Rain patterns across the Midwest have seriously delayed plantings, and have jerked around markets.
This week, the results of continued delays were surprising. Corn futures made new all-time highs last week as the wet weather resulted in very low planting progress numbers. As of Sunday night last week, the nation was only 10 percent planted, versus a normal 35 percent.
The result was a December corn futures high of over $6.37 on two different days. The highs came April 29 , the first trading day after the Monday afternoon USDA Planting Progress Report, and last Friday, in anticipation of a wet weekend.
So, one would expect that, with the actual wet weekend occurring, and with the assumption that the corn planting progress was still way behind normal, we would see higher prices Monday.
One would be wrong!
In fact, December corn futures at the low Monday were nearly 33 cents off the Friday high. As usual, the analysts’ twist is the crucial item, not the actual fact.
Looking at the numbers, the planting progress is terrible. Ohio is a little better than some states, at 31 percent planted, a big gain from the 9 percent of last week. Still, that is well of the 59 percent that is the five-year average, although it is in line with last year’s 33 percent.
The U.S. as a whole is at only 27 percent, up 17 percent in a week, but barely half the normal 59 percent. Pennsylvania is right on pace, at 33 percent versus a normal 34.
Illinois and Iowa, however, have only planted a fraction of the norm. Illinois has planted 28 percent, and 76 percent is the average. Iowa is at 18 percent versus a normal 64 percent. It is in the Western Corn Belt and the Northern Plains that the worst problems lie.
I listened to a couple of the weekend farm shows on TV and noticed two things. First, analysts talked about parts of Iowa that were so wet it would take two weeks to get going. They mentioned flooding in many areas, and 18 inches of snow in the north.
But, on the other hand, they were not too worried about yields until planting continues after May 15.
That planting date assumption might be part of the crash yesterday. The thinking seems to be that, yes, the progress is bad, but we rallied prices to new all-time highs last week, so how high do we need to be. And, we are not in real trouble for another week or 10 days.
So, it remains to be seen how much we catch up this week. It does not look good in eastern Ohio, unless we squeak through the forecast rain today (Tuesday).
Traders know, however, that we have remarkable capacity in equipment to catch up, and have proven it before. The highs in corn were countered by lower and erratic soybean prices as traders made a knee-jerk reaction that corn acres might be delayed enough to become bean acres.
Beans have lost over $1.50 since the November futures price of 13.15-1/2 posted mid-April, so more losses are disappointing. “Erratic” may be a little mild.
November bean futures made the recent low at $10.60 on April Fool’s Day. In two weeks, we rallied $2.55. Then, we lost $1.50-1/2 in the next two weeks exactly, to May 1.
Since then, prices are actually 50 cents higher, but with a lot of volatility. For example, we had a 56-cent range on April 28, a 51-cent range April 30, and a 43-cent range on May 1.
Don’t look for switches
One other thought emerged from the TV experts over the weekend that is echoed by local farmers. This year there will not be switches between commodities because all the seed is already committed.
Hang on for another interesting spring!