Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Time is Running Out
U.S. farmers now have 82% of the ’09 corn crop planted, 4% behind last year and 11% behind the five-year average. Major problems persist in Illinois, Indiana, and North Dakota where wet conditions and more rain received recently has further delayed planting. A recent industry estimate suggests that 12 million acres of the 85 million acres USDA projected for ’09 corn plantings remained unseeded as of May 24. Depending upon geographic location, the ’09 corn crop will need to be planted no later than June 10.
The commodities market has been contemplating a 1 to 3 million acre shift from corn to soybeans. The actual size of an acreage shift remains to be seen, however, it now appears that an acreage shift will occur and is likely to be much larger than previously anticipated. Bear in mind that trader’s would need to see a larger acreage shift than the 1 to 3 million already anticipated before we’d expect to see much reflection in new crop corn and soybean prices.
U.S. soybean plantings, at 48% are also well behind the average of 65%. In follow-up to last week’s mention of spring wheat crop planting delays, spring wheat was 79% planted compared to the 5-year average of 95% for the week ending May 24. This further suggests that additional soybean acres could also come from other places besides corn.
Market Strategy
The cut-off date for Corn Belt farmers to opt for prevented planting insurance on corn was May 25. Although some producers in extremely wet areas may have opted for the prevented planting option, most are likely to opt for planting soybeans. The new crop Nov ’09 soybean futures contract closed at $10.50 per bushel on Wednesday, May 27. Every 1 million acres of soybeans planted could result in a 40 million bushel (+ or -) production increase for U.S. soybeans. A few million acre increase would not likely have a significant impact on the new crop soybean price due to the reduction that is forecast for the Southern Hemisphere crop and the ferocious appetite that China has for U.S. soybeans. A larger acreage shift would likely be good news for new crop corn and bad news for new crop soybean prices. It is likely to be advisable to advance new crop corn and soybean sales for ’09 delivery ahead of learning the actual U.S. acreage count. Actual planted acres won’t be reported until the end of June. Depending upon location, new crop corn and soybean basis bids are currently even to 45 under, respectively. At-the-money put option premiums are currently bidding at 52’7 for corn ($4.50 strike price) and 108’2 for soybeans ($10.40 strike price).
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.