April 4, 2012

 

US crop sowings advance except for corn

 

 

US farmers, aided by warm temperatures, got spring plantings off to a quick start except for one crop, corn, for which seedings were expected to have got off to a record pace.

 

Growers were well ahead of the average pace in sowing the likes of cotton, barley and rice, besides oats for which nearly half of farmers' intended acreage is already planted, the USDA said in the first of the 2012 series of weekly crop progress reports.

 

In spring wheat, farmers had sown 8% of the crop, four times the average as of the start of April, with growers in North Dakota particularly quick of the mark, having one-quarter of their crop seeded compared with an average of 2%.

 

Seeding was spurred by warmer temperatures, which lifted state soil temperatures to 46-62 degrees Fahrenheit, from 31-33 degrees Fahrenheit a year ago.

 

However, growers had only 3% of their corn crop in the ground, only one percentage point ahead of the average rate, and well below market forecasts.

 

Traders had expected a figure of 5-7%, according to broker US Commodities, a start-of-April record believing that growers would attempt both to exploit the benign spring sowing weather, and attempt as early harvest as possible to achieve higher prices.

 

In Chicago, corn futures for September were on Tuesday trading at US$5.71 a bushel, a premium of US$0.26 a bushel to the December contract.

 

However, early sowers risk invalidating insurance, which sets earliest planting dates by area and crop, and will not cover prematurely-seeded crop damaged by, for instance, a late frost.

 

Even in Illinois, one state where early sowings, at 5% completed, were unusually quick, the USDA noted that "most [farmers] are waiting on the 'go date' for their area to arrive" before starting.

 

Later seeding of corn increases the chance that growers will switch area from the grain to soy, which thanks to price rises over the last few weeks, has become an increasingly competitive choice.

 

Indeed, there is already talk of growers changing, with Paul Georgy at broker Allendale saying that "we are getting calls from producers who are switching from corn to soy.

 

"We are hearing from seed salesmen who are getting corn seed returned and soybeans seed purchases."

 

At Market 1, Mike Mawdsley said: "We have already heard of some switching of corn to soy because of the change in price."

 

In Chicago, new crop November soy were, in showing a 0.1% decline, slightly underperforming flat December corn as of 10:00 GMT, reversing the recent trend between the two contracts.

 

The crop progress report also revealed a further improvement in the condition of winter wheat, which has continued to recover from a weak start, amid drought in important growing states in the southern Plains.

 

In Kansas, the biggest wheat-producing state, the proportion of the crop rated "good" or "excellent" edged 1 point higher to 60%, the highest figure since the 2010 harvest.

 

The Kansas crop is also "one of the most advanced in recent history", with 61% of it at the jointed stage, three times the usual proportion by now, USDA officials noted.

 

This could provide a boon to farmers, with an early harvest increasing the chances of allowing a follow-on crop, such as soy, but does render the crop more vulnerable to frost damage.

 

"Talk of threatening cold temperatures has dissipated for now," Brian Henry at Benson Quinn Commodities said.

 

"But given the advanced stage of the winter wheat crop, the trade will be watching closely for any additional talk of cold temperature entering this region."