When it comes to talking about planting delays, you only need to look at the pictures from the devastation going on in Nebraska to think there might be some serious complications with spring planting this year. But before we jump to conclusions based on a Twitter feed alone, we think it's important to objectively tackle the questions: What causes planting delays? If planting delays occur, do they indeed lead to less corn acres? And finally, are the cards stacked this year for planting delays?
To explore these issues, we looked at 30 years of data coming from numerous sources including planting pace data from USDA’s crop progress report, daily temperature and precipitation data across the U.S., and corn acres planted as reported by USDA in their March report as well as their final estimate for the crop year. What follows is a summary of the key findings from that data and analysis.
What Causes Planting Delays?
Planting delays are a result of two key criteria: First, how soon can farmers start planting the crop. And second, once the planting season gets started, how quickly can they finish?
This latter concept of the “speed of planting” has been a topic often mentioned by analysts as a key reason why we rarely see planting delays. As the theory goes, bigger planters and tractors hasten the planting pace and therefore make planting delays less likely. But while the data does support this hypothesis that technological improvement does exist, it is not materially large enough to offset the effects of bad weather. For example, between 1999 and 2008, the average planting pace for U.S. corn was about 1.9 million acres per day, but the most recent 10-year period from 2009-2018 was only marginally higher at 2.0 million acres per day. That is not a big enough improvement to offset weather that keeps farmers out of the field during the planting season.
How soon farmers start planting is driven more by temperature as compared to precipitation, although excessive moisture during the early spring is a stumbling block for getting the crop planted early. Historically, 10% of the U.S. corn crop is planted by April 20. This year, temperatures in February and March have averaged 8 degrees cooler than the past 30-year average.
At the same time, moisture is higher as well compared to average. Based on these observed values going into the 2019 planting season, we would expect the planting period to get started between April 24 and May 1. So that puts the crop about a week behind; however, that one-week delay could be made up over the course of the near 45-day planting season if we see favorable weather that is warm and dry.
Do Planting Delays Lead to Lower Corn Acres?
The short answer is yes, we do see a fairly clear relationship between planting delays and how final corn acreage stacks up against USDA’s March survey. But what seems to be more important is the date at which the majority of the crop is planted, while the start date for planting has less of an impact.
In other words, it is possible to overcome a late start to planting. The chart below illustrates the 90% planted date for the U.S. corn crop (x-axis) and how final corn acres vary relative to the March survey (y-axis). The data seems to suggest two critical dates. If we get 90% of the corn crop planted by May 21, then corn acreage tends to go up relative to the initial reading in March. But if we get to June 1 and haven’t reached a 90% rate for planting, there is a tendency for the crop to go down.
Is a Planting Delay in the Cards for 2019?
From above, the critical date is June 1 to get 90% of the crop planted. At this early stage of the season, the data does not give us firm guidance on a date forecast because it depends crucially on the weather during the planting season. But based on the current weather data for 2019, our estimate for the 90% completion date is May 31, with a sizable margin of error of plus/minus a week. So, it’s right on the boundary of that June 1 mark.
However, when we look at years that were historically slow planting (labeled in the above chart after June 1), we see the planting season weather is cooler than normal and wetter than normal (see chart below). The current year in blue shows that same tendency with heavy moisture loads in the past several weeks and cool temperatures, although they are closer to normal in recent days.
The near-term forecast shows less rain with temperatures rising once we get into April. Longer term weather patterns suggest a colder and wetter bias for the western Corn Belt in April/May, which would be supportive for not getting the crop planted on time.
What does this means for farmers?
The data strongly suggests a later start to planting this year. If that continues through the planting season and leads to less than 90% of the crop planted by June 1, we think the odds are that we’ll see a lower corn acreage number as compared to USDA’s report next week. Historically, when we don’t reach that June 1 date for wrapping up planting, we see about a 2% drop in corn plantings, which would be about 1.8 million acres this year and could potentially improve the corn balance sheet.
Copyright © 2019 FBN BR LLC. All rights Reserved. FBN Market Intelligence is distributed by FBN BR LLC and is only available where FBN BR LLC is licensed. Contact 877-472-4607 for more information. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.
We do not guarantee customers will receive specific benefits or value from participating in FBN Crop Marketing; results will vary. The data in this post is being supplied as a courtesy by FBN BR LLC. The risk of trading futures and options can be substantial and may not be suitable for all investors. All information, publications, and reports, including this specific material, used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. This post contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC.
Disclaimer: Futures and Option trading involves substantial risk, and may not be suitable for everyone. Trading should only be done with true risk capital. Past performance, either actual or hypothetical, is not necessarily indicative of future results.