While Plant 2013 has basically caught up to the historical average pace in Western Canada, wet weather continues to push fieldwork farther and farther down on the calendar in the United States. This in mind, producers south of the 49th parallel have to decide if they should plant an early maturity corn or switch those acres to soybeans. The market consensus seems to be that about three to five million acres of corn may not get planted, potentially removing about 500 million bushels of production from the supply and demand balance sheet.
Due to the late start and delayed progress of the crop, new crop prices have been creeping higher. This may continue until we have a better understanding of exactly what sort of condition the fields are in, likely toward the end of June or early July. Ultimately, with fewer corn acres being planted in the U.S. and instead, more soybeans going in, this smaller supply will likely support wheat prices as it’s often seen as a decent feed substitute for corn. Furthermore, the USDA sees feed usage increasing from last year’s numbers, indicating the demand will be there.
Nonetheless, the U.S. winter wheat crop is still hardly into harvest as, again, the weather has created problems for both fieldwork and the risk of disease. Here in the Canadian Prairies, provincial crop reports have shown the majority of producers are seeing positive crop development with mostly warm temperatures and some decent rains. Southern Manitoba continues to be fairly wet (and recently under a freeze watch) as they’ve been getting hit by the storm cell that’s been hitting the northern states (Minnesota, South Dakota and North Dakota) so hard (also where almost one million acres of corn that were supposed to go into the ground but won’t now).
On the international front, there is some concern hanging over the market for what will come of the genetically modified wheat found in that field in Oregon. It’s more than clear that Australian, European and our Canadian producers may benefit the most from this issue but you can bet the farm American trade groups will be lobbying aggressively to re-instate themselves as go-to for international buyers (an estimated 27.9 million metric tonnes was exported in the 2012/2013 marketing year).
Continuing on food security issues, the largest pork processor in China is buying the largest American pork producer, Smithfield Foods. “Safe” food in the Asian Supernation is becoming an increasing concern, especially among the growing 350 million-person middle class. It’s more than clear that China is focused on securing resources for future consumption. Whether it’s land in Australia, corn from the Ukraine, energy in Canada, or now meat from the U.S., China will likely continue its spending spree to guarantee the people of the republic are provided for. I mean, come on – a billion people who are unable to secure their most basic needs is not a good thing. History shows people rise up and become more aggressive when hungry.
Brennan Turner is originally from Foam Lake, Sask., where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online grain marketplace. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653).
— FarmLead Breakfast Brief