Corn prices crashed on the Chicago Board of Trade the last week, even as soybeans tried to hang on to recent highs.
Last week, I made the case that this was, after all, a bean rally. The corn was being dragged along, and corn prices were showing signs of faltering. That view was confirmed this week with a major decline in corn prices that demonstrates a severe divergence between the two commodities.
Corn’s swan song?
Ever since the March 31 USDA Planting Intentions Report, the fundamentals have been pointing toward better bean prices and worse corn prices. In fact, corn did go higher for a time. That time is over.
Cash corn prices locally have declined about 60 cents in April, with most of that in the last 10 days. At one point Monday we hit 3.60 1/2 on the May futures, 47 cents below the April 2 high.
We traded above $4 May futures eight days in a row while the soybeans were gaining $1.76 in less than three weeks. We lost a third of that soybeans gain in the last two days, to a 10.12 low overnight Monday, but are now at 10.22 before the Tuesday open.
In addition to the futures losses, basis has widened 10 to 15 cents as there is very little local demand for corn. The futures loss of 47 plus 13 cents or so basis decline is a 60-cent cash change in price.
I have been turning down several trucks a day for a month because the feed mills in central Pa. are jammed. At the same time, the farmer attitude is that they will think about selling cash corn at 4.25 to 4.50. Unless there is a major fundamental change, this is unrealistic.
What is the next fundamental change? Well, we are already talking about delayed planting. Locally, we had a dry spell in March, and have seen ground stirred off and on since then. Now we are stopped by rain again, with more rain forecast.
The fear of delayed planting got some initial strength yesterday. The first USDA Planting Progress Report was released Monday after the close. The trade was hoping to find 10 percent of the corn in the ground. It got just 5 percent, when 14 percent is the five-year average.
Last year we had 4 percent at this time, and went on to make a huge crop.
A 20-cent or so break in bean prices Friday might have been a weekend profit taking move, or might have been a reaction to the Dow declines of the week, after six weeks of positive Dow action.
Since the beans have been trying to support the corn prices, the bean decline made it easy for the corn to make new recent lows.
Overnight Monday/Tuesday we have recovered modestly on corn and beans. Maybe we have put the lows in again on the delayed planting.
Bullish export news is helping. Mondays export report from USDA is pointing toward record soybean exports.