Will we get 92 million acres of corn planted? Maybe, maybe not, maybe more.
One thing is clear; it will not be a season where the corn crop goes in early. However, it was wet in April in both 2008 and 2009, and we got the corn crop in, matching March intentions. However, we have 6 million more acres to get planted in 2011 than in 2008 and 2009.
U.S. farmers have planted as much as 40 percent of the corn crop in one week, and often plant over 30 percent. Can that happen again, sure, could it not, sure?
While later plantings do not mean poor yields, as shown by 2008 and 2009, it does lower the odds of good yields. While as of this writing I would still expect the 92 million acres of corn will be planted. One thing is assured; the price volatility will remain as the weather market gets in full swing.
We need to discuss a couple of questions. Are old crop prices high enough to ration demand? And are new crop prices high enough to assure the acres will get planted the later the planting season gets?
The USDA incorporated the March mid-year corn stocks report into their April 8 Supply/Demand updates for 2010-11. As you may remember, corn disappearance the first half of the year was higher than expected. The USDA lowered projected feed use by 50 million bushels, despite the higher feed disappearance than expected and raised projected corn used for ethanol by a like amount.
No change in projected use
This led to no change in the projected total use and ending stocks. At first glance one may ask how that can be. The answer is, they feel the market will not let the ending stocks to use ration go under 5 percent, which means the price will go high enough to ration second half use to a much lower number than first half use.
Are old crop prices high enough to get the job done? It is not clear for a couple of reasons. One, we are not sure what price it will take, we are in a position we have not been in before. However, present use rates make one wonder; use hasn't slowed down enough in the almost two months since the data was collected.
Livestock harvest weights are still way above last year. But that makes some sense, given livestock prices are way above last year, but I am still a bit puzzled. However, after we get through the large group of cattle on feed now, a lot less feeder cattle will be available to be placed.
And there should be a few less hogs being fed this summer.
Corn used week to week this past month for ethanol has declined, and is below the weekly forecast needed to meet the updated USDA 2010-11 corn used for ethanol projection. However, at this time, there is still a positive margin despite the high corn prices.
Part of the weekly slowdown can be explained because this is the time of year they slow down to make repairs. So we need more time to see if the cutbacks persist.
The world gets complicated. The higher the gas price relative to ethanol the more sense it makes to add ethanol, but the high gas prices are cutting back gas use, which means less gas used, so less gas to mix ethanol in.
The later the planting season gets, the higher the price it will take to get the corn planted, unless soybean prices tank. But the later the corn planting season gets, the later the soybean planting season gets. And while that may gain you more soybean acres, it may cut into yields.
Are old and new crop corn prices high enough to ration demand and get the corn planted? On the one hand we don't know, on the other hand I am not convinced they are.
Consider spreading remaining old crop corn pricing between now and mid-July. You probably should consider taking some advantage of these great new crop price bids, but consider not getting too carried away.