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"Continuation of generally dry conditions in eastern and
southeastern growing areas is of most concern," said Darrel
Good. "Along with actual and forecast weather conditions, the
USDA's weekly report of crop conditions will be monitored
closely. Deteriorating crop conditions in eastern growing areas
were expected to be reported in the June 18 update.
"Historically, weather concerns such as those currently being
experienced have resulted in price highs in June or July."
Good's comments came as he reviewed a series of upcoming USDA
reports. On June 29, the annual Acreage report and the quarterly
Grain Stocks report will be issued. These reports take on a
little more importance for corn, soybeans and wheat this year
for a variety of reasons, he noted.
"These include the rapid rate of increase in consumption, the
low and/or declining level of world grain inventories, and
concerns about production in a number of areas, particularly in
the United States," he said. "A difference of a few acres
planted or a few bushels in the inventory could have significant
price implication in this environment."
Good focused on the Acreage report and will address the June
1 Grain Stocks report next week.
The markets, he noted, will be interested in at least three
pieces of information in the Acreage report.
"First, is the total planted acreage (harvested acreage of
hay) of all crops," he said. "Intentions for all non-hay crops
reported in January (winter wheat) and March (most other crops)
totaled 256.37 million acres, 3.26 million more than planted to
those crops in 2006. In addition, acres of hay intended for
harvest in 2007 was 2.25 million more than harvested in 2006.
"It will be important to see if planted acreage was nearly 2
percent more than planted in 2006, as indicated in March, or if
adverse weather resulted in fewer planted acres. The comparison
to 2006 acreage may be made a little more difficult if failed
acres of wheat, for example, were replanted to another crop. A
state-by-state analysis of acreage will help shed some light on
that issue."
The second important piece of information in the Acreage
report is obviously the estimates of planted acreage of
individual crops. A lot of the focus will be on corn and
soybeans. In March, producers reported intentions to increase
planted acreage of corn by 12.1 million acres (15 percent) and
to reduce planted acreage of soybeans by 8.4 million acres (11
percent).
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"There are clear differences of opinion about actual planted
acres relative to these intentions," he said. "A review of the
weekly reports of corn planting progress by state reveals no
significant delays in planting that crop. In all major states, the
majority of the crop was planted by the second week of May, with
planting essentially complete by the third week of May.
"Generally, timely planting opportunities, then, do not point to
a significant change in acreage from intentions based on concerns
about potential yield loss from late planting."
From early March, when the survey of planting intentions was
conducted, through late April, December 2007 corn futures declined
about 50 cents. Prices were generally higher, but volatile, during
the first half of May. In contrast, November 2007 soybean futures
increased about 20 cents per bushel from early March to late April,
but dropped by 60 cents during the month of May.
"Again, opinions differ about whether the changing price
relationships influenced producers' planting decisions," said Good.
"It would be surprising if planting decisions were significantly
influenced by the short duration of price variability."
Good added that the third piece of information to be gleaned from
the Acreage report will be intentions for harvested acreage of
individual crops. While it is early in the production cycle for
spring-planted crops, it will be useful to see if early season
weather conditions had yet affected the expected level of abandoned
acres.
"Drought conditions in the Southeast and excessive precipitation
in parts of western growing areas could have impacted not only the
magnitude of planted acreage, but also the expectation for abandoned
acres," he said. "Trade guesses about planted acreage will be
released leading up to the USDA report.
"Our expectation is that total planted acreage fell a little
short of March intentions and that harvested acreage forecasts will
show a little higher rate of expected abandonment in areas of
adverse weather conditions. Both corn and soybean acreage may have
been a bit below intentions, but we do not anticipate the report to
show a significant 'switch' in acreage between the two crops."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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