Weather surprise stirs up markets

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uncovered wheat
Uncovered wheat.

A winter storm in the Central Plains has dumped snow on western Kansas and fear into wheat futures markets. Kansas City wheat futures gained as much as 28 and 3/4 cents on the various futures months, while the Chicago soft red winter futures gained 23 3/4 cents on the July contract.

A large portion of the western Plains got six inches of snow, and western Kansas got from 12 inches to 20 inches. This came after a change in weather brought extremely cold temperatures to the same region.

One market letter simply states that, “major production losses are going to happen.”

The snow comes as wheat in the affected area is headed out. In some cases the wheat will be killed before filling. In other cases there will be losses from the lodging caused by the heavy snow.

Extreme variance

Remember, there is extreme variance in crop progress as we go south to north in our large country. This is the week that the harvest starts in southern Texas by tradition. Meanwhile, spring wheat is still being planted in the Dakotas.

That spring wheat planting is behind the normal this year. USDA reported Monday, May 1 that 31 percent is planted, versus a normal 46 percent. South Dakota and Montana are especially late.

With the weather woes, Chicago July wheat futures were up almost 24 cents, with a high at $4.57.

This Tuesday, May 2 morning, we are seeing surprisingly little follow-through, with just under a two cent gain, to $4.57 3/4. The blow up in wheat problems pulled corn and soybean futures back to the recent highs, but did not really cause a break-out on the charts. May 1 saw July corn futures hit $3.79 and close at $3.77 1/2.

The recent high was $3.79 1/2 on the 13th. We were also $3.79 1/4 on the third. This morning, Tuesday, we are down two and a quarter cents at $3.75 1/4.

The December corn futures were a similar situation. We are down two and a half this morning, at $3.92 1/4. The Monday high was $3.95 3/4, and we close up nine and a half cents. On the chart we see four very similar highs recently, at $3.95, $3.95 3/4, and $3.95 1/4.

So, the wheat problems added to some wet weather, which is delaying planting but helped us return to recent highs, but not break out to new prices. Similarly in soybeans, the high Monday was at $9.69 1/2, then it broke a nickel to the close of $9.64 1/2.

Recent highs

We had recent highs of $9.68 1/4 and $9.68 1/2, so we technically were higher, but on the chart it just looks like we traded up to the resistance line. There is a difference in that we are a little higher on Tuesday morning.

For the day so far we are up just under a nickel, at $9.69 1/4. The good news for corn and soybeans is that planting progress is ahead of normal. The bad news is that the weather may keep us from gaining planted acres this week.

The U.S. is now reported at 34 per cent planted for corn, which is dead on the average. That was a big gain from last week’s 17 percent, although last year we were at 43 percent. Ohio is at 42 percent, up from just nine last week, and way ahead of the 17-percent average.

Last year we were at 24 percent at this time. The soybean planting for the nation is at 10 percent, up from the seven percent average. We were at six percent last week, so we can see the big push this week was to plant corn.

Planting progress

The Ohio farmers are at 14 percent, as more and more farmers plant beans early, or even before they start corn. Last week we had just started, at one percent, and the average at this date is just five percent. Most of the Corn Belt got light showers May 1.

Some of Ohio got a fast, severe thunderstorm instead. Here in Wayne, in Ashtabula County, I got an inch-and-a-half in 12 minutes and couldn’t see the tree outside my office window.

More rain is forecast for the week, so little planting is likely for a few days.

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