Low prices, wetness question upbeat corn sowings hopes

(Agrimoney) – A double whammy of low prices and wet weather is undermining buoyant expectations for US corn sowings, raising the potential for supplies of the grain to fall further than expected next season.

A strong early pace of sowings had provoked a consensus that US corn area would not fall as far as 1.4m-acre drop to 89.2m acres that the US Department of Agriculture is forecasting.

However, the assumption is increasingly coming under pressure as renewed rains have cut back plantings in some states, such as Kansas and Missouri, to well below the average pace – at a time when the sowings window is closing and depressed corn prices are reducing the incentive to plant.

Later corn seedings risk hitting the heats and dryness sensitive pollination period at the height of summer.

Richard Feltes at Chicago broker RJ O’Brien flagged “trader chatter that 2015 corn area may not be fully realised”, in terms of meeting USDA expectations.

At Zaner, Ted Seifried said that “low prices this year have some questioning the incentive” to get the last of the crop seeded.

“Heavy rains in some of the furthest behind areas in Missouri and Kansas are not helping corn get planted either.”

One week to go

The doubt over seedings is gaining extra significance as the US Department of Agriculture will not publish more data on corn sowings in its weekly crop progress reports so late in the planting season to give the market guidance.

This week’s report showed 5% of corn yet to sow, equivalent to about 4.5m acres.

There is time for farmers to plant the last area, but not much with “next week the last week for planting corn”, in many areas.

And when farmers in the inland state of North Dakota, at least, facing prices of $3.15 a bushel, it “does not look enough for them to take the trouble” to complete sowings, Mr Zaner said.

“Significant impact”

He forecast that US corn sowings, which he had seen beating the USDA forecast by some 600,000 acres, would instead fall behind, coming in at 88.6m-88.8m acres.

Ahead of the data, Mr Zaner forecast that US corn sowings, which he had seen beating the USDA forecast by some 600,000 acres, would instead fall behind, coming in at 88.6m-88.8m acres.

The extent of any shortfall carries significance for prices as it could raise doubts over ideas that US corn stocks will fall only slightly over 2015-16, and remain in comfortable territory.

Traders foresee that next week’s USDA Wasde report will peg stocks at the close of next season at 1.779bn bushels, down from a 2014-15 figure seen nudged higher to 1.859bn bushels.

“With the USDA estimating the smallest corn crop since 2010 any loss of corn acreage could have a significant impact on the balance sheet,” he said.

Mr Feltes said that “unrealised corn [planting] intentions could be the bigger story going forward, given expectations for a trimming of corn stocks in 2015-16”.

Midwest gains

However Richard Nelson of Illinois-based brokers Allendale struck a more upbeat note, stressing that “corn acres are not going to decline” from the USDA estimates.

Mr Nelson said that although Southern US farmers may be liable to switch to soybeans, which have a slightly later seedings window, or to leave fields unplanted, this has been more than made up for by the gains in key Midwestern states.

The “very dramatic” start to the season saw corn win out at the expense of soybeans in the race for dirt, leading to corn plantings well in excess of US estimates in key areas.

Mr Nelson was also upbeat on the outlook for per-hectare yields.

“We see a tremendous crops that will at a minimum meet USDA’s trend yield estimates,” said Mr Nelson.

June prospects

Allendale told Agrimoney.com in April that USDA corn sowings figures have a history of rising between the March-end Prospective Plantings briefing and a report on actual plantings released in late June.

In 11 of the past 15 years, the June figure has beaten the March estimate, by an average of 1.1m acres in those years, the broker says.