Corn planting season has already started in some areas, but farmers with old-crop corn left to sell have turned up their noses at the current flat price. On top of a weak trend in the futures market, basis hasn't been helping prices much.
The DTN national average corn basis chart shows one of the reasons farmers are unhappy with prices. Basis is currently sitting below the minimum five-year average and has actually been camped out there since the start of the crop year. One year ago, for the month of March, DTN average basis was close to -27H, and the average for March this year was at -39H. A farmer commented to me that the basis is "supposed to" strengthen when futures move lower, at least that's what "should happen," he said.
Todd Hultman, DTN market analyst, told me, "The seasonal low for DTN's National Corn Index came about a month earlier than usual in 2016, posting $2.73 a bushel on Aug. 31. Since then, the index has gained 54 cents a bushel as of April 6 at $3.27, and only about 6 cents has come in the form of a stronger basis. While cash prices are still higher than they were at harvest time, the upward trend has been nothing to brag about, and may have already peaked at $3.41 in mid-February."
"Seasonally, cash corn prices tend to trade higher until the end of May, but prices already broke below the support of their two-month low in March with concerns of record production out of South America," added Hultman. "Corn prices are trying to hold sideways after USDA estimated a lower-than-expected planting of 90.0 million acres, but a close below the March low of $3.17, if it happened, would add to corn's bearish woes."
Randon Peters, president of Nebraska Wheat Growers, raises wheat, corn, peas and soybeans in southwest Nebraska in McCook, Hitchcock and Red Willow counties. He told me that he still has some old-crop corn left, but some of it is priced to be delivered throughout the summer. "I have about 45,000 bushel to be priced yet; we store about 650,000 bushels each year with a capacity of 1.1 million bushels shared with wheat and peas. I will wait to see if there are weather rallies in June or July to price the rest of the corn." He added, "$3.85 would be satisfactory."
Angie Setzer, vice president of grain at Citizens Elevator in Charlotte, Michigan, told me, "$3.85 seems to be the magic number right now for everyone. In Michigan, basis has remained strong, because we're one of the few states with less corn on hand as of March 1, so for most of my customers, it's a much more attainable goal than for much of the rest of the county."
An elevator manager in South Dakota told me that, "This year's corn supply in western South Dakota has long outpaced demand. Current basis levels are 15 cents to 20 cents higher than if going farmer direct to eastern South Dakota shuttles or other rail destinations. That said, cheap back-haul fertilizer truck rates will support our current relatively higher basis values, but again, demand is limited. We need lower single, 10- or 25-car corn rates to South Dakota/Minnesota ethanol plants or to eastern feed markets."
Tim Luken, manager Oahe Grain in Onida, South Dakota, said, "Basis here is always very wide. This is the worst part of the state for growing corn because of location and freight charges. Basis of -75 to -85 is pretty common here. Sometimes we can get basis in the -60s, but not very often. With the wide basis we have in this area, that is why a new ethanol plant is going up, and this should help increase basis 10 to 15 cents."
LET THE PLANTING BEGIN!
"Planting-wise, we're a long ways away from getting started," said Setzer of farmers in her area in south-central Michigan. "We had a midweek snow storm this week and are expected to remain cool and wet for the foreseeable future. At this point, we wouldn't be planting anyway, but many are chomping at the bit to get started, with spring field prep work. In northern Iowa, I have started to see a few tractors roll as we've been relatively dry compared to southern portions of the state these last several days."
Luken said spring wheat is being planted around Onida, South Dakota. "I would say by this time next week, we should wrap it up," he said. "As far as corn, they (farmers) will start at the end of the month, maybe sooner. Planting conditions are excellent around here with good topsoil, but sub soil is kind of dicey."
A farmer in northeastern South Dakota told me that it doesn't look like there will be any corn planting until at least April 20 -- if it stays dry.
"We usually do not start planting corn until April 20th," said Peters of farmers in his area of southwest Nebraska. "This year seems to be no exception; it has been cooler the last few weeks, and that has driven the soil temperatures down to the upper 30s, low 40s (Fahrenheit). We will be planting approximately 5,900 acres of corn this year, down about 800 acres from last year. We are faithful to our rotations in our area: dryland ground is a three-year (wheat, corn, peas or fallow), irrigated acres are usually two years corn and one year beans."
Jeremy Wolf, whose home farm is in Homer, Illinois, located in eastern Champaign County, also farms in three other counties. He told me, "No crop planted around here yet. Wet conditions persist, and the next break we get, fieldwork will cut loose. Last year, we were two-thirds corn; this year we will be two-third beans."
Another farmer who raises corn and soybeans in Daviess County, Indiana, told me that he is sticking to his 50/50 rotation and will start planting 1,500 acres of corn this week.
"We had 6 inches of rain over the last 10 days, so no planting for us yet," said Adam Casner, a row-crop farmer in the Missouri River bottoms in Carrollton, Missouri. "Corn acres will be the same or slightly higher than last year. Trying to get back in 50/50 rotation, and also, we usually go against the trend. With all the talk about soybean acres, we will plant more corn."
Jeff Nail from Orrick, Missouri, in Ray County, farms right along the Missouri River. He told me that they have not started planting yet due to recent rains. "We normally start the last week of March," said Nail. "We will put out 2,000 acres of corn, and that is 300 acres more than we normally plant. I'm kind of concerned with the amount of snow pack above South Dakota. It's trending the same as 2011 when we had a flood. Hopefully, it melts slowly."
On Monday, April 3, Missouri's NASS reported that rain throughout the region delayed planting of corn, and there were only 1.1 days suitable for fieldwork for the week ending April 2.
Noah Hultgren, past president of the Minnesota Corn Growers, who farms in Kandiyohi County, near Willmar, Minnesota, had this to report: "No corn has started in my area yet, but I believe there will be some planters rolling early part of the week. Tuesday, April 11, is the insurance date in my area. Field conditions are still a little wet and cold, but a few more warm days and the planters will be going. We plan on planting around 2,000 acres of corn, which is similar to last year."
"I have not started to plant and intend to seed 350 acres of corn, the same as I did last year," said Jerry Demmer, who farms in Freeborn County in Clarks Grove, Minnesota. "Weather permitting, we would like to start the 20th to 25th of April; it is wet, but with a few days of 70 degrees and wind, the field conditions will change fast."
Minnesota's NASS reported that cool, wet field conditions limited field activities to only 1.2 days during the week ending April 2, 2017.
One thing that pretty much governs corn planting besides weather is the plant date set by insurance companies. Most of South Dakota is set at April 10; North Dakota is April 15; Iowa, eastern Wisconsin and southern Minnesota is April 11; northern Wisconsin and northern Minnesota is April 21; and the states south of these areas have already reached their plant date. Top corn-growing states like Illinois have earlier start dates in parts of the state, with southern Illinois' plant date at April 1, central Illinois' April 5 and northern Illinois' April 10.
However, Mother Nature seems intent on putting a damper on some farmers' plans. Bryce Anderson, DTN senior ag meteorologist, said that rain showers are in store for the eastern Midwest on Monday, and periods of rain and snow will occur in the north-central Plains and northern Midwest. "This moisture will disrupt fieldwork," Anderson said. "We'll also see more rain and snow in the Northwest, causing further delays in spring field work."
Mary Kennedy can be reached at firstname.lastname@example.org
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