Commodities Report: Planting off to slow start
The 2018-19 growing season in the U.S. is off to a rough start to say the least. The domestic winter wheat crop has struggled because of dry weather during the winter and early spring. As of late April, just 31 percent of the winter wheat crop was rated in either good or excellent condition. These are some of the worst ratings for this time of the year since 1996. The winter wheat harvest season is just around the corner. Spring wheat, corn and soybean planting has commenced. But because of a relatively cold, wet spring, planting is off to one of its slowest starts in recent history. As of late April, just 5 percent of corn and 2 percent of soybeans had been sowed, which is well below historical norms. Perhaps a bigger concern, just 3 percent of the spring wheat crop had been planted. Typically, in late April a quarter of the crop should be in the ground. Now, farmers can plant the crops much faster than a decade ago due in part to advanced technology. And the weather after planting is much more important to the crops than before. Along those lines, the longer-term weather outlook through July shows relatively favorable growing conditions for corn, soybeans and spring wheat. So at this point there is no reason for alarm. However, with the USDA currently forecasting 2018-19 domestic corn acreage at its second smallest level in the last eight years, the concern is that corn plantings could be even smaller due to the delays. With such an occurrence happening, it is very easy to paint a tighter corn supply picture. And that could be felt throughout the major commodities for the foodservice industry. Also being felt in those commodities is the existing government trade policies. As of this writing, negotiations covering the North American Free Trade Agreement, China, and various other countries including Japan were ongoing. Any major disruption in trade could push an excessive supply for various commodities on buyers. But we’d offer that it’s more important to get these deals done amicably so all sides of the agriculture supply chain would win, producing a more stable supply in the coming years.
David Maloni is commodity consultant for American Restaurant Association Inc., a food commodity research, forecasting, consulting, and contract risk management organization founded in 1996 specifically advising the US restaurant and hotel industry and supply chain.