PanXchange: Hot Commodities: Hemp Planting Updates
It’s crunch time for planting decisions. Today is the last day for corn prevented planting filings – a range of options on crop insurance that gives payouts for not planting the full, normal crop – for the corn belt. CBOT corn futures rallied this week to break-out levels as corn acres planted as of last week came in well below both last year and the 5-year average.
As of late, news programs have run endless reports of flooding across the Midwest, with farms underwater and disaster relief on the way. Indeed, uncharacteristic weather has affected much of the United States over the past few weeks, especially when looking at the agriculture-heavy states Illinois, Indiana, Nebraska and Iowa. In many of these areas, traditional grain farmers are currently deciding between planting late corn and hoping for conditions conducive to rapid maturity, planting shorter growing season soybeans whose pricing is currently in a slump from large carryout and trade wars, or taking prevented planting insurance coverage as the deadline approaches. But due to slower adoption of hemp regulations, these states were not slated to be major producers of hemp for the 2019 crop year.
Germination to harvest time for hemp is in the range of 90-120 days depending on location, genetics, weather, and a slew of other variables. Most of the farmers we’ve spoken with are planting from starts grown from clippings in a greenhouse versus seeds, thus gives an extra cushion for hemp farmers yet to plant. Clones taken from a sister female plant.
So what are current conditions like?
Although the USDA is not publishing hemp specific updates, using data from the Crop Progress Report, including current soil conditions, historical precipitation levels, and days suitable for planting, we can assess weather and soil conditions for those states expected to plant significant hemp acreage. Additionally, statistics on corn planted is a relevant proxy for hemp planting conditions where applicable as both crops are planted during the same time of the year and have a similar timeline to maturity, with hemp likely having a slightly shorter maturity time as they are started in greenhouses and transplanted as starts.
While the general commodity market sentiment is that the major growing areas of the US are affected by adverse planting conditions, the data show that major hemp producing areas of the US generally have a favorable outlook and fundamentals are in place for a strong planting season. Below is a breakdown of conditions in the major hemp growing areas.
(Image source: USDA Crop Progress NASS)
Colorado saw much above average precipitation year to date, with the southwestern part of the state experiencing the most.
Colorado is slightly behind the historical average when looking at planted acres of corn coming in at 71% compared to the historical average of 83%. This past week dried up a bit, allowing for planting, and we spoke with many farmers getting starts in the ground this week.
This is the first time since the U.S. drought monitor was launched that the entire state of Colorado is drought-free, and snowpacks are near record levels giving irrigated farmland a strong outlook, a remarkable change from last year. A main risk for Colorado crop is hail.
Oregon & Montana
Oregon saw record-breaking precipitation levels in April, resulting in improvements to drought conditions throughout the state. Bend received around 2.25 inches of rain, coming in as the second wettest April over the past 118 years. The western side of the state is generally in line with historical averages for year to date precipitation, ranging from 90% to 105%, while the eastern side is above-average ranging from 111% to 121%.
As these two states are not major producers of corn, acres planted is not the best proxy for hemp production. But over the last week, Oregon and Montana had 6.8 and 5.8 days suitable for planting and fieldwork, signaling weather has been suitable for planting. Topsoil moisture conditions in both states are looking good as well, with 73% and 80% labeled as adequate.
Precipitation throughout the Southeast has been above average for the region as Kentucky saw 136% of normal precipitation for the past year. Some areas of western North Carolina exceeded historical averages for the month of April by six inches, while southwestern, central and eastern parts of Tennessee experienced 150% or more precipitation compared to historical averages.
Corn planted in the southeast is generally on schedule as North Carolina is behind by two percent compared to historical averages (95% versus 97%), Tennessee is behind by four percent (93% versus 97%), and Kentucky is behind by seven percent (82% versus 89%).
Topsoil moisture conditions in the southeast are generally favorable as 72% and 77% in Tennessee and Kentucky are categorized as adequate, while 21% and 15% are labeled short respectively. North Carolina looks a bit drier, with 60% of the state considered short or very short, while 39% is adequate. In South Carolina, 58% of the state is short, 28% is very short, leaving the remaining 14% as adequate. Conversations we’ve had with farmers in the southeast areas, planting conditions have been good when for Tennessee and Kentucky – expected to be two of the largest producers this year. Many farmers report that they have already planted or intend to do so this week.
As a side note, last week, one of the largest greenhouse operations in the country based in Kentucky announced they are leaving ornamental bedding plant production and shifting their entire production facility to hemp starts and indoor farming.
The planting conditions for these major hemp growing regions are currently strong but are only one part of the equation as farmers face increased risk this year when contemplating planting hemp. There is strong interest from farmers across the demographic spectrum, but applying for permits for acreage doesn’t always correlate to farmers exercising on those rights. And as a brand new crop in many markets, a lack of generally accepted and widely available agronomic knowledge regarding how to plant, how to control plant gender, harvest techniques, drying and curing best practices, and even when the ideal time to harvest is, all add to uncertainty around quantity and quality of harvestable biomass that will make it to processing or storage facilities.
Finally, a lack of crop insurance creates a risky environment for farmers making the switch. This environment will create a huge amount of opportunities for farmers up to the risk, and this crop year will undoubtedly bring about more knowledge about the entire hemp production chain, from seed to tincture. We’re excited to be working with all our partners in this dynamic time.
Rhode Island is rolling out an interesting use case for blockchain: tracking bad actors. We will no doubt see more of these solutions for hemp, an industry that could use end to end, public tracking.
Image Sourced by Pixabay
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