Grain markets remain steady as planting progresses

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Corn planting
Corn planting (Farm and Dairy file photo)

I’m trying to remember what spring was like last year. I seem to remember good progress in the West, but wet weather in the Eastern Corn Belt. Any idea that the start this year would be slow was lost this week as all areas saw good progress, according to the U.S. Department of Agriculture Crop Progress Report.

Planting progress

Corn planting in the U.S. advanced by an impressive 15%, putting progress at 27%, 5% ahead of the five-year average. Ohio went from nothing to 6%, right on average.

The report was led, in my mind, by the 39% planted in Iowa. Iowa is the number one state for corn acreage and production and number two soybean state. Twenty-eight percent is the average corn planting at this time, and last year at this time, Iowa farmers had planted 24%.

The weekly gain was 26%, but it did not come at the expense of the early soybean planting there. Iowa farmers now have 25% of the soybeans planted, up 17% in a week and more than double the 12% average.

Ohio farmers, as of April 28, have planted 7% of the soybeans, slightly above the 6% average. There was nothing reported for Ohio in last week’s support.

The other notable state reported was Illinois, with 25% of the corn and 26% of the soybeans planted. Illinois has long been the number one soybean state and the number two corn state.

I am writing this in the early hours of April 30.

Previously, there was a little concern for planting progress, but this puts that concern to bed unless we have a long spell of wet weather. There is no notable effect on corn that is planted by an average date of May 1, so we can hope that we are in the optimum planting period this year. For northern Ohio, there is no yield penalty until May 7 or May 10.

That is an average. I remember years when the early corn was the best, and I remember the first three years I planted corn in April, and it did not come up visibly until the last couple of days of May when I was really fretting about having to replant.

The best yielding years come when we have warm, dry weather early. The other years come when May is cool and damp. I remember one year when I planted only soybeans and thought that would be the year the soybean yields would shine. Instead, we had a cool, wet May, and the soybeans were less than average.

I also remember a few years ago when the corn was planted very late, mostly in June, and we still had a near-record crop after a perfect summer. Tomorrow is the first of May, and anything can still happen.

The significant market mover this week is our planting, which has moderated prices that we saw early April 29. We were double digits higher on soybeans early, but that went away to small gains at the close.

South America

Besides our planting, the potential market maker this first half of May is South American weather, and the progress of likely Argentine port strikes.

The safrina, or second, corn crop in Brazil is now a high percent of all their corn production. The corn crop there is now the headache for our world exports that the soybeans used to be. A very high percentage of the crop is exported, so that, as of 2023, Brazil is now the world’s largest corn exporter. This is a huge change.

In my lifetime, Brazil has emerged from nowhere to be the world’s largest exporter of soybeans, and now, of corn. They are not the biggest growers, but most of the crop is exported, competing with us, and competing for the most part while having lessor cost of production and lessor export prices.

The wild card in the market right now is that Argentine port unions are threatening and beginning strikes. One strike has been declared as indefinite in time. One is promised for only five days. If these strikes continue, they could have an effect on soybean and soymeal prices. Argentina is the third largest exporter of soybeans, and is the world’s largest exporter of soymeal.

Advice

Be aware that the cash buyers are now switching their hedges to July futures. April 29 was first notice day. That means that any May futures contracts have now become cash contracts.

If you have sold futures, you may now become required to actually deliver grain to a delivery point on the Illinois River, for example. For that reason, farmers do not let hedges go into delivery. Take this advice from someone who has actually had to deliver soybeans to Chicago as a penalty for inattentiveness and ignorance.

Be also aware that cash buyers will now try to “steal the spread.” That is, if July futures are a dime higher than May on the 29th, then the effective basis at your elevator is not 10 cents under the May, but now 20 cents under the July futures.

This basis will exist normally for only a few days, and will generally improve until it may be 10 or 12 cents under the July. Resist selling for this period until the basis improves, unless futures rally dramatically.

The other general advice for this season is to take a few minutes every day to check in with your advisor or receiver. Do not ignore marketing while you are planting, especially since the markets have a lot of downside potential right now.

The only thing you have going for you right now is the possibility of the weather or labor issues in South America. Do not come back here June 10 and wonder what happened to prices.

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