There are four very significant and obvious impacts of a slow, late spring on the grain markets. The first of these is that late seeding tends to discourage corn planting and could reduce the total size of the corn crop. The second influence is that later planting tends to correlate to later harvest dates, which stretches out the period of time that the old crop stocks have to last, and can create tightness in the supply. The third consideration is that later planted crops, or crops that get “mudded-in” tend to suffer lower yields, and finally, delayed springs tend to result in larger than forecast soybean plantings as cropping programs shift to plants better adapted to a later seeded date.
To be certain, it is colder than normal for this time of year right across the North American continent. Overnight lows on April 18 reached 19 degrees Fahrenheit, (minus 7 Celsius), as far south as central Texas. These temperatures are causing no shortage of anxiety in the winter wheat business and are certainly no good at all for soybeans or corn.
If we do get into a situation where corn seeding acreage declines, it will begin in the marginal corn areas where it takes a full-length growing season in order to produce a good crop. In the context of the North American corn supply, this means that we can expect to see the first declines on corn acreage in areas like North Dakota and Minnesota. If we do start to see an adjustment in corn plantings it will occur in the marginal areas first and will likely never be significant enough to impact the heart of the U.S. corn belt.
In some ways, the commodities markets have already started to play on the concern that planting intentions are starting to shift. Between April 15 and 19 we’ve seen the price spread between the old crop corn futures and the new crop corn futures start to tighten in – the strength in the new crop corn market being a direct result of potential to shrink 2013 acres. There are early signals that the opposite activity is occurring in the soybeans market as new crop drops away from the tightening old crop market. The signs are present if you are looking for them, but they have yet to become significant.
The reality of the situation at this point is that our spring is not late. While the concerns about a delayed planting season and the resulting impact on crop selection and yield are legitimate, there is a difference between seeing a cloud on the horizon, and getting in out of the rain. In mid-April, we’re still just sizing up the cloud. The speed at which modern farmers can sow a crop is impressive. There’s not a very big percentage of the forecasted 97 million acre 2013 corn crop that is going to be planted with a Massey 65 and a 4-row plate planter. Ten good days in the first half of May will look after sowing the whole thing.
There is an old saying in the market to “Buy the rumor and sell the fact.” Our delayed spring won’t be a fact for at least another three weeks.