We are seeing volatility at the current top of the market. This is normal after a huge week on the Chicago Board of Trade has traders deciding if they have gone too far or if they have not gone far enough with the rally recently.
July corn futures gained 59 cents for the week, and December new crop futures gained almost 73 cents, so a little volatility is normal.
July futures made a new contract high of $7.351⁄4 May 7, and a December futures high of $6.38 the same day. Prices were higher as dry conditions continued in many areas of the Western Corn Belt, and as crop prospects of the “safrina,” or second crop, in South America is suspect because of late planting and dry weather.
Add in continued export shipment that have us at 99.9% of the U.S. Department of Agriculture projections already, and you have a classic bull market.
Normally at this time, we would be focusing on planting progress, worried that we are keeping pace on our way to the big crop we like to project this time of year. Timely planting is usually seen as having us on the way to a big crop.
This year, we are way ahead of normal in the nation as a whole, although Ohio is a notable slow spot. USDA reports that, as of May 9, 67% of the corn is in, up from 46% last week, and well ahead of the normal 52%.
Continuous rain events have kept Ohio behind, with just 27% planted, a gain of 5% for the week, but just off the 29% that is normal.
I don’t know where the 5% was gained. It was not in Northeast Ohio, which now has tilled fields showing small flooded spots anywhere there is a depression or a little compaction.
Similarly, the nation is 42% on the soybean planting, up from 24% last week, and nearly double the average pace of 22%. Ohio, however, is at 20% planted, up just 3% for the week, but still 7% ahead of the five-year average of 13%.
While the planting was going on, soybeans were also making contract highs. July futures gained over 55 cents, and continued the gains to a new high the morning of May 11 at $16.151⁄2. The November futures had the high back on May 7, at $14.431⁄4, and were trading at $14.283⁄4 May 11.
Soybeans are also driven by the realization that the crop cannot possibly be big enough, and the reality that we continue to increase the amount that we will be short this summer. We will import soybeans, and the amount we import is increasing as we see continued demand for oil.
It is the soy oil that is driving the beans higher as we need them to crush, and know we are running out.
In recent weeks, the corn has driven the market, and it is the corn that has been making new contract highs. Now the soybeans are roaring back.
It feels like we need to reward these markets with sales, but it also feels like the rally is not over, especially this early in the year. We still have all the potential spring and summer weather problems ahead of us.
It is hard to remember when you grow up in extreme Northeast Ohio, but most of the Midwest is short of rain in a normal year. We are starting out dry, and some small rains over the region this week did little to make a change in a dry forecast.
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