head losses during the past two years. Readers should realize that the LMIC model included full yardage and feed markup costs but the profit picture is still bleak even for yard-owned cattle for which cash costs may be a bit lower.

The pictures is somewhat better for pork producers, especially as one looks into 2014. Current corn and soybean meal futures prices suggest a substantial drop in breakeven costs by the end of 2013 and a move to below $80/cwt. carcass by June 2014. Those would be the lowest average costs since early 2011 and position hog producers for profits according to current lean hogs futures prices. While hog prices this spring and summer have been disappointing to say the least, it is
also clear from this chart that the culprit in this loss episode is still COSTS. Projected 2013 losses, as of Friday’s close, of $14.38/head would make this the 6th worst year since 1990 for U.S. hog producers.


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