Planting Delay Impacts 'Flower Acerage
It was an interesting spring and summer in the world of grains and oilseeds:
Worries about the extreme drought conditions that existed through March were replaced by one of the wettest April through early June periods on record.
Planting was seriously delayed across the entire northern half of the U.S. and resulted in some Prevent Plant (PP) and other acreage changes.
North Dakota will end up with between two and three million acres of PP, and that had a negative impact on sunflower acres. Some PP estimates are as high as four million acres.
Summer temp through mid-August was below to much below normal. That has made the late planting season potentially more of problem. Crop maturity and frost/freeze dates can have a major impact on production.
Export shipments of soybeans from Brazil have been hampered by logistics problems since the completion of their big harvest. Vessel waits are still up to 80 days. That has pushed soybean export business to the U.S.
The markets chose to view the cool summer weather as great for corn and soybean yields. The USDA was forecasting a record soybean yield of 44.5 bushels per acre and a very high corn yield of 156.5 bushels per acre. They also did not make any acreage reductions because of the wet spring and delayed planting season. Those big production expectations resulted in December corn futures dropping from $6.00 to less than $4.50 a bushel and November soybean futures dropping from $13 to near $11.50 a bushel by early August. Sunflower and canola, of course, followed the soybean market lower.
The August USDA crop production estimates were a bullish surprise to the corn and soybean markets. The trade was expecting to see the corn yield increase and the soybean yield steady to just slightly below the July estimate. Instead, the corn yield was reduced by about two bushels per acre, and the soybean yield was cut by 1.9 bushels per acre.
The corn outlook for the 2013/14 marketing year is still bearish. Corn ending stocks are still forecast to exceed 1.8 billion bushels compared to 719 million bushels this year. The smaller corn yield, if verified in future production estimates, should lift the bottom end of price expectations.
The soybean market, on the other hand, is again turning from early bearish expectations based on big yields and large production to a much tighter outlook today if reduced soybean yield estimates are realized. August is always the month when soybean yields are made or not made. This year it will be August and into September because of the late planting.
The remaining bearish aspect of oilseeds markets is that analysts are already forecasting another record soybean crop in Brazil and a big crop in Argentina. These expectations are based on increased planted acres (at the expense of corn) and good yields. We are still a few months from the planting season in South America, so it is premature to bank on huge crops there. The other issue is that logistics in Brazil are still very tough with vessels waiting 70 to 80 days to load. Increased production must also see increased handling capacity, and that is still lagging behind.
Sunflower acres were very adversely affected by the delayed planting season. The total acreage lost to PP wont be known until the late-September USDA final acreage estimates, but the table below shows the change from the March intentions to the late-June USDA estimates:
U.S. Planted Sunflower Acres
2012 Acres 2013 March Est. 2013 June Est.
Oil 1.658,000 1,399,000 1,268,000
Nonoil 261,000 285,000 299,000
All 1,919,000 1,684,000 1,567,000
It is possible the decline in planted acres of oil sunflower will be down more than 30%, based on reports of increased PP across traditional oil sunflower crop areas. The sunflower crop, like virtually every crop, is behind normal in terms of development, but is generally rated in good to excellent condition. Late-season rains and frost dates will determine production.
The world, however, has had an excellent sunflower crop, with supplies anticipated to be at record levels and nearly 5.0 million metric tons above last year. World sunflower ending supplies are expected to increase significantly in the coming year. The super strong demand for protein meals has meant accelerated soybean crushing around the world. You make oil when you make meal, and the demand for oil has not kept up with production. It is possible that sunflower oil could trade at a discount to soybean oil in the coming months, although that would likely not last long.
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