Unusual spring, unsettled market Rain, heavy rain. I am sitting here listening to it this morning and enjoying it.
Normally as we start the second week of May I would be discouraged with the rain. I would think of it as a deterrent to planting. This morning I am grateful. I can almost hear the soil sucking it up. It has been so dry.
This spring has been a little weird for the beginning. Start with the fact that spring started in what we normally see as the end of winter. I have a friend in Bristolville who commented that this was the first year he ever mowed lawn in March.
As I mow I notice the progress of my little arboretum. The maple trees were budded the first week of April. My last fruit tree to blossom is normally the Northern Spy outside my office window. I get blossoms the first week of May in most years, but they were more than two weeks early.
The only trees that seem to have a calendar are my oaks and sycamores, which are just budding, and my Eisenhower ashes, which still look dead. My catalpa will get around to putting on leaves some time this month, after scaring me that it died in the winter.
This week we saw USDA release the weekly Crop Progress Report Monday afternoon. To no surprise, we still are at a record pace for corn planting in this country, and Ohio is ahead of the U.S. in general. We started planting in what is normally winter, also!
USDA says that the country as of Sunday night was 71 percent planted on the corn crop, up from 53 percent the week before. Last year, after a wet start in many areas we were at 32 percent, and the average is 47 percent.
Ohio is ahead of that, with 79 percent planted. We gained 22 percent in one week. Last year we were one of the wettest states, and had only 2 percent planted. Our average is in line with the U.S., at 33 percent.
The market assumes that early planting is good for the corn, bad for the prices.
For most of the Midwest, the peak yield comes when planted by May 7, and that is now past. The old timers were not in such a hurry, and they were vindicated last year when farmers around here planted the last week of May, then harvested 185-bushel corn in some cases.
The soybeans are also going in fast. The U.S. has planted 24 percent of the crop, up from 12 last week. Last year we were at 6 percent, but normal is 11. The Ohio planting is far ahead of that. We have 35 percent planted, up from 16 last week. Last year we had nothing, but the five-year average is 13 percent.
So, hopefully we can take a rainy breather, do a little sleeping, a little maintenance, and then put the final push on.
Then, the farmers will turn their minds back to marketing. They know how to plant. The marketing is murkier.
For that last few months we have been looking at an ugly inverse in corn futures that showed us headed toward much cheaper new crop prices. The July futures were lower than the May, the September and December sharply lower still.
We are now in that ugly transition to July, as hedgers stop using May futures the last week of April. Still ahead is the big drop. December futures are not a dollar lower than the July.
So, we traders are talking to farmers trying to make a case why new crop corn at less than $5 is a good deal. It is not much fun.
Barring weather problems that start now, we are headed for a huge crop and lower prices yet. Thursday the reader will get this in the mail. Thursday morning USDA will release the first Crop Production Report. The trade will be looking first at the carryout numbers. Our critical number is 1 billion bushels. The trade is comfortable with that amount of corn left in the pipeline the last day of the marketing year, Aug. 31.
This year we are predicting ahead of the report 749 million bushels left this summer. This is the tug-of-war the market is playing this summer with prices, to ration our crop. But, the trade expects that next summer we will still have 1.75 billion left. This is a huge change, and reason for cheaper corn.
(Marlin Clark trades producer and elevator grain from an office near Andover, Ohio, for Town and Country Co-op of Ashland, Ohio.)