Upside of Wet Spring Is Higher Prices
Published: Friday, June 21, 2019
An historic wet spring causing major delays in planting and much lower yield projections could result in a long-awaited noticeable jump in prices, especially for corn.
That's according to ex-
perts in agricultural economics at Purdue University during a Monday webinar from the West Lafayette campus.
According to the latest USDA figures, just 84 percent of corn and 64 percent of soybeans in Indiana were in the ground.
The amount of still unplanted corn and soybeans varied only somewhat in other eastern Corn Belt states like Illinois, Ohio and Wisconsin hit hardest, perhaps, by the extremely wet spring.
Nationwide, 92 percent of corn and 77 percent of soybeans were planted based on March intentions, according to USDA.
"Those numbers were really not unexpected but, nevertheless, it does indicate and confirm just how far behind we are in our planting,'' said Jim Mintert, director for the Purdue University Center for Commercial Agriculture.
Already, current unplanted
crop estimates were close to 50 percent above the previous record from 2013 since 2007 when those figures started being made available.
Chris Hurt, one of the webinar panelists from Purdue University, felt the current amount of unplanted acres of corn he estimated at 5.2 million and 3.6 million for soybeans nationwide could go higher.
He said some of the unplanted acreage hasn't been tallied, with some farmers still undecided whether to try and finish planting especially with more rain
in at least the short-term forecasts.
Another reason not to plant late is the 85 percent coverage afforded by the federal crop insurance program and the current payout based on prices above current market average, at least for soybeans.
"Those numbers you could easily come up with prevented planted for corn in the seven and a half to eight million acre range if not higher,'' said Michael Langemeier, associate director for the Purdue University Center for Commercial Agriculture.
Hurt said corn prices could go up by as much as 20 percent or more depending on yields, which could be about 164 bushel per acre depending on weather during the growing season, or if the growing season gets extended from late-arriving frost.
Originally, USDA projected corn yields at 176 bushels per acre.
"There's just a couple of factors here that could really make corn prices shoot up,'' Langemeier said.
"It creates some upside potential,'' Mintert said.
Hurt said the potential isn't quite there for such a significant price jump with soybeans, though.
That's because late- planted soybeans have more ability to rebound during the growing season and the current market glut caused primarily by China not purchasing U.S. soybeans in response to the ongoing trade war.
But, Hurt said soybean prices could approach $9 per bushel or a bit higher based on current unplanted acre estimated being projected to grow in the coming weeks.
"We still have a long ways to go to get us back to $10 beans,'' he said.
Prices for soybeans could go much higher given current yield projections if the trade war would come to an unexpected near future end.
"You tighten supply and people get worried about availability they're willing to pay and often willing to pay a lot if there's a very tight shortness as we're having with corn right now,'' Hurt said.
He said also encouraging is long struggling corn prices closing Monday at $4.55 per bushel.
"We now have exceeded all of the high prices on nearby corn futures back through 2015,'' he said.
Hurt felt there's a strong possibility per bushel corn prices could reach $5.25 but not the levels during the price boom prior to 2014.
Despite the market optimism, his advice to farmers was to go ahead and sell if the returns meet their needs.
"If the price today works for you. If it meets your farm management goals, there's nothing wrong with meeting your goals. Keep that in mind, but it looks like there's upside potential,'' he said.
Return to Top of Page