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KARL SETZER

By Staff | Mar 25, 2016

Fieldwork is increasing across southern and some central regions of the Corn Belt. This is earlier than normal for many regions, and the result of a lack of snow cover and unseasonably warm temperatures.

In such years it is not uncommon to see elevated corn acres across the United States. At the same time, there are thoughts that elevated input costs and stricter financing may push acres into soybean production.

While fieldwork is progressing, there are some areas of weather concern being reported. These are pretty well confined to the U.S. Delta, where corn planting is only half of its normal pace.

Forecasts for ongoing precipitation will likely string these delays out longer. While corn planting has been slow in the Delta, we need to remember it is still early in the year, and as last year proved, later planting does not necessarily mean reduced yields.

We may get a better indication of acres on March 31 when the USDA releases the 2016 prospective plantings report, which will be a follow-up to the data that was released in the February Outlook Forum.

There is still a large amount of the spring planting season ahead of us though, and acres can and will shift.

One factor that is getting more attention in this situation is financing. There are reports of lenders cutting back on the amount of financing they will give out, and this could force producers to plant the crop with the least cost, not necessarily the one that would provide the greatest return. This would greatly benefit soybean plantings.

As we approach the spring planting season, more focus is being placed on what we could see for yields this coming year.

USDA released trendline, or what it considers to be an average, yields this year at 168 bushels per acre on corn and 46.7 bushels per acre on soybeans.

These are actually under what we had for yields a year ago. While the official numbers will not be released until the May balance sheets, many analysts are already questioning these predictions.

There remain concerns in the commodity market over the slow export pace we have seen on corn this marketing year. While whole corn exports have in fact been down, the sales of finished products are actually up.

This is especially the case in ethanol and distiller grains, which are equal to the selling of 800 million bushels of whole corn. This may not change current balance sheets, but it does show there is still a large amount of demand for U.S. products in the global market.

We are at a point in the year when we typically see demand increase for U.S. corn, however. This is from a shifting in the export process out of South America, and how loading facilities now focus on soybeans rather than corn.

This tends to push corn demand to the United States for the next several weeks. While this is positive, the added demand my simply prevent our carryout from increase from current levels.

March is a time of the year that is critical for farm-stored inventory. Temperatures across the United States are starting to rise, and as they do, corn and soybeans being stored will warm as well.

It is not uncommon to see condensation develop at this time, causing elevated moisture inside grain bins. This is also when farmers have the least amount of time to monitor bins, which is why most quality loss takes place over the next four to six weeks.

We continue to see comparisons made between the current El Nino system and what it could mean for this coming year’s corn production.

Historical data shows there is not a firm trend that can be followed. One year that was similar to this one is 1983, when corn yields were a large 22 percent below trend.

While a deterioration of the El Nino and a developing La Nina is possible, the main question remains when this will happen.

More forecasters are claiming this will not happen until late August and possibly September. This would have little impact on production this year, and if anything, may promote higher yields.

Karl Setzer is a commodity trading advisor/market analyst based in the West Bend office of MaxYield Cooperative. He can be reached at (800) 383-0003.

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