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Planting progress puts pressure on markets

North Dakota and Minnesota still lag behind on planting. The acreage that will be planted remains to be seen.

060622.AG.CropProgress01
Hired man Braden Klusmann seeds spring wheat for farmer Shane Tellmann, north of New Salem, N.D., on May 26. They finished seeding wheat the next day.
Mikkel Pates / Agweek
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Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com.

The grains wrapped up the fourth week of May mixed with Minneapolis wheat managing to end with gains along with soybeans while the winter wheat exchanges and corn ended with losses.

In a surprising move, soybeans hit new contract highs to close out the month. June has not been as kind though as at the time of this writing, the first two days of June has brought heavy selling into all three wheat exchanges and corn.

The grains came under selling pressure during the middle of the last week of May with most of the pressure due to improving weather conditions.

The northern Plains saw a much-needed break in rain and producers took advantage of that break and made good planting progress with the warm dry conditions.

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Planting progress surged at the end of May, but North Dakota and northern Minnesota will still see a significant amount of prevented planting acreage.

Memorial Day weekend brought more rain to the northern Plains as much of North Dakota and Minnesota reported rain amounts from 1.5 inches to over 4 inches. To cap that, the last week of May brought crop insurance’s last planting date for corn in North Dakota and Minnesota along with wheat in the southern half of North Dakota and central Minnesota.

It’s unlikely that will stop planters. Producers are likely going to continue to plant corn through the first week of June to second week of June. And most will likely push spring wheat planting activity until June 15.

It has been interesting to see the debate on prevented planting acres and how producers would not just elect to take prevented planting because of the high prices being offered by the market.

Obviously, the people making those comments have never had to take a large screwdriver or tire iron out to dig mud out of press wheels or between planter disks. Wet is wet and sometimes there is just nothing you can do.

There has been a lot of talk about the economics of prevented planting.

By all accounts, it is better to get a crop planted. But if the ground is not ready, it’s not ready. This has led to a lot of talk of late planting, which results in losing 1% of your guarantee for every day you plant past the final plant date, which at these prices, is still workable.

What is not workable is taking prevent plant on a crop and then planting a second crop on those acres. In that case you get 35% of your prevent plant payment, 100% insurance on the second crop, and you will take a hit on your Actual Production History on the crop you prevent plant. Not a good plan in the northern Plains where your yields can sit in your database for 30 years.

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Make sure you talk to your agent and all options are explained before making a decision.

Other negative news

Besides the improving weather forecasts, there are other negative news items starting to enter the marketplace.

First of all, China has inked a deal with Brazil to supply them with corn. Most of China’s corn imports have come from Ukraine and the U.S. (the past two years) but now China will be buying most of their needs from Brazil.

On the wheat front, Russia has agreed to allow for food exports out of Ukraine in exchange for sanction relief. This is likely a play by Russia as it will certainly be rejected by the rest of the world, and that will give Russia the excuse to blame the West on not allowing for them to help Ukraine (while they are bombing the country).

Russian President Vladimir Putin is pushing extremely hard to resume exports out of Ukraine and the Black Sea region. Seems like there could be another reason. Russia and Turkey are planning on meeting the second week of June to discuss a plan on how to proceed.

The markets are in a transition from planting concerns to growing concerns, and the dynamics are quite different. Planting progress has greatly improved in most of the U.S. as the Corn Belt has caught up to their average planting progress and weather for much of the Corn Belt is close to ideal (warm and wet). This is pulling corn lower.

The only trouble spots are limited to North Dakota, northern South Dakota, and northern Minnesota. It is likely the grains will continue to trade in a sloppy fashion until there is more confirmation on the actual planted acreage, which will be released in the U.S. Department of Agriculture’s Planted Acreage report on June 30.

Martinson Ag is still looking at the northern Plains to see 1.5 million to 2 million fewer acres
of corn and spring wheat. If the rain is realized this weekend, soybean acres could also see a reduction of 1 million to 1.5 million.

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Crop Progress

USDA’s latest Crop Progress report was expected to show rapid planting progress in the Corn Belt, but most were up in the air on the northern Plains.

As of May 29, corn planting progress has moved to be at the five-year average as 86% of the nation’s crop was in the ground versus 72% the previous week and 87% average (11.6 million acres left to plant).

All states are either at or ahead of their average pace except for North Dakota and Minnesota. North Dakota is 56% planted versus 20% the previous week and 83% average. That leaves 44% of North Dakota’s corn acreage unplanted, roughly 1.58 million acres.

Minnesota producers fared a little better. As of May 29, Minnesota producers had 82% of their corn in the ground versus 60% the previous week and 92% average. Minnesota’s 18% left to plant is equal to about 1.4 million acres.

Soybean planting progress is also close to the five-year average. As of May 29, 66% of the nation’s soybeans were planted versus 50% the previous week and 67% average. Again, most of the major states are at or just above their five-year average planting pace except for North Dakota and Minnesota.

North Dakota producers are 23% planted versus 7% the previous week and 70% average. That equates to about 5.4 million acres of soybean left to plant in North Dakota.

Minnesota producers have 55% of their soybeans in the ground vs 32% the previous week and 80% average. That leaves 45% left to plant or roughly 3.6 million acres.

There is time left to get soybeans planted as the last planting date for crop insurance is not until June 10.

Hard red spring wheat planting progress was estimated at 73% complete vs 49% the previous week and vs 92% for the 5-year average. That leaves about 27% of the nation’s spring wheat left to plant or roughly 3.0 million acres. A majority of those acres are in North Dakota.

North Dakota is reporting planting progress at 59% vs 27% last week and 91% average. That equates to 41% of North Dakota’s spring wheat acres that are still unplanted or roughly 2.1 million acres. Minnesota is 53% planted vs 11% last week and 96% average. That leaves 47% of Minnesota’s wheat acreage unplanted or roughly 592,000 acres.

In all, as of May 29, North Dakota has more than 9 million acres of wheat, corn, and

soybeans to plant. The last planting date for corn has passed and the final planting date

for spring wheat is June 5 for the northern parts of North Dakota, and June 10 is the final plant date for soybeans.

Livestock

In the livestock markets, cattle closed out the last week of May with small gains but has since pushed to post strong gains to start June. Technical buying seems to be the main driver.

Cattle are oversold and need a correction, but supplies are tight and they are only going to get tighter going into the fall. A disappointing cash trade has kept a lid on gains.

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”

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