Rural Voice May 13, 2020

Soil conditions have been very good for early planting this season.  The dry field conditions allowed for a lot of field work to be completed early, at a rapid pace.  US corn and soy planting are well ahead of the 5 year average pace, and it is similar here in our region as well.   About the end of the first week of May,  US corn planting was 67% complete – 11% higher than the 5 year average pace.  This is a sharp contrast with the planting pace last year, when it seemed like we were plagued with wet weather, allowing only 28% of the corn to be planted by the same date.  Soy planting has been just as quick.  38% of US soys were in the ground as of May 10th, versus the average pace of 23% and only 8% last year.  This is all good news for production, as early planting in good soil conditions typically sets up the crop for good yields.  That is, assuming the weather co-operates for the entire season. 

So while planting progress and field conditions have been great, the temperatures through the first half of May have been far less than desirable.  To start the growing season we have experienced temperatures well below normal, with some nights well below freezing.  In the London area, we experienced frost every consecutive night for about 10 days in a row – with forecasts for some nights to be record low temperatures.  From this there is concern about the survivability and vigor of the recently planted crops in the field.  At this stage it is a bit early to know how the early planted stands will emerge, but there is concern that replants may be required in some fields.

There are also concerns in the wheat crop because of the cold temperatures.  Damage to this crop will depend on the stage of the plant development at the time of the frost, and of course the severity of the freeze.  In later fall planted fields, the wheat is likely still in the tillering stage, and therefore the growing point is still below the surface of the soil, protecting it from freeze damage.  At the tillering stage, wheat will begin to be damaged only after it is exposed to temperatures of -11C for at least 2 hours.  The wheat that could be the most affected, is therefore the crops that were planted early in the fall and that have progressed closer towards their reproductive phase.  After the tillering stage wheat enters the jointing growth stage, followed by the boot stage.  At the jointing stage, wheat’s cold hardiness is only to about  -4C for 2 hours.  It is at the jointing stage that the wheat stem begins to rapidly elongate and the head begins to move up the stem.   As the head moves into the stem it becomes more susceptible to freezing, and therefore is more likely to have yield loss if exposed to cold temperatures.  At the boot stage freezing of -2C for the 2 hour period would cause severe yield losses due to floret damage causing sterility.  After the freeze event occurs it may take up to a week before you can assess if damage has occurred to the developing crop.  These freezing fears have added a support to the market place, as the Soft Red Winter crop in Ontario, Ohio, Indiana and Michigan are all exposed to the potential of freeze damage. 

In regards to trade, it seems the back and forth US/China spat will continue for the foreseeable future.  China is reported to have urged new negotiations for the Phase 1 trade deal due to the current economic climate caused by the Covid pandemic.  The US will have no part of a renegotiated deal, and they maintain that China must adhere to the deal they negotiated.  In the midst of this chatter China has been buying large sums of US beans.  It is reported that through April, Chinese government owed agribusiness have purchased over 1 million metric tonnes of US beans for various shipping periods.  It is forecast that Chinese bean demand should be record high through 2020/21 – but expectations are once again that China will purchase the majority of their soys from Brazil and only fill in purchases with US beans.  The US shipping window is basically September through December, when Brazilian old crop stocks are exhausted and new crop is still in the field.

The US corn pile continues to grow.  Current USDA estimates are for stocks to grow 15% over last years carryover.  The May 12th USDA report 20/21 ending stocks estimate was for over 3.3 billion bushels – the largest ending stocks ever recorded by far.  If this production is achieved the US stocks to usage ratio would be the largest since the 1992/93 growing season.  Currently it appears that the market is pricing in a risk premium during the planting season, possibly continuing through the early part of the growing season if conditions are not ideal.  But as we go through the season, if yields appear that they will be as expected, corn prices are going to struggle.