The problem with trying to pick a bottom to the market, as I have been doing the last two weeks, is that it is easy to underestimate just how low things can go.
Like one big global game of Limbo, the pole goes lower and someone manages to go under it without falling.
When markets opened up the morning of May 22 after the “biscuit break,” we were sharply higher in corn and soybeans, and once again I heard the idea that we might finally be rebounding. In fact, the early gains of corn up six to seven cents and beans up seven to 11 cents did not hold, at least for soybeans.
By the end of the day session, July corn futures had in fact gained 16 1/2 cents to $5.71, December corn futures had gained nine and a quarter cents to $5.09, but July soybeans had gained a penny to $6.36 1/2, and November beans had gained one and a quarter cents to $6.06 1/4.
In other words, we had a good bounce in corn, but the soybeans lost the early gains and closed barely positively. The ugly news was that, as the evening session started May 22, all the four contracts lost value.
By 10 p.m., as this was being written, July corn futures were off two and a quarter cents, the December corn was unchanged at $5.09, July soybeans were down four and a quarter cents at $13.37, and the November beans were off two cents at $11.95.
So, we can’t say the bottom is in, with prices weak after just one day of gains.
The corn looks better than the soybeans. The reason given by many analysts was the U.S. Department of Agriculture Crop Progress report, out in the middle of the day. This showed planting well ahead of normal in the country, and even showed Ohio as having more than caught up after being the one major state that was behind.
There were also bearish items in the WASDE report out last week, primarily as USDA still thinks the corn will reach 181.5 bpa.
Let’s look at the planting numbers. Ohio is reported to have planted the most acres in one week in my memory. I did not look up the history, and I am old and have suspect memory, but Ohio farmers were reported to have gone from 26% planted to 66% in one week. Not a lot of sleep implied in those numbers.
The weather was open all week, and the lights ran in the fields all night on a lot of farms. Sixty-six percent is well ahead of the average 52%, so we have gone from being behind with corn to being ahead. The U.S. at the same time went from 65% to 81%, against the average of 75%.
Each week, I have reminded you that the crop needs to be 75% planted by May 15 to expect no yield decrease from late planting. This report would indicate that we were just a couple or three days late getting to 75%.
The soybean planting is even better. Ohio was actually already ahead last week, and this week we had big gains. We went from 28% to 63%, with an average for five years of 39%.
The U.S. was reported to be 66% planted, well ahead of the 52% average. So, planting progress is not an issue.
Now, we can go on to the big topic of our morning Midwest conference call May 22, which is dry conditions. Ohio is dry. Some areas have had less than an inch of rain in May. Southern Illinois is dry.
The best corn areas of central Nebraska normally see irrigation turned on in June, but the center pivots are already running, and the dryland corners that the pivots miss have corn that is curled up from lack of moisture.
Most of the rest of the prime area is well along with planting, and in good condition, but wanting a little rain. The exception would be southern Minnesota which had been too wet, but had a good week and is up to 80% planted, just 2% ahead of normal. A few small areas have had excessive rain, as much as seven inches!
So, the crops are getting planted and sooner or later farmers will catch up on sleep, and then start worrying about prices. We saw some new lows last week. July corn futures touched $5.47 May 18. December futures got below $5 to $4.90 3/4 the same day.
July soybeans almost broke the $13 level, with $13.04 3/4 May 19. November futures touched $11.72 May 22.
There is a strong seasonal trend for corn and bean prices to improve in the end of May and June. We can only hope that the worst is over, and better prices are ahead.
In fact, some advisory services are already recommending some re-ownership of corn that was already sold or hedged, or the use of some option strategies to buy almost at-the-money options and sell options a dollar higher to capture some money out of this break. That is fine if this is just a break, not a revision.
I have not mentioned wheat. There is nothing good to talk about. Chicago wheat futures were down 30 cents last week. The Kansas City bread wheat was down 53 cents, even though the crop tour in Kansas says the crop is the worst in decades. Remember, it was planted in the dust, and came out of dormancy in the dust.
Feeders used to renting pastures to put cheap weight on beef are finding no pastures with any growth.
The one negative for wheat was the good news, if you are a Ukrainian producer or an African user, that the Russians agreed to a 60-day extension to the Black Sea shipping agreement. It was thought that this might not happen, unless the Chinese put pressure on the Russians.
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