Analysts: The Weather Story in Corn Isn't Over This Summer

US Farm Report 06/08/19 RT 1
Crop conditions are so variable this year, analysts say we won't have an accurate grasp of the impact on both yield and abandonment until later this summer. ( Farm Journal )

The historic spring is rattling the markets. September corn futures rallied 80 cents since mid-May after the markets realized there were serious issues getting the crop planted this year.

Even with major planting progress being made by farmers last year, planting is still historically behind. So, just how historic could 2019 be?

“This is double the geographic area of 1993, but this blows all the statisticians out of the water” said Bill Beidermann of AgMarket.Net on U.S. Farm Report this weekend. “Statistically, we just started STAX in 2013.”

USDA, acknowledging the adverse weather could have an impact on yield, made a small adjustment to yield in this week’s supply and demand report, dropping its estimate to 166 bushels per. However, the yield estimate is still at a decent level, with the estimate pegging this year’s corn crop as the sixth best on record. Biedermann thinks this week’s adjustment to the yield adjustment is just a start.

“The big question is, ‘Is supply going up or is supply going down?’” Biedermann. “We have no idea yet of how bad it’s going to be. It’s going to take all summer to really access this.”

Mike North of Commodity Risk Management Group lives in the southwest portion of Wisconsin. He said the area had a five-day window of dry weather, which was fruitful for farmers needing to plant. The northeastern portion of the state is a much different story, as he said in some cases, farmers are still waiting to get into the field. He said that’s the story playing out across the country.

“The conditions are variable, and I think that’s what makes this very frustrating,” said North. “There are places where crops went in well, some on time, some late. There are some areas where the crop went in poorly, and some areas where the crop isn’t going in at all. And as Bill pointed out, we aren’t going to be able to wrap our heads around this until we get far enough along to know how many acres we have in the field, what the stands look like, is the yield potential anywhere close to what you planned or is it way off the mark?”

He said adding to the uncertainty and variables this year are areas that saw massive nitrogen loss from all the rain, and some even seeing drowned out spots – or even entire fields – from monsoon rains.

“It’s not over, and we have a lot of time until we figure out that side of the story,” said North.

When will the market have an accurate grasp of how many acres will go unplanted this year? Biedermann thinks that factor will be figured in soon. 

“I think the private industry, we’re going to have an 80 percent confidence level by the end of next week,” he said. “Right now, AgMarket.Net, we’re at 8.66 million acres lost.”

The 8.66 million figure was calculated last weekend when Biedermann appeared on the show. Thanks to a period of drier weather and more field work getting done, AgMarket.Net has since dropped that estimate to 7.5 million.

“That (prevent plant estimate) doesn’t account for stuff that was planted and drowned out or pounded by rain and not impacted, that’s a yield issue, and that’s going to take until late summer,” said North.

It’s not only abandonment that could become a story, but impact on yield. Both analysts say that will be a late summer story.

“Because it got planted, we aren’t going to count those as lost acres,” said North. “Are we going to count them as abandonment? No, because we are still going to harvest the field, but inside that field will take the yield down.”

With the wet spring and massive flooding, could this be a 1993 scenario playing out? Both analysts say 1993 has entered into the market chatter lately.

“In 1993, when we had the floods, we went from a 92% harvested ratio at planted, all the way down to 86%,” said Biedermann.  “That’s huge.”

Even the abandonment side of the equation is going to take time.

“What degree of abandonment are we going to see, and I think that’s why this all take some time. But as we go forward in  time, we’re going to have to balance that discussion of what’s lost on the production side with what’s lost on the demand side, and I really think that’s the next discussion in our market.”

Both analysts talked about demand destruction on this weekend’s show.