Market Monitor: Good planting progress, bad prices

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The main focus of the market these days is a matter for the calendar. These are the days when prices are all about planting progress, and planting progress is now great.

Gone are the worries that we would be delayed, as good weather has put us way ahead of the five-year average.

Corn

USDA statistics, released Monday, show progress as of Sunday night. Ohio, which had lagged the rest of the country, now has 55 percent of the corn planted.

This is up from just 15 percent the week before. It is also significantly above the 36 percent of last year and above the 47 percent average. The nation as a whole is now at 75 percent planted, versus an average of 57 percent. We added 20 percent last week in the country, and were only 55 percent planted.

Soybeans

While the corn was going in the ground, good progress was also made on soybean planting. We are 31 percent planted, versus an average of 20 percent.

Last week we were only at 13 percent, and we were 18 percent planted at this point last year. So, it is hard to remember a couple of weeks ago, when the traders were ready to push prices based on the idea that we were late to the field. When planting got going well we made new lows on corn. Now that planting is well ahead of normal we have actually recovered some from the negativity to go higher.

Futures

July corn futures made a low on May 5 at 3.553⁄4. A big bounce put in the recent high the next day, at 3.691⁄2 — a gain of nearly 14 cents. We are currently on Tuesday morning trading 3.581⁄2, down two cents and getting near the low again. The soybeans show similar price action. July bean futures were 9.95 on April 30, but dipped to 9.611⁄4 the next day. By May 6 we were back to 9.901⁄2, but we are now trading 9.733⁄4, down a quarter-cent for the day.

Similar volatility in the wheat had the July contract at 4.603⁄4 on May 5, but it is now at 4.803⁄4. The wheat got cheap as the Kansas City hard wheat market reacted to good rains in the dry southern Plains. That carried over into our Chicago soft red winter wheat market.

We frequently have some volatility in the wheat markets this time of year because of the long extended harvest. Hard wheat will traditionally come off starting this week in Dalhart, Texas. The harvest will extend north until the spring hard wheat finishes while we are harvesting beans here. Our wheat harvest has moved ahead a little the last 25 years with new, shorter-season varieties to the middle of July. All that means that we harvest wheat in this country for more than five months.

Good rainy season

Call this the week that we switch from thinking rain is delaying planting to thinking rain is good for the crop. From now on, “rain makes grain.” Thus, market notes from one hedging company this morning noted that the 11-to-15 day weather forecast calls for rain events through much of the Plains and Midwest. They reported this as good news instead of bad.

At noon our time May 12, we get a new World Agricultural Supply and Demand Report from USDA. The market has mostly ignored this as the focus is on planting progress. Now we get the report, and guesses going in look for little change. A case could be made that the report could be bad for corn, good for beans, but the numbers would have to change more than the current guesses for that to happen. Current market guesses are that the carryout from this crop we are now planting will be a little higher for corn, a little lower for soybeans.

In April, USDA said we would carry out 1.827 billion bushels of corn and 37 million bushels of beans. We are now guessing the corn will increase to 1.864 billion and the beans will ease slightly to 36 million. The wheat carryout is expected to go from 684 million bushels to 693.

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