CHICAGO (Reuters) - (The opinions expressed here are those of the author, a market analyst for Reuters.)
Mother Nature apparently disagrees with the government’s generous forecast for U.S. spring wheat acres, as the extended winter has kept planters grounded. If the frosty spring lingers too much longer, more of these acres may ultimately end up devoted to oilseeds than farmers originally had planned.
So far, April has felt more like early February for much of the United States. Snow still blankets most of the Northern Plains, where the spring wheat is grown, and average temperatures there have been near 20 degrees F below normal since the start of the month.
The U.S. Department of Agriculture recently pegged 2018 spring wheat planted acres at 12.6 million, some 1.1 million more than analysts had predicted.
Last summer’s drought in the Dakotas and Montana shrank the U.S. spring wheat harvest to a 15-year low. This sent Minneapolis spring wheat futures surging last June, which provided a great opportunity for producers to price some of the 2018 crop at profitable levels.
But the planters have sat idle as winter continues, especially in North Dakota, which grows half of the nation’s spring wheat. As of April 8, only 2 percent of the spring wheat crop was planted nationally, according to USDA’s statistics agency. None of that progress had taken place in the core spring wheat states. By April 15, the next report date, planting should reach 15 percent based on the five-year average. (tmsnrt.rs/2GVZhuc)
Based on the latest weather forecasts, reaching this benchmark by Sunday is basically impossible. Below-normal temperatures are expected to prevail for the next 10 days in spring wheat country, and another snowstorm could target parts of the region on Friday.
Spring wheat planting typically wraps up by the end of May, but if conditions do not improve over the next several weeks, farmers could opt to plant something else, like corn. But even the corn planting window starts to close toward the end of May, meaning that oilseeds could ultimately gain more acres in the Northern Plains.
Cash prices for North Dakota’s prominent oilseeds – which are typically planted after grains – are elevated relative to last year, and this could also boost incentives to plant. The state is becoming a larger fixture on the national soybean front, planting the fourth-largest area in the country last year.
North Dakota is the top U.S. state in canola, and it trades off with South Dakota for the lead in sunflower seeds and oil. USDA projects that combined planted area in North Dakota for these two oilseeds plus soybeans will rise fractionally over last year to 9.2 million acres.
USDA placed 2018 North Dakota spring wheat plantings at 6.4 million acres, some 20 percent more than last year. Corn area is expected to fall by 11 percent to 3.05 million acres.
It may seem way too early to talk about yield losses, especially stemming from late planting. But historically, there is a greater chance for below-average yields when spring wheat planting is much below 50 percent complete by the end of April. (tmsnrt.rs/2GTuK48)
Some recent slow-planting years eventually produced good yields. Planting was only around 20 percent complete by the start of May in 2009, 2013, and 2014, but favorable summer weather boosted final yield between 3 and 6 percent above the long-term trend.
But some of the worst years have also been associated with slower planting. Yield fell about 14 percent below trend in 2011, and end-of-April planting had only reached 10 percent completion. The long-term average pace by April 30 is around 40 percent.
Editing by Matthew Lewis