Grain traders finally have something new to talk about. After a winter of news and rumors and rumors of news about a trade deal with China, this week traders started to talk about delayed planting. In the first part of April. Out of desperation.
Yes, the China saga continues. President Donald Trump says we are making good progress. Rumors still have the ag portion to be $50 million or more a year for six years. The vice premier of China came to Washington, then went away again.
The market is bored, and tired of waiting. Maybe the “China premium” has gone out of the market as traders wait for the real news of a signed agreement.
But, the new news is talk of delayed planting. This talk has been around since the early flooding from the historic storms across the Western Corn Belt a month ago. If you actually talk to the farmers, some of them are devastated, but most are watching the fields dry up and are talking about planting.
The trouble is, it is time to start in Central Illinois and, although the fields are drying, significant rain is forecast for the middle of the week. So far, the futures traders do not care about the idea of late planting.
The farmers are primed with the knowledge that springtime is a race to plant that can’t start well enough. They are reading about the benefits of early planting, and know that profit is not just about finally getting the crop in.
In modern times, the emphasis is on early of planting of soybeans, not just corn. Big farmers run two planting crews and plant both at the same time. Agronomists say that, contrary to tradition, the central Corn Belt will gain 10 bushels per acre in soybeans by planting April 15 instead of May 1.
Here in Northeast Ohio, we plant earlier than we used to, but not quite yet. In Ashtabula County, we are having an early, dry spring so far. We did not end the winter with 2 feet of snow on the ground waiting to soak in and keep us wet until May. The soybean stubble is showing the tile lines in drying patterns that get us thinking about planting in three or four days. However, most farmers this far north will not plant until the third week of April, so if we stay dry, we will see fertilizer applied and maybe that first (or only) cultivation pass soon.
What we will not see is a bump in the market if the coming rains keep us out of the field. Traders in Chicago are not as concerned with early planting. They know that farmers can sleep every other day, and the size of modern equipment means the crop can go in with a narrow weather window any time we get dry.
Still thinking about USDA reports
Prices recently have reflected the depression of the USDA reports the last Friday in March that gave us surprising corn acres, surprising grain stocks, and some new contract lows. A quick rebound got corn almost half the way back from the 3.84 1/4 December futures low in just four sessions, but we have been lower since.
The market is waiting to digest today’s (Tuesday’s) Supply and Demand Report, out at noon our time.
Our current supply of corn and the anticipated carryout at the end of the new crop year are the big issues for the market. Traders anticipate a carryout of 1.991 billion bushels. The March report said 1.835 billion, so anything less could help prices. There are estimates of over 2 billion, which is crushing for prices, but there are estimates much lower based on fewer acres and good disappearance. Spec traders are short a record 245,000 contracts, so any surprise could spark a quick rally. The large spec fund traders are notoriously fickle, and can turn on a dime and give six cents change.
The soybean markets did not see the surprise in the end of March reports, so they have not been so volatile. A poll ahead of the reports has the soybean carryout for the new crop year at 898 million bushels, but in a wide range of guesses.
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