April 21, 2009

The US winter wheat crop saw increases last week in both the portion of the crop rated excellent and the portion rated very poor, while corn and spring wheat planting both continued their slow starts, the US Department of Agriculture said Monday (April 20).

The estimates, issued in the government's weekly crop progress report, were mostly in line with analyst expectations and reflect wet planting weather in the US Midwest and uncertainty about damages from a recent freeze in the southern Plains.

The USDA rated 43 percent of the winter wheat crop as good to excellent, up from 42 percent last week. Trade expectations for the report were mixed, and analysts noted that it could be weeks before it's clear how much of the crop was damaged by recent freezes.

While the portion of the crop rated highly increased, so did the portion of the crop that is faring poorly. The USDA estimated that 27 percent of the crop was rated poor or very poor, up from 25 percent the prior week. The increase was seen in the very poor category.

"The two-percentage-point increase in the poor and very poor category more than offsets the 1 percentage point increase in the combined good to excellent category, thus maybe creating a little supportive undertone," said Terry Reilly, analyst for Citigroup.

In Texas, the portion of the crop rated poor or very poor jumped to 74 percent from 67 percent last week. Reilly said struggles in states such as Texas and Oklahoma might reflect damage from the frost and freeze in the region a few weeks ago.

The USDA showed that 14 percent of the winter wheat crop nationally was headed, up from 9 percent last week and 7 percent at the same time last year. The average is 12 percent.

Analysts expect the crop's condition to continue to improve due in part to warmer weather and rainfall in the southern Plains.

The USDA said 6 percent of the spring wheat crop was planted as of Sunday, up from 2 percent last week but well behind the average of 21 percent. Last year the crop was 19 percent planted. The slow start is due to soggy conditions in the northern Plains.

North Dakota has yet to plant any wheat, according to the USDA. The average for this time of year is 12 percent planted, and the state had planted 14 percent last year.

More progress was seen in South Dakota, where 11 percent of the crop is planted up from 2 percent last week, the USDA said. However, the crop is still well behind the average of 50 percent planted, and is lagging behind last year's progress of 31 percent at this point in the season.

Analysts said it was still early to be too concerned about the crop.

"It's a little bit different being behind April 20 than it is two or three weeks from now," said Jason Britt, president of Central State Commodities. "You can close those gaps a lot quicker."

The slow start to the corn growing season continues, with the USDA estimating that 5 percent of the crop has been planted, up from 2 percent last week but below the average of 14 percent. Last year farmers had planted 4 percent of the crop.

The trade has expected planting progress to be at between 4 percent and 7 percent.

Planting has yet to start in Indiana, where on average 9 percent of the crop has been planted by this point, and is only 1 percent complete in Illinois, compared to that state's average of 23 percent. Neither state had showed any plantings in the previous report.

Consistent with reports of more favourable weather, planting in Iowa showed more progress, with 6 percent of the crop planted, compared to the average of 10 percent. Iowa had not planted any corn last year at this time, nor had it planted any as of last week's report.

The slow start to the growing season is widespread. Of the 18 states listed in the report, only one -- Colorado -- has exceeded its average plantings for this time of year.

A floor trader said Monday's report would be "a little supportive," but that the trade is largely focused on forecasts calling for better planting conditions during the next week.

Reilly said the numbers have already been worked into the market, but that the trade will begin to get nervous if the planting pace doesn't pick up soon.

"If we don't get a good amount of corn in the ground across the lower Midwest through this Sunday, then we would expect more acres to shift over to beans," Reilly said. "Over the next couple weeks, producers are going to be hitting that point."