The planets are aligning this morning in a manner that will be easier to interpret by the end of the day. Unfortunately, I have to write this on Tuesday morning, not Tuesday evening.
The planets are aligning, or even colliding, in the form of the USDA Planting Progress Report, out Monday afternoon, and the USDA Supply and Demand Reports, out before the open today. All make interesting reading, and all indicate another bounce in this bullish market.
I have said that the market had run out of steam and needed more fundamental news to sustain it. That would happen if we continued a slow pace of planting, I have told callers.
Now, that is true, and there is more news besides. The USDA U.S. and World Supply and Demand Reports indicate a drawdown of supplies and point to higher prices. The grain trade was expecting a 1.71 billion-bushel carryout in corn at the end of this year. It got an estimate of 1.6 billion. That is not a lot, but it is in the right direction. It is also below the lowest trade guess of 1.645 billion.
The soybeans came in as expected, at 130 million bushels. The significance there was not that it was not a surprise, but that it was 35 million below the April estimate.
The Planting Progress Report contains the immediate market-making news. However, the least surprise is in this report, as the market has been trading delayed planting for several days. This would be the reason why the bullish enthusiasm in the market recently had changed clothes.
The last few days corn has gained at times when beans were lower. This is a reversal of a market that has been led by the beans, ever since the March 31 acreage surprise. At that time, we found out the corn acres would stay closer to last year instead of declining and that we would plant several million acres fewer beans.
Now it remains to be seen if the acreage projections are correct.
Corn planting in the country, led by the East, is sadly behind normal. In addition, there is disagreement as to how fast we catch up. Some forecasters think the wet patterns will hold us back this week and next. Some have stirred the chicken entrails and see clearing and a catch-up of planting. You roll the dice on this one.
What were the numbers? The U.S. as a whole, which is represented by the 18 major corn states, is behind 23 percent compared to the five-year average. We normally plant 71 percent of the crop by this time, but are at 48 percent. Last year we were also slow, and still raised a huge crop, however. This time last year we were also at 48 percent. That is the good news.
The bad news is that last year Ohio was similar to the country as a whole, but this year we are one of the laggards. Ohio, as of Sunday, was at 22 percent planted, up from 13 last week. We have a normal average of 68 percent, so are less than a third of normal planted.
Indiana and Illinois are even further behind, and they are two of the four largest states for acres. Indiana is 11 percent planted, and Illinois is only 10 percent done.
The soybeans are a similar situation. The U.S. is 14 percent planted, with 25 being normal. Ohio is at 13, but we normally are 37 percent planted.
Historically, even though we got away with it last year, this is the week that late planting starts to hurt yields. In Ohio, the best yields come when we are done the first week of May. You can argue that the magic day is maybe the 10th or after for northern Ohio.
Regardless, the late planting adds an immediate bullish factor to the bullish supply situation. The next week will make critical differences for the crop and the markets.