The U.S. Department of Agriculture crop progress report confirmed what has been anecdotally coming out of the country: The anticipated fast pace of spring planting expected because of extreme dryness over much of the Midwest has gone away.
The last week has seen general rains and cold weather that have stopped the planting that had started early in some places. The USDA reported April 19 that Ohio was now 3% planted on the corn crop, up just 1% from last week, and actually ahead of last year, when we had planted nothing.
The nation as a whole, however, was just on the average of 8% planted. That was up from 4% last week, and up just 2% from this time last year. So, we are a little ahead of average in places, but basically on pace with planting instead of way ahead. The challenge this year is to plant enough acres to meet demand.
The USDA surprised us March 31 with the idea that we would plant 91.1 million acres, but private estimates were as high as 93 million. It was thought that dry weather would contribute to acres, but now that hasn’t happened.
The USDA also reported April 19 that soybean planting for the U.S. for the first time this year was at 3%. Last year at this time, we were at 2%, and 2% is the average. Ohio, however, has 5% planted, up from 1% last week, and well ahead of the normal nothing.
This suggests that farmers are continuing the trend of planting soybeans earlier, even before corn.
Although Ohio had scattered light showers several days last week, a couple of breezy days would have the ground ready for planting, and the calendar says it is nearly time to get going. Farther west, farmers are waiting out a couple days of snow to get started. The snow is mostly welcomed as it is falling on very dry ground.
Corn rally continues
While the planting is just getting rolling, or is just ready to start, the market has continued to give us some life of contract highs. The rally continues in corn, where May futures hit $6.011⁄2 April 15, breaking the strong psychological number of $6.
We were seeing another new high of $6.061⁄2 April 20. At the same time, the new crop December futures made a high April 15 at $5.17, then hit $5.213⁄4 April 19 and $5.283⁄4 April 20.
The corn futures may be helped by the crop progress report, which is not showing the pace expected by some. USDA would be encouraged to increase their yield estimate if the crop is very early, as that is seen to increase production.
The market is also being helped by exports that are being reported, especially to China. These export inspection reports confirm that China continues to perform on their contracts. There has been speculation that the contracts would not be executed, but confirmation of shipment adds to the bullishness in the corn trade.
The soybeans had been consolidating prices below the contact highs as corn had been the lead commodity recently. That changed April 20 as the May soybean futures finally made a new contract high of $14.83-1⁄2. We have not had a new high since the $14.60 of March 8.
The November soybean futures did make a new high more recently, with $12.85 April 1. We had a dip to $12.423⁄4 by April 12, and then made a new high April 20 at $13.06.
Again, that breaks a big psychological barrier. It was not that long ago we were wondering if we could get to $12!
The planting that we accomplish in April will have a lot to do with the trend of these markets for the spring. The large spec funds are getting rid of some length at this level. That can be profit taking, or it can indicate their unwillingness to bet on higher prices until we know more about the crop.
This is a year when the end of the market may not be seen until summer weather has told us the party is over, in late June. It is a good place to get some sales on however.
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