By Lester Aldrich.
KANSAS CITY (B)--Corn and soybean farmers around the Midwest are delaying bookings of their fall crops. Grain and soybean merchandisers report bookings are behind normal in nearly all instances and well behind the advised levels of at least one market advisory service.
Farmers are not real confident of their ability to deliver the grain or soybeans, said Tom Jackson, agricultural economist at DRI-WEFA. They are still uncertain about what they're going to get for a crop.
Although rain is supposed to make grain to commodity futures traders, in reality it also makes mud, which this year kept farmers from completing their planting in a timely fashion, merchandisers said. On average, planting was not disrupted all that much, according to U.S. Department of Agriculture figures, but merchandisers and economists pointed out that the areas most delayed were those where yields and production tend to be highest.
The wet, cool weather also delayed plant growth and in some cases drowned out portions of fields.
With the return of more normal weather, the corn that was not standing in water responded quickly, the merchandisers said. Most expect this afternoon's state crop reports to show a significant improvement in corn condition. Most reported visible changes in crop condition on a daily basis.
But that does not mean the crop is entirely out of the woods yet, the sources said. Wet fields mean roots are choked, and the plants cannot respond to sunny weather.
Some fields still are in the process of being planted to alternate crops. Portions of some fields will not be planted at all, and the acreage adds up.
Bill Biedermann, vice president and director of research at Allendale Inc., said his company's survey of farmers and crop conditions indicates U.S. farmers may only produce about 9 billion bushels of corn this year, down from about 10 billion last year.
If production is down, prices at some point could rise, and low prices right now are what are keeping farmers from booking new-crop corn, Biedermann said.
Currently, cash prices in most areas are below government price protection programs, so there is no reason for farmers to book 2001 corn just yet.
Jackson said the fundamentals are going to have to prove to the market that wet weather actually can take out some of the crop. It has been done before, but it is hard given the mindset of traders.
Biedermann said the Allendale survey also showed an expected production of about 2.3 billion bushels, versus 2.9 billion last year. This is 600 million bushels less, or the entire expected soybean carryover.
Some of the expected corn land is being planted to short-season soybean varieties, merchandisers said. This is expected to help production but may not make up for what could have been.
That puts soybean farmers in the same boat with corn producers--the price is too low, the sources said.
With marketing programs and the loan deficiency payments, farmers can still benefit if the price goes down, Jackson said.
Wheat farmers are not selling large portions of their new-crop wheat, either, grain merchandisers said. The market is being kept at steady levels because they booked enough ahead of time to satisfy current needs, along with what is being sold over the scales.
Some merchandisers said this market could develop a significant protein premium in coming weeks for the grain merchants and farmers who store grain at home. Yields are coming in at better-than-expected levels, and higher yields often mean lower protein levels.
Some fields that looked as though they would not yield a crop on May 1 actually turned out to be fairly decent, merchandisers said. The cool weather of May that left much of the Midwest slogging through mud also removed a lot of stress from the wheat crop, leading to the better yields.
Farmers are not saying how much more the market will have to add to the price before they will sell, merchandisers said. It is just something more than what is being offered now, unless cash prices remain mired in the muck until fall when growers need space for those crops.