Storm in the field

Still a Story of Moisture and Slow Crop Development

Excess soil moisture is abating – but slowly, and more moisture could be on the way. In the 48 contiguous states, surplus topsoil now is reported on 15% of the cropland. This is down 5 percentage points from last week, but still well above the 8% surplus in topsoil at this same point last year. Likewise, subsoil moisture is in surplus supply on 17% of the acres, down from 20% last week but up from only 6% last year.

The percentage of topsoil that is short or very short increased from 12% last week to 15% this week, compared with 30% last year; moisture shortage in subsoil creeped up from 12% last week to 13% this week, but is very favorable compared with last year’s 32%.

TOPSOIL

Surplus

Adequate

Short / very short

Iowa

16

80

4

Kansas

13

81

6

Nebraska

12

84

4

South Dakota

31

68

1

48 states

15

70

15

 

Crop development continues to lag, with only 30% of the corn silking and 10% of the soybeans blooming in the 18 reporting states. This compares with five-year averages of 22% and 32%.

Corn silkingweek of July 7

Corn silkingaverage

Beans bloomingweek of July 7

Beans bloomingaverage

Iowa

1

14

7

30

Kansas

19

38

7

20

Nebraska

2

16

10

37

South Dakota

0

6

3

31

48 states

8

22

10

32

 

Corn condition, rated at 57% good/excellent, was up one percentage point from last week and about what the trade looked for.  Soybeans’ good/excellent rating decreased one percentage point to 53%; the trade expected an increase of one to two points.

Grain sorghum heading is actually ahead of average in Nebraska (11% vs. 4%) and Kansas (5% vs. 4%). Meanwhile, South Dakota reports 0% is heading compared to a 15% average. Combined, the six reporting states stand at 22% heading, 2 points behind average.

Nebraska sorghum is rated 79% good/excellent. This is ahead of Kansas sorghum at 69% and South Dakota sorghum at 59%. For the six states, 83% is in the top categories. Very little is rated poor/very poor.

USDA’s supply and demand estimate on Thursday is the next indicator of where these crops may be headed, but it will be some time before there is any confidence in acreage or yield estimates. USDA is conducting another acreage survey this month as it attempts to get a handle on prevent-plant acres. Meanwhile, crop insurance claims are being logged as well.

Winter wheat

Wheat harvest is creeping along and has reached 47% in the 18 reporting states, well behind the 61% average. Kansas has cut 61% (average, 84%); Nebraska, 2% and South Dakota none (6%).

Long-range weather

The Climate Prediction Center’s 8 to 14 day outlooks indicate the likelihood is on the side of wetter and warmer than normal weather. The one-month outlook shrinks the area likely to have above-normal rainfall and suggests the center of the country will be cooler than usual.
Map source: Weather.gov

8-14 day outlook July 2019

1 month outlook July 2019

Make Adjustments Now to Optimize 2019 Profitability

We recently sponsored a webinar “Sorting Through the Implications of a Wet, Slow Spring,” featuring Agriculture Economic Insights co-founders Brent Gloy and David Widmar. Below we summarize the steps they outlined for adjusting to planting and market changes.

Even if your operation hasn’t been directly impacted, this year’s slow, wet spring has changed prospects for 2019, and your initial profitability projections likely are outdated. It’s time to reassess where you are financially and make adjustments where needed to optimize your marketing results in 2019.

Start by writing a summary of what has happened on your farm, said David Widmar: “What got planted, what didn’t? What lessons did you learn from this year? What would you do differently?”

This exercise is a good investment of your time, Widmar said, because it helps you think through the decisions you ultimately make and also serves as a reminder of timing — your thinking at the time and how the wet spring played out.

Now move onto the critical task of updating your operating budget, something that should be a standard, annual activity, said Brent Gloy. Compare what you planned to spend for seed, fertilizer, crop protection, etc. and what you actually paid. Make per-acre adjustments based on actual acreage. Combined with updated yield projections, you can reassess your break-even price per bushel.

“Some people may be in a good place now,” Gloy said. “Prices certainly have improved and maybe their crop is looking pretty good. If you have the chance to make some money this year, you want to take advantage of it and replenish some of your working capital.”

If you have a prevented-planting claim, ask your crop insurance officer to help you figure what your payment will be, Widmar recommended.

“This income can affect the minimum, or target, price you’ll need for your production,” he said.

With an adjusted breakeven as a starting place, review and update your marketing plans. Much has changed over the course of the spring, and expectations for marketing opportunities need to adjust as well, Widmar said. Corn and soybean prices, for example, rallied about $1 per bushel in the face of repeated delays and the corn stocks-to-use tightened from ample at 17% to a possible need for rationing at 12%.

 

corn december futures

CORN May June

Change

Acres planted (mil.) 92.8 89.8 -3
Acres harvested (mil.) 85.4 82.4 -3
Yield (bu./A) 176 166 -10
Begin stocks (bil.) 2.095 2.195 +.10
Production (bil.) 15.03 13.680 -1.35
Imports (mil.) 35 50 +15
Total supply (bil.) 17.160 15.925 -1.235
Total use (bil.) 14.675 14.250 -.425
End stocks (bil.) 2.485 1.675 -.81
Stocks/use 17% 12% -5 percentage points

 

Among the questions to ask yourself: Have you locked in some higher prices? Did the priced percentage of your expected crop change much with your acreage and expected yield? Do you need to sell less or more — or change the tool you use for pricing to allow for more uncertainty?

You now are ready to update your financial projections. In addition to cash-flow and income statements, it is important to update balance sheet projections, Widmar said. USDA estimates producers’ working capital has decreased 25% in the past few years and has reached a critical point at the national level. When there is a crop loss like many producers are experiencing, working capital can further erode, although crop insurance can help mitigate the impact.

Gloy urges producers to use their updated information to have constructive conversations with trusted advisors. Lenders and grain marketers can take a lot of the emotion out of the situation because they likely are less emotionally involved, he said.

“They may have ideas about how you can improve your outcome this year,” he said. “And in any case, you can avoid surprises later.”

Rows of young green corn plants. Corn seedling on the field.

Knee High by Fourth of July? Some Fields Yet to Sprout

USDA reports 94% of the corn has emerged in the 18 reported states, 6 percentage points behind average. Iowa stands at 98%, Kansas 97%, Nebraska 99% and South Dakota 96%. Condition ratings in the 18 states and in the states we follow have not changed more than 2 points from the prior week.

Soybeans continue to be modestly behind average, with 92% planted against a 99% average in the 18 states. Iowa is 97% complete, Kansas 91%, Nebraska 98% and South Dakota 97%. It is true some acres may have shifted to prevent plant, moving a farmer’s report of planted higher (if you call it quits, you are 100% done), but the improved field work days last week likely reduced that impact compared with the week earlier.

Emergence is further behind for soybeans. Iowa is at 90% for 9 points behind average; Kansas, at 82%, is 6 behind; Nebraska, 96%, 2 behind; and South Dakota 82%, 17 behind.

As is the case with corn, soybean condition has not changed more than 2 points from last week.

Prevent Plant

Prevented planting acres have been as high as 10 million in the past, and Bill Northey, USDA’s undersecretary for farm production and conservation, said claims this year could easily exceed that level as a result of excess moisture and flooding.

As of July 1, the Risk Management Agency (RMA) has paid roughly $151 million in prevent-plant claims, with most claims coming from the upper Midwest and along the Mississippi River.

“We expect that to certainly pass the $1 billion mark if you look at the acres in the prevent-plant area,” Northey said. RMA expects that by the end of July it will better understand claim amounts for the 2019 growing season.

USDA is encouraging farmers to plant cover crops on prevent-plant acres, which would then be eligible for a minimal payment under the next round of the Market Facilitation Program, the Trump administration’s trade assistance package for farmers.

Farmers who want to grow cover crops also are eligible for cost-share assistance from the Environmental Quality Incentives Program (EQIP) operated by the Natural Resources Conservation Service. Certain states, including Kansas, Nebraska and South Dakota, have started special signups for farmers who could not get into their fields this spring. Deadlines vary by state and producers need to visit with their local NRCS office.

For this year only, USDA is allowing cover crops on prevent-plant acres to be chopped for silage, harvested as hay or grazed as soon as Sept. 1. The normal date is Nov. 1. Cover crops still cannot be harvested for seed or grain.

Winter wheat

Winter wheat harvest has progressed to 30% in the 18 reporting states, but that is still 18 points behind average. Kansas is only 28% complete, compared with 61% average, and Nebraska has not yet started (8% is average). South Dakota, at zero, is 2 points behind.

Heading reached 100% in Kansas, 98% in Nebraska and 93% in South Dakota.

In the 18 states, condition is 63% good/excellent, up 2 points from last week and only 37% last year; 10% poor/very poor, 1 point less than last week and compared with 34% last year. Condition is 55% good/excellent and 16% poor/very poor in Kansas, while Nebraska is rated 73% good/excellent and 6% poor/very poor. South Dakota has 62% in the top categories and just 5% in the bottom two.

Both hard red winter and soft red winter wheat prices are down by double digits at the close July 1. Shown is the chart for September hard red winter futures.

wheat futures july 2019

young soybean plant

Slightly Lower Condition Ratings Take Center Stage

With corn planting nearing completion at 96% for the week ending June 23, attention turns to condition.

Emergence is behind average by 10 percentage points at 89% in the 18 reporting states. In Iowa, emergence lags by 4 points; Nebraska, 5; Kansas, 6; and South Dakota, 20 points with only 79% of the crop emerging.

In the 18 states, the corn crop is rated 56% good/excellent and 12% poor/very poor this week, compared with 77% in the top categories and 5% in the bottom two last year. This also is down several points from the week earlier, and the market took note, bumping corn futures more than 4¢ higher through the December contract.

 

Corn

Soybeans

 

Good/excellent

Poor/very poor

Good/excellent

Poor/very poor

Iowa

62

8

63

5

Kansas

50

13

43

13

Nebraska

77

4

75

3

South Dakota

56

6

55

5

 

Soybean planting – with its generally later final dates and late-planting period – still lags with just 85% planted compared with a five-year average of 97%. However, in the states we report, most are only 3 to 6 percentage points behind average. South Dakota at 84 percent planted is the exception, running 15% behind its usual pace.

Emergence in the 18 states is reported at 71%, 20 points behind average. In Iowa, 81% of the soybean crop is up (96% average); Kansas, 68% (78%); Nebraska, 85% (96%) and South Dakota, 92% (95%).

As the table above shows, soybean condition is rated fairly close to that of corn. It also has dropped a few percentage points from the prior week.

Other spring crops

Grain sorghum planting is 84% complete, according to USDA. The five-year average for this point in the planting period is 91% complete. Kansas reports the slowest pace at only 77% planted compared with 88% on average; Nebraska, at 91%, is seven points behind and South Dakota, at 92%, is one point ahead of average. Not much sorghum has headed in states outside of Texas. Condition in the states we report ranges from 67% good/excellent in Kansas to 80% in Nebraska. Only 1% to 3% is rated poor.

Sunflower planting is only a few points behind average. The four reported states reached 85% complete compared to their five-year average of 89%. Kansas is three points behind at 73; South Dakota is two points behind at 82%.

Winter wheat

Ninety-four percent of winter wheat in the 18 leading states has headed. The lowest percentage is in South Dakota, where only 80% has headed compared with an average there of 94%. Harvested acreage is less than half the average for the week ended June 23 – 15% vs. an average of 34%. What has been harvested is in the southern states. In the states we report, Kansas stands at just 5% (average 36%).

Pasture and range

Pasture and range conditions dropped 3% on the top end and increased 2% on the bottom end. But at 68% good/excellent and just 8% poor/very poor, condition is dramatically better than last year’s 49% and 20%.

Earlier Haying, Grazing and Chopping Allowed, RMA Says

Due to the unprecedented flooding and excessive rain this spring, USDA’s Risk Management Agency (RMA) will permit producers to hay or graze cover crops on prevent plant acres as of September 1 instead of waiting until November 1 and still maintain eligibility for prevented planting indemnity.

RMA also is applying the same date to chop cover crops for silage, haylage and baleage.

It is important to note that this change does NOT change what is considered an approved cover crop and insureds must continue to follow all other rules regarding prevented planting and cover crops. For crop insurance purposes, a cover crop is generally recognized by agricultural experts as agronomically sound for the area for erosion control or other purposes related to conservation or soil improvement (approved cover crop types will vary by area).

Additional information regarding cover crops can be found on the RMA website and the NRCS website.

Note: This deadline change applies to 2019 only. Please contact your insurance officer if you have any questions about your crop insurance coverage.

Other USDA agencies also are assisting producers with delayed or prevented planting. The Farm Service Agency (FSA) extended the deadline to report prevented plant acres in select counties, and USDA’s Natural Resources Conservation Service (NRCS) is holding special sign-ups for the Environmental Quality Incentives Program in certain states to help with planting cover crops on impacted lands. Contact your local FSA and NRCS offices to learn more.