Summary
Planting of corn east of the Mississippi have been delayed into the second half of May, with a potential reduction in yields and acres. On top of this there has been a reduction of fertilizer applications. The eastern corn belt could suffer more then the western corn belt with supply and basis implications.
Analysis
The wet April and first half of May have resulted in a delay in the planting of corn and soybeans in the key eastern corn belt states east of the Mississippi: Illinois, Iowa and Ohio. We have had a few clear and warm days this week and still looking good as of this Wednesday May 20 writing. Farmers will get a lot of corn acres planted in these states this week and move on to soybeans as soon as they can.
The delay in planting will result in reduced yields. While the USDA has reduced the average yield, what does not show up is a state by state reduction. The eastern corn belt will suffer more of a yield reduction as these are the states that have been delayed the most. In addition, it is evident that farmers have not applied their normal amount of fertilizers this year. This is especially true for potassium (potash) and phosphate. While this might not result in reduce yields in normal years when the plant "mines" these minerals from the soils, they can leave the crop more susceptible to stress and reduced yields.
From here until the harvest this fall the most critical remaining issue is weather. We are at the end of the current La Niña and according to the Climate Prediction Center, most models show that for the remainder of the year we will be in a neutral state, as we were this time last year.
If corn yields drop in the eastern corn belt, ethanol, feed mills and grain companies in the region may be faced with a higher basis for their corn then the western corn belt putting them at an economic disadvantage. The larger companies like Cargill, ADM and Bunge with a presence throughout the corn and soybean belt will not suffer. The Anderson's and other regional companies could be impacted.
