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Purdue: Upside of wet spring could be higher crop pricing
 

By STAN MADDUX

WEST LAFAYETTE, Ind. — A wet spring causing historic delays in planting and lower yield projections could result in a long-awaited sizable jump in prices, especially for corn.

That’s according to experts in agricultural economics at Purdue University in a June 17 webinar from the West Lafayette campus. According to the latest USDA figures, just 84 percent of corn and 64 percent of soybeans in Indiana were in the ground this late in the season.

The amount of still-unplanted corn and soybeans varied only somewhat in Illinois, Ohio, and other Eastern Corn Belt states hit hardest by the extremely wet spring. Nationwide, 92 percent of corn and 77 percent of soybeans were planted based on March intentions, according to USDA.

“Those numbers were really not unexpected but, nevertheless, it does indicate and confirm just how far behind we are in our planting,” said Jim Mintert, director for the Purdue Center for Commercial Agriculture.

As of June 17, current unplanted crop estimates were close to 50 percent above the previous record from 2013, since those figures started being made available in 2013.

Ag economist Chris Hurt, one of the webinar panelists from Purdue, said the current amount of unplanted acres of corn – which he estimated at 5.2 million, as well as 3.6 million for soybeans – nationwide could go higher. He said all of the unplanted acreage hasn’t been tallied, with some farmers still undecided whether to try to finish planting, especially with more rain in the short-term forecast.

Another reason not to plant late is the 85 percent coverage afforded by the federal crop insurance program and the per-bushel payout being above current market average, at least for soybeans.

“You could easily come up with prevented-planted for corn in the 7.5- to 8-million-acre range, if not higher,” said Michael Langemeier, associate director for the Center.

Hurt said corn prices could go up by as much as 20 percent depending on yields, which USDA projects now at 166 bushels per acre. Earlier, it projected yields at 176.

“There’s just a couple of factors here that could really make corn prices shoot up,” Langemeier said.

“It creates some upside potential,” Mintert added.

Hurt said the potential for such a significant price jump isn’t quite there for soybeans, though. That’s because late-planted soybeans have more ability to rebound during the growing season and the market glut caused primarily by China not purchasing U.S soybeans in response to tariffs.

But, he explained soybean prices could approach or top $9 if current unplanted acre projections grow in the coming weeks, as well as the impact weather might have on yields during the growing season. “We still have a long ways to go to get us back to $10 beans,” he said.

Prices for soybeans would get more of a bump if the trade dispute comes to an unexpected end in the near future. “You tighten supply, and people get worried about availability, they’re willing to pay and often willing to pay a lot if there’s a very tight shortness, as we’re having with corn right now.”

Hurt said also encouraging is a recent uptick in long-struggling corn prices, which closed on June 17 at $4.55 per bushel. “We now have exceeded all of the high prices on nearby corn futures back through 2015,” he said.

He noted there’s also a strong possibility that corn prices could reach $5.25 this year – a price last attained in 2014. Despite market optimism, his advice to farmers is to go ahead and sell if the current returns meet their needs.

“If the price today works for you, if it meets your farm management goals, there’s nothing wrong with meeting your goals. Keep that in mind – but it looks like there’s upside potential,” Hurt concluded.

Todd Hubbs, a farm commodities marketing expert at the University of Illinois, agreed the potential is there for corn prices to rise above $5 per bushel, from having so much unplanted ground and some of the emerging crops not looking too good from prolonged dampness in the soil.

He said growers who didn’t plant or finish planting might come out better financially from their crop insurance checks than farmers seeing potential for higher prices rolling the dice on late-season planting. The risk of planting late could really pay off, though, especially for farmers just a little late in getting their crops into the ground.

Hubbs noted soybean prices have rallied lately but he feels there’s still too much of a stockpile from previous years and not enough demand to cut deep enough into supply, even if yields are down in the fall. “We’ll see what happens.”

6/26/2019