Kub's Den

The latest weekly USDA NASS Crop Progress report showed 97% of intended corn fields were planted as of Sunday evening, so we can call this year's corn planting pretty close to done. At least done enough to calculate the median corn planting date in the U.S. this year, which was a fairly typical May 9. Half of 2018 corn fields were planted before that date and half planted after it.

If U.S. farmers planted the same average mix of corn hybrid maturities that they usually do, then we can assume the median harvest date will occur on Oct. 17, 2018, or 162 days after that median planting date. For any typical U.S. corn field, that'll be 162 days of watching the sky and worrying about rain, hail and searing heat; 162 days of guessing about yield prospects and ultimate production, capped off by one day of reading the combine's yield monitor -- or the grain cart's weights -- to really know what went on in that field over those 162 days.

Note that this number of days isn't a hybrid maturity number. Corn seed varieties come labeled anywhere from 72 days to 120 days, but those numbers are slapped on by seed companies to generally communicate the number of days between emergence and when the kernels will reach their full weight or black layer (yet still too wet to harvest).

Even those maturity numbers don't refer to days in calendar time, but rather to growing degree days, or "thermal time." They're not intended to indicate the number of actual days between planting and harvest. Maybe the average labeled hybrid maturity for corn planted in the U.S. is somewhere between 105 and 110 days, but nobody really knows. Nevertheless, the time between placing the seed in the ground and harvesting the dry grain is (as a median) 162 calendar days.

Let's think of this timeframe as 162 days of market uncertainty, or more specifically, let's consider the 112 trading sessions between May 9 and Oct. 17. Those are 112 daily opportunities for traders to enter or exit the market and express a diverse range of opinions about supply and demand. Taking what they can glean from weather forecasts, field reports, crop tours, satellite images, statistical models, or any other midseason observations, and then buying or selling futures and options contracts, traders can communicate what they feel about the risks experienced by the growing crop.

Until the final harvest yield reports come in, these traders' judgments will be considered fresh information to an efficient market that puts them altogether and expresses them as one price. If the traders feel the risks to the growing crop have increased, the futures prices will increase. However, each day that passes is one less day for the crop to experience that price-boosting risk.

By June 6, 18% of that May 9-to-Oct. 17 timeframe has already passed. It would be an unusual marketing plan if a corn producer tried to have 18% of the crop sold by the time 18% of the season had passed, then 50% by the halfway point of the season; 75% by the time 75% of the season had passed, and so on. It might be more reasonable to say, "Planting is half the battle, and if we make it through pollination without too much stress, the battle is won." But the day-by-day math may be a useful reminder.

There's often reluctance to sell grain while the producer is unsure it will ever be produced. What if it's too wet to get planted? What if it doesn't yield enough to meet the commitments of forward contracts? But as each day of the season passes without calamity, there is that much less chance of yield reduction and that much more confidence to make future commitments.

However, it's not that simple. There is more yield risk during certain growth stages than others. This is especially true during pollination, which likely won't occur until the last half of July for most of the central Corn Belt. Therefore, risk potential doesn't proceed in the same linear pattern that time passes. Risk premium in the corn market during the growing season doesn't fade away in a linear pattern, day by day. But again, the time available for trading opportunities does pass in a linear fashion.

If grain traders and grain producers want to consider how much time is left before the projected median 2018 harvest date, here is a handy table of benchmark dates:

Median planting date -- May 9, 2018

10% of season passed -- May 24, 2018

20% of season passed -- June 9, 2018

30% of season passed -- June 25, 2018

40% of season passed -- July 11, 2018

50% of season passed -- July 28, 2018

60% of season passed -- Aug. 14, 2018

70% of season passed -- Aug. 30, 2018

80% of season passed -- Sept. 15, 2018

90% of season passed -- Sept. 30, 2018

Median harvest date (projected) -- Oct. 17, 2018

Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at elaine@masteringthegrainmarkets.com or on Twitter @elainekub.

(BAS/BE/AG)

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