The extreme weather throughout much of the nation has definitely created its share of impacts. But the recent USDA crop reports and World Agricultural Supply and Demand Estimates revealed another impact to agricultural crop forecast, ”There’s no doubt this year the weather’s had an impact on planting progress in the U.S. to the extent that it’s extended well into June now, it appears very likely that we’re going to loose some acres.”
And as Ag World Agricultural Supply Chairman Gerry Bange says, the potential impacts range from planted acres to crop prices and they are only beginning. Rod Bain and top USDA officials take a look at the weather and June's crop forecasts.
Usually June is a quiet month compared to other monthly releases of USDA Crop Production Reports and World Agricultural Supply and Demand Estimates as forecasts are still based on the March Prospective Plantings Report.
Ag analyst and observers await the end of June for the Acreage Report that solidifies crop planting projections. However, as World Ag Outlook Board Chair Gerry Bange points out, ”This particular year’s been unlike any that I’ve seen for ever, really.”
And that’s because of the extreme weather that’s hampered planting and affected crops in many parts of the country, ”If you look at what’s been happening in the U.S., you could pretty well say that the northern half to two-thirds of the country has been unusually wet, and the southern half of the counrty, or third of the country, has been unusually dry.”
In fact, because the weather has been such a predominate factor in crop planting and production this year, USDA did something that it rarely does in its June Crop Reports; it made adjustments. Several of them, according to USDA Chief Economist Joe Glauber, ”We’ve made adjustments to acreages on spring wheats, we’ve reduced corn acreages from the prospective plantings numbers and we’ve made adjustments to cotton.”
For example, overall wheat production saw a slight adjustment up from May, however there was a big decline in the forecast for spring Durham wheat due to excessive moisture and flooding in growing areas like Montana and North Dakota.
Gerry Bange says that flooding on the Mississippi River in May led to a projected loss of several acres of planted rice in states like Arkansas and Mississippi, "We think we’ve lost just short of 168 thousand acres, to be exact what we think we’ve lost in terms of our planted area.”
On the other weather extreme, Joe Glauber says that national cotton estimates were adjusted down over one million bales because of the drought that has plagued Texas, ”A greater proportion of the cotton crop is centered in West Texas, we’re expecting abandonment rates to be very high; close to 35% or so.”
But, perhaps no crop saw a greater adjustment or received greater attention than corn, due to excessive moisture and flooding, first in the eastern corn belt, in states along the Ohio and mid-to-lower Mississippi River Valleys then later flooding along the Missouri river valley impacting states like Iowa and Nebraska, ”In net we took down the planted acreage numbers by about 1.5 million acres, and we adjusted our harvested acreage numbers by almost 1.9 million.”
And while the US corn crop is forecasted to have a record number of acres planted this year, ”Harvested area along with the current yield forecast gives us a production at 13.2 million bushels, which is still record high, still record corn production in the U.S., but 305 million bushels less than what we had estimated last month, again because of the loss in area.”
Both Gerry Bange and Joe Glauber say there will be some residual affects to other commodities. This will mostly be felt in the price of corn, tighter supplies helping to raise record price estimates even higher, ”Now we’re seeing that’s certainly to persist through the end of this year, and all the way through the next year with a season average price at $6.50, which is very, very high for corn.”
So, for example, ”That is obviously going to have an impact on livestock, and dairy and feed costs will be higher.”
And as corn prices rise, greater demand for wheat and soybeans is already pushing prices in those crops higher as well. As much as .50 cents to a $1 higher between the May and June USDA outlooks. In fact, many commodities, due in part to adjustments, are seeing price forecast increases as well.
Speaking of commodities, soybeans that was one crop not adjusted in the June forecast due in part to the late planting season and lack of data at this time, ”The planting period for soybeans extends a bit, certainly into June, and we’ll wait to see what NASS has to say on those numbers.”
In fact, many will be watching with a close eye on June 30th, when USDA releases its acreage, and grain and rice stock updates to see if additional adjustments are needed in crop estimates and what impacts might lie ahead for supplies and demand and prices of ag commodities.