It looks like we split a doubleheader on Friday. I suppose it was a case of you win some and you lose some.
First, in its World Agricultural Supply and Demand Estimates (WASDE) report, USDA lowered its price estimates on corn, soybeans and wheat for the 2013 crop, a bearish signal for the industry. Later in the day, the Assn. of Equipment Manufacturers reported that U.S. and Canada tractor and combine sales were up pretty much across the board in March.
USDA raised its ending inventories of corn by 164% compared to a year earlier. With that, the ag agency also dropped the range of its corn price forecast to $4.30 to $5.10, with a midpoint price of about $4.70. This is about $2.20 a bushel lower than last year’s estimated $6.90 per bushel average.
In terms of yield, the ag agency assumes the slow start to corn plantings will also impact yield, and is estimating 158 bushels per acre or about 3% lower than the 20-year trend, but much better than 2012’s estimated drought-stricken yields of 123.4 bushels per acre.
USDA laid out a similar scenario for soybeans, dropping its price range estimates for the coming year to $9.50 to $10.50 with a midpoint of $10.50. This is a drop of about $3.80 per bushel from last year.
For wheat, the outlook wasn’t quite as bearish as the agency dropped its price range $6.15 to $7.45 with a midpoint of $6.80 a bushel. This is $1 dropoff from 2012’s estimated average of $7.80.
Despite concerns about the ideal planting window beginning to close due to the cold, wet spring across much of America’s breadbasket, farmers continued on their spending spree in April.
According to the Assn. of Equipment Manufacturers, sales of row-crop tractors (100-plus horsepower) continued to surge in April. In the U.S., unit sales of 2WD high horsepower tractors rose by nearly 30% through the first 4 months of the year vs. the same period of 2012. In Canada, sales of row-crop tractors are up by nearly 12% January through April 2013.
For the year, total U.S. sales of all farm tractors are up 9.3% through April, while Canada unit sales of all tractors are up 8.9% for the same period.
Sales of combines showed little sign of easing up either. So far, January through April unit sales in the U.S. are up 57.2% and in Canada they’re up 45%.
Many in the industry consider this week — mid-May — to be critical in determining how many acres of corn are planted and what those acres will ultimately yield. Through yesterday, USDA reports that in the 18 states that planted 92% of the corn acres last year, only 28% of the corn crop is in the ground compared with 12% last week and 85% at this time last year. On average, over the past 5 years, 65% of corn acres were planted by this date. It looks like we’ve got a lot of catching up to do.
I’ve spoken with several dealer-principals during the past week and none showed any deep concern about equipment sales for this year. Next year is a different matter though. For now, they’re focused on getting their customers in and out of the field.