Slow planting progress dominates grain markets

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rutted wet farm field, Ohio farm, planting,
(Farm and Dairy photo)

A tractor running in the field across the road woke me this morning. As an ex-farmer, I was looking forward to sleeping another hour, but it was a good sound. As an alarm clock, it was a month late.

Wheels are finally turning in Ohio. Some slabby tillage was done around here in northeast Ohio on Thursday, but mostly activity picked up on Sunday and Monday after we sneaked through some forecasted rain.

If it feels like we have been too wet for too long, that feeling is confirmed by the Monday USDA Planting Progress Report. Ohio has the smallest percentage of corn planted of any state, at 9%. It is tied with South Dakota for soybean planting, at 4%. South Dakota! If they weren’t busy getting the sugar beets planted, which is their money crop, they would be ahead of us, too.

Looking at the forecast is encouraging, if still a mixed bag. Most days this week have a 30 to 40% rain forecast, except for Thursday. There we are now bumped to 60%. So, we may squeeze through, or maybe not.

Yesterday Squeeze and I drove through sprinkles on the way to Ashtabula. Black clouds hung overhead, but no real rain ever developed. Here’s hoping that trend continues this week.

National planting picture

The Monday morning Russell conference call with my fellow associates is always revealing. Across the Midwest, farmers are depressed about planting progress, which varies greatly. One area of south central Minnesota is 85% planted for corn and soybeans. Not that far away in southwest Minnesota is a 10,000-acre farmer who hasn’t put one seed in the ground.

Iowa is making good progress, with large areas virtually done, and the state almost three-quarters done officially. Then there is the Eastern Corn Belt. Besides Ohio at 9%, we have Indiana at 14 and Illinois at 24% planted. Ohio is up from just 4% last week, so thank God for little green apples.

This time last year we had 69% planted after a slow start. Normal is 62%.

At the same time, the entire U.S., or at least the 18 major states, have now 49% planted, just 1% under the trade guess. Last week the nation was at 30%, but the average is 80.

Based on comments on the conference call, many areas expect rain and little planting progress this week.

Now what. The delayed planting and the expectation of further delays, has finally been reflected in the markets. We made a hard low last Wednesday, May 13, after the Chinese trade deal collapsed and escalated into an actual trade was with more tariffs on both sides. We added in the Friday USDA reports which predicted a record corn crop.

By Wednesday, however, the spec funds started to reverse themselves with the reality of a crop significantly lower than forecast.

The reality of really delayed planting is that acres will be reduced by either prevented planting for a switch to soybeans. Yields will be reduced more than a bushel a day for agronomic reasons. The return to a new reality meant that December corn futures gained sharply six days in a row.

We have bounced 46 cents off the awful 3.63 3/4 low to a high this morning of 4.09 3/4, up over 5 cents for the day so far on this Tuesday morning.

At the same time, the market seems to be shaking off the knee-jerk reaction that delayed corn planting means more beans. Farmers are doing the math and thinking about prevented planting insurance payments instead. And, traders are being more realistic about what late bean planting will do to expected yields.

As a result, the November soybean futures have rallied almost 50 cents of the low to a high just under 8.70 this morning.

Another payment

Added to the bright side of the ledger is the fact that our president has ordered Secretary Perdue to come up with a plan to help farmers not be a victim of the failed trade talks as they drag on or even come to a stop. Current talk is that $20 billion in payments would go to farmers.

There is discussion about how much of this should go to soybean producers and how much should go to other farmers who are also being hurt by the backlash to critically slow soybean export to China. They have been the nation’s second biggest export to China, after aircraft and parts.

There is also talk of how to decide the acres compensated for. Initially it was thought it would be based on 2019 acres, but there is a realization that it might need to be based on several years of crop history because just using 2019 would hurt those already devastated by prevented soybean planting.

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