By: Dan Hueber –
US farmers made surprisingly solid planting progress this past week and compared to the historical average for corn, sit right at the normal pace of 31%. Of course, this year the USDA may want to publish two planting categories; corn planted and then corn in need of replanting. Anyone who has been watching the news stories of rivers flowing over the flood stage level and fields under water, particularly the areas of the central Midwest where some of the plantings had been most rapid, recognize that the real pace will be something less than published. I do believe it is worth noting that the four largest corn producing states by ranking are Iowa, Illinois, Nebraska, and Minnesota. Combined last year they produced 8.24 billion bushels which represent 54.4% of the total crop. Furthermore, nationwide there are only six states that recorded yields above 190 bpa, of which three of these show up in this list, Iowa, Illinois and Minnesota and only one of these came in north of 200 bpa, namely Iowa. In case you were curious, the other states in this club were Arizona at 215 bpa, Oregon at 230 and Washington at 235. Combined, these three produced .26% of the total crop. Regardless if we again focus on the big four, we see that Iowa is currently 28% planted compared with 55% last year and an average of 35%. Illinois has 63% in ground (first planting) versus 63% last year and an average of 47%. Nebraska stands at 34% planted compared with 25% last year and 30% average, and finally, Minnesota at 12% planted compared with 57% last year and 36% average. If I am computing this correctly, this would say that in the aggregate, these four states are 1.6% behind average but 15% behind last year. While we all recognize that early planting does not assure above average yields but I believe there would be few that would argue is does provide a setup for such potential. Enough yield-fear mongering for corn this week. Bean planting came in at 10% planted which compares with an average and last year pace of 7%. Note as well that spring wheat planted came through at 31%, which compares with a year ago at 52% and the average of 46%.
The bean market continues to perform relatively well in the face of average planting progress here and more than ample global supplies. While no one has specifically referenced an issue, but take note that workers throughout Brazil conducted a general strike last Friday to protest government corruption and the austerity measures that have been proposed there. While this may not amount to anything more than a one-day event but I would not count on such and market participants could be building in a little precautionary risk premium.
From the corporate side of the agricultural world, fortunes are looking up for ADM as they have reported a net profit of $339 million for the first quarter. This is a 47% boost over the same period last year and was primarily attributed to increased volume of oilseeds processing.
It would appear that we have a little re-balancing going on between the corn and bean markets this morning, but overall, we appear to be sitting with a slightly positive short-term bias. How much we can build on the current optimism is in question and weather dependent, but I would suggest that the bears are squirming in their seats and it would not require much to scare them to the sidelines.