Uncertainty prevails for 2013
By CLAYTON RYE
Markets and weather are never very far from any farmer’s mind.
In fact, 2013 is even more unusual than past springs in that the western corn belt is still dry and indications show corn could reach 40 cents over basis this summer.
In a web-based seminar on March 19 DTN’s senior market analyst Darin Newsom and senior ag meteorologist Bryce Anderson offered their updated outlooks.
According to Anderson, the eastern corn belt has received 10 to 20 inches of moisture since Oct. 1, 2012, while the western corn belt has measured 5 to 6 inches.
Anderson said drought conditions continue from Rockford, Ill. to Sheridan, Wyo.
“It is very much on the dry side,” said Anderson, and is a “real big issue.”
Anderson questions if the 164 bushels per acre for corn, forecasted by the U.S. Department of Agriculture, is possible for 2013.
Anderson attributed the continuing cold weather of this spring on a high latitude, high pressure upper air system that is keeping temperatures from rising.
He predicted the blocking high pressure system will stay in place through the end of March creating a delay in planting season similar to 2011.
The Pacific Southern Oscillation Index, used to predict either La Nina (dry) or El Nino (wet) conditions is in neutral territory and is expected to stay neutral through the growing season, said Anderson.
Anderson presented a forecast map from the U.S. Drought Monitor showing the tendency for drought from March 7 through May 31. The map predicted the western Corn Belt would be under ongoing drought conditions with some improvement.
Anderson’s forecast for summer temperatures is a good chance for above-normal trend in all crop areas.
Precipitation will be near normal in the Midwest and below-normal in the southern Plains,according to Anderson.
Market analyst Darin Newsom said he had no confidence in the USDA’s late-March report describing USDA’s numbers as “mostly fictitious” because they are subject to revision at later times.
Corn usually has a low in late September most years, said Newsom, but the 2012 low occurred in December. Newsom sees the corn market building to normal conditions.
Newsom said the “corn average trend is up” and is predicting a mid-June high for corn.
“The market needs to go up,” said Newsom, who predicts a 40-cent-over-normal basis.
Newsom sees investors looking to rebuild their long positions on corn as the threat of volatility has been lowered.
Market fundamentals are showing in future spreads, said Newsom.
But the inverted market is a cause for concern.
“The big push could be coming to an end,” said Newsom. “It is in a lull right now with one more run left.”
Newsom’s outlook for corn is to rally to near $7.80 and a new crop target price of $5.75.
The 2013 crop year has “so many unknowns,” according to Newsom, with drought and demand as two of them.
Spring will be critical and it will be July temperatures that will be the most important part in determining corn yield.
“Soybeans have really struggled this year,” said Newsom. “They have been trending sideways and there is no concern yet as we have to get past the South American harvest.”
Volatility on soybeans was high, but has come down which could attract investors.
Soybeans have a “tighter supply and demand than the USDA is telling about,” said Newsom.
Newsom sees tight ending stocks of soybeans and, in the end, it will all come down to weather.
He is predicting soybeans rallying to near $15.20 for the spring quarter and new crop November in the area of $13.35.
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