By John DePutter & Dave Milne – September 19, 2019
“With a week left of summer officially, you’d think farmers might want to finally see an end to this frustratingly difficult season. Actually, they’re wishing for an endless summer.”Capital Journal, September 14, 2019
What it means:
There’s plenty at stake for farmers on both sides of the border
With corn and soybean crops in the U.S. and Ontario planted so late in the spring due to the wet conditions, there’s little doubt Mother Nature is going to have to cooperate if producers are going to reap crops that will pay the bills. That means not only getting enough sunshine and warmth to get crops to maturity, but also enough good weather to actually get the crops out of the field.
As all farmers know, the crops are on the clock. According to this week’s USDA crop progress report, just 18% of the American crop was considered mature as of Sunday, up 7 points on the week and far behind 51% last year and 39% on average. Meanwhile, only 15% of the national soy crop was reported dropping leaves as of Sunday, versus 50% last year and 38% on average. In Ontario, corn and soybean crops are similarly delayed.
Some crops not likely to make it
Although much of the Midwest and Ontario is currently experiencing near ideal conditions – well above normal temperatures and lots of sun – the weekend is expected to usher in wetter and cooler weather. And with the days getting shorter, and the mercury dropping a bit more every night – the risks are rising.
If Jack Frost arrives at his normal time between late September and the first couple of weeks of October for much of the Midwest, some crops will not make it to the finish line, resulting in significant producer losses. Further, producers may be facing the potential of high moisture corn that will have to be dried, pressuring farmer returns as well.
Delays may linger
Meanwhile, as we get deeper into the fall, there’s also the threat of muddy fields for harvesting that may result in compacted, damaged soils that will linger into next spring – possibly resulting in delays in getting the 2020 crop in the ground. Fall fertilizer applications and winter wheat seeding are likely to be delayed as well, which may negatively impact next year’s returns, too.
The bottom line is late planting in the spring has a very good chance of not only crimping returns for this year, but next year as well. At a time when commodity prices are already low, that’s a bad combination. The USDA said in August that total U.S. crop receipts for 2019 are expected to decrease $3.3 billion (1.7%) in nominal terms from 2018 levels. And through the first quarter of 2019, Statistics Canada said Canadian crop receipts were down almost 1% (excluding cannabis returns).
Of course, any production corn and soybean production cuts in the U.S. may result in higher prices, but with overall global supplies still adequate, any gains are likely to be limited.
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