Prolonged wet weather in the US corn belt is having a serious impact on the planting of the 2019 maize crop.
With less than 60% of the crop in the ground (compared with 90% on the five year average at this time) and more heavy rainfall forecast over the next two weeks it is looking increasingly likely that a significant acreage will not get planted this year.
The big maize states around the major processing area in Chicago - Illinois, Iowa, Ohio, South Dakota and Indiana are worst affected and the yield reduction due to poor establishment and water-logged soils together with the reduced acreage could well knock 70mln mt off the 2019 corn crop. This prospect is pushing the corn price up towards the $5 bushel mark.
Elsewhere in the world big corn crops are still expected with Brazil forecasting 100 million tonnes, Argentina, 50 million tonnes and the Black Sea region 30 million tonnes. While there is no real concern about global supplies the markets have become nervous and the news has moved the funds to cover in around 70% of their extremely short positions on grains.
At a local level the grain markets, which have been extremely quiet, have come to life with more buyer interest and maize prices moving up around £24 per tonne in the last couple of weeks. This has brought maize much more into line with the wheat and barley price and may reduce the heavy emphasis on maize in many livestock rations.
On the protein side the rains in America are also a factor with the potential for farmers who are unable to plant corn to switch to soybean – but soya plantings are also delayed with only 29% complete compared with the five year average of 66% at this stage. US growers are confused by the options available to them - it’s still not clear how President Trump’s $20 billion compensation to farmers will be distributed and for many there is the option to claim on crop insurance.
With no sign of any resolution to the trade war with China US growers will be concerned about the lack of customers for their crops. Even their close neighbour, and major customer, Mexico is now bringing corn from Brazil.
The local feed trade is suffering from late arrival of some key protein materials as logistical problems continue to delay movement of corn gluten and distillers from the US corn regions to the ports. The barges which travel up the Mississippi with fertiliser at this time of year are unable to move because of the floods – these vessels back load with corn by-products to the Gulf of Mexico for shipment to Europe.