Ya gotta love a grain market where the biggest news you can find is that Argentina is cold, and immature corn and beans may be damaged. Or, maybe you want to throw in with the crowd that are watching for corn exports to China.
By the end of April, Argentine weather is not big news. The crop is getting done, the traders are just looking for a reason to do something different. They are looking, because there is no bullish news in this country, but they would like prices to go up again. The China watchers are always there.
Soybeans have been holding their own, drifting off the highs, then going back up.
The big break has been in corn. Hard to make prices go up with good fundamental news so far this planting season. The traders love to trade on delayed planting, then hot, dry weather.
So far what we have is a scary-dry spring, with warm weather until the last few days and a record planting pace. Farmers are using the good weather locally to work up ground so as to be ready for fast planting.
Corn planted in the middle of April in extreme northeast Ohio is a risk, but the farmer has to at least stir ground or he gets stir crazy. Farther south in Ohio the corn is going in, with USDA reporting Ohio at 34 percent planted as of Sunday night.
Consider that the average is 8 percent, and the fast pace past year had us at 17 percent. Last week we were at 10 percent. This means we are even a little ahead of the national pace. There the average is also 8 percent, but we are now at 28 percent planted.
The market is always going to consider that early planting is a sign of high yields until bad weather would cause them to talk about damage and replanting. So far that is not an issue, even though snow had been forecast yesterday for much of the Northeast U.S.
Now that we are up to the last week of April, even Northeast Ohio farmers will hit it hard this week if we warm up a little. It is hard to drop seed when it is still in the 40s, regardless of the calendar.
Traders go low
While we have been looking at early spring, the market has been defensive of corn acres. With USDA forecasting the largest acres since the 30’s, traders have been betting on lower prices.
May corn futures are now trading at 11 cents above July futures, with the transition to basis versus July coming this week. The recent high on May corn was back on the 3rd, at 6.65 3/4.
This was in that period when the acreage report pulled beans higher and corn for no good reason went along for the ride. When reason hit, the May futures dropped to 5.99 1/2 on the 18th. However, we bounced 29 cents in the next two days.
Prices were then off, but a dime gain Monday got us back to 6.22-1/2, and we tacked on three cents overnight going into Tuesday.
The December futures have been lower, with the report day low of 5.23 on March 30. Then, we had a high of 5.56 on the 9th, but by the 17th we were back to 5.25, with a gain of 8 3/4 cents Monday we got back to 5.45 1/2, and overnight we are at 5.47.
I have to think that, if the planting pace continues and we have a warm and moist May, we will then see new lows in corn. The market is now optimistic for a good crop, but not sold out for one. Some of the excess supplies of the large acres will be used in early September.
The traders are now assuming that as much as a million bushels of corn will be harvested before the official crop year begins on September one. This makes the crop effectively smaller, and it takes the pressure off the old crop as it increases the “old crop” supplies.
Normally, we harvest about a third of a million bushels this early.