The late Sen. Everett Dirkson is famous for supposedly saying, “A billion dollars here, a billion there, and pretty soon you are talking about real money.”
This is almost universally misquoted, since he originally said, if I remember right (which is a nice way of saying that I am too lazy to Google it), “a million…” somewhere in the decades since our perspective has changed, and a million dollars doesn’t sound like enough to really make a statement about our government.
Numbers change
Maybe it is because we are now close to $20 trillion in debt. Funny how numbers change.
For 20 years we dreamed of the couple of times corn futures got to $3.50. That was the benchmark of stupidity. We knew that if prices got that high, we were stupid to hang on. It was time to sell.
That was then, as they say, and this is now. Now we have had corn in the neighborhood of $3.50 to $3.75 for months, and the farmers have been reluctant to sell.
Well, that is a little bit of an understatement. We have not had prices that have allowed me to buy corn most of the time with a telephone and a shotgun. Input costs have changed, and history has changed. We sold corn for $8 one summer, and more, and now our perspective has changed.
We bid the value of corn into increasing acres and competing for inputs, and all of a sudden seed corn and fertilizer and spray costs were higher than we had ever nightmared.
They have moderated the last two years, but farmers will tell you that $3.50 corn is a losing proposition, and this is the farmers who did not bid land rent over $200 per acre.
As we say in this business, the market does not care what it costs you to produce grain. That is true in the short run, when it is in your bin, and the price is a matter of whether anyone is hungry to buy it away from you.
It is not necessarily true in the longer run, when economic reality may convince you to plant $10 soybeans instead of $3.50 corn.
Planting
We are now in that dangerous period when the crops are getting planted instead of talking about. I am beginning to wonder if USDA is really correct about the increase in corn acres.
Partly it is watching the Chicago Board of Trade. Partly it is from talking to local farmers who are done planting corn because they cut the acres.
Even planting between the showers, one local has 150 acres of corn in and is waiting to plant 400 of beans. Something in me is wondering if there is a trend.
For those of you planting corn and assuming the price gets better, you have been right for a few weeks. Conditions have conspired to help prices.
Swamp conditions in Argentina and Uruguay have stopped the harvest and cut the crop size. What is off cannot get to town down dirt, now mud, roads.
This happened at the same time when the Argentine ethanol mandate was increased to 12 percent from 10 (are you listening, Washington?), and at the same time that a new government has dropped the level of soybean export taxes.
Oh yeah, and the currency is bouncing around.
Add to this the dry weather in Brazil that is damaging Brazil’s second-crop corn. Brazil is opening the door to corn imports to make up the difference. Some of this will come from the U.S.
Then, there are increasing bean exports to China. Just when it seemed like they would keep lagging, March shipments were a third higher than those of February.
Three-quarters of Chinese bean imports come from us. Meanwhile, our futures markets have boomed, with soybeans leading us higher.
Last week the Chicago market had record volume, with nearly 3 million bushels traded each of two days. That gets us to planting progress.
USDA reported May 2 that progress is actually ahead of normal. This does not jibe with my feeling that we are barely getting progress between showers, but I am apparently wrong.
Ohio
Ohio is reported at 27 percent planted on corn, with 17 being the five-year average. That was a big uptick from the 8 percent reported last week, or the 11 percent of last year.
The U.S. is at 45 percent planted, versus an average of 30. Last week we had 30 percent planted in the country, but this time we were at 45 percent.
This means that my hope to get a bump out of late planting will not likely happen. The market is struggling to get back to highs, but the weather may not help.
A quick look at numbers shows that the beans have been in steady price gains since the November futures low of 8.68 March 2.
We paused at 9.17 3/4 in early April, then increased, sometimes in big moves, to the new contract high of 10.30 3/4 overnight into Tuesday.
Corn futures have been more erratic, with a low April 1 on the December of 3.64, then a high of 4.09 April 21. We broke to 3.77 3/4 April 25, then made a high of 3.97 3/4 April 28.
May 3 we are down nearly a nickel at 3.92 in early trading.
