Yesterday, USDA released its weekly crop progress report. Planting of the 2010 corn crop, at 68%, is off to a start that is well ahead of last year’s crop (32%) and the average pace over the last 5 years (40%).
In his analysis of the most recent plantings report, UBS Chemicals analyst Don Carson, sees some risk in over production of corn in 2010.
"A record planting pace coupled with timely rains in the Corn Belt has facilitated germination resulting in 19% of the corn crop emerged vs. the 5-year average of 9% as of May 2nd. We expect the fast planting start to lead to planted corn acreage of 90 million acres vs. the 88.8 million USDA estimate and with a longer growing season raising the odds of yields equal to the 2009 record of 164.9 bushel/acre, the 2010 crop could be 500 million bushels or 4% above 2009."
Nonetheless, UBS machinery analyst Henry still sees 2010 crop production resulting in a flat outlook for ag machinery sales for the remainder of the year
“Although down from the prior year, we note that corn, soybean and wheat prices remain well above historical averages, and farmers are expected to remain profitable in 2010 (USDA forecasts cash net income to increase 8% year-over-year in 2010),” says Kirn. ‘That said, given above trendline farm equipment sales over the past few years, we expect flattish U.S. farm equipment demand in 2010.”