UPDATE for April 6th 2023
A Spring Warm-Up and Price Action
USDA projects that American farmers will plant 92 million acres to corn this season, an increase of 3.4 million from 2022. 1.3 million of that 3.4 million increase is expected to happen across South Dakota, North Dakota and Minnesota. Winter in the Upper Midwest has been long with record snow-pack in some areas. Many of these same areas received an additional 3 inches to nearly 2 feet as this week’s early spring blizzard tracked through the region. Regions of Wyoming, Utah, NW Nebraska and SW South Dakota were the hardest hit. This has the trade considering the possibilities of late planting, acreage switching and even Prevent Plant.
Planting of the 2023 U.S. corn crop is underway in some areas of the nation. According to the USDA Crop Progress Report this week farmers in Kansas have planted 1% of their corn crop which is on track with the 5-year average. Kentucky progress is running ahead of last year as well with 2% now planted. Tennessee is now 1% planted which is ahead of last year but on pace with the 5-year average. Farmers in North Carolina have 1% of this season’s crop planted which is behind last year as well as the 5-year average.
Planting of the 2023 U.S. corn crop is underway in some areas of the nation. According to the USDA Crop Progress Report this week farmers in Kansas have planted 1% of their corn crop which is on track with the 5-year average. Kentucky progress is running ahead of last year as well with 2% now planted. Tennessee is now 1% planted which is ahead of last year but on pace with the 5-year average. Farmers in North Carolina have 1% of this season’s crop planted which is behind last year as well as the 5-year average.
The map above from NOAA shows the areas at highest risk of spring flooding. According to NOAA the SWE or snow water equivalent values are the biggest component in prompting the agency to issue the warning for possible spring flooding. As of March 20th, the SWE amounts present across northern and central Minnesota were between 5 to 7 inches. In Wisconsin the SWE is higher between 6 to 8 inches. The agency explained, “These values are in the top 10% to 20% of the historical record and are the primary driver of the above-normal chance of flooding along the Mississippi River.” “SWE values significantly drop along a line from roughly Austin, MN to Wausau, WI.
When the markets resume after Easter the USDA will release the monthly Supply and Demand report on Tuesday, April 11th. Commodities markets will close for the holiday weekend at the close today and will resume trading Sunday evening. Prices have struggled this week. The thought is that large spec traders and Funds are likely doing some profit taking and re-positioning and ahead of the report prior to the long weekend.
Corn export demand is still a concern. Now that Brazil has harvested 65% to 70% of their 1st corn crop there is speculation that China will be done buying major amounts of U.S. bushels for now. A large portion of Brazil’s Safrinha (2nd corn crop) got planted late due to unfavorable harvest conditions during the 1st season. This means that the 2nd corn crop, and largest corn crop of the year, will not be ready to be harvested during the typical months of MayJune and July. This has led some analysts to believe that this may force China to return to the U.S. for some of their corn needs.
Ukraine is going to be a wild-card for the fore-seeable future. Russia’s invasion has destroyed Ukraine’s farming industry which prior to the war accounted for 10% of the nation’s gross domestic product. Total new-crop production and more specifically corn production is likely to be much smaller than what is currently projected, some estimates run as low as 30% less than a normal year before the invasion began. Contributing to this collapse in production comes from the lack of input supplies and the cash to buy them. To aid these farmers several Western nations and ag companies are planning to lend millions of dollars towards the rebuilding of the country.
Finally, some warm, dry weather to talk about! The newly released 6–10-day outlook from the Climate Prediction Center gives us an 80-90% probability of above-normal temperature across the entire Corn Belt. GFS models also keep rainfall out of the forecast until April 16th-17th. This means planting progress will happen across regions where conditions are ready but also means a rapid warm up which could lead to flooding in areas with significant snow-pack.
Looking even further down the road…the CPC’s 8–14-day outlook through April 19th shows a continuation of the above-normal temperatures but more chances for precipitation return.
Unfortunately, we may be reverting to the active pattern that has been in place over the past couple of months with the mean trough located over the west. The GFS map below shows the 500mb jet set up April 20th. This placement allows a SW flow to form which will carry moisture up to the Midwest from the Gulf. If this develops as expected it also creates a “classic severe weather look” for the Central U.S. much like we have seen with violent tornadoes, hail and abundant rainfall.
