It is that time of the year: Weather dominates every farmer conversation and weather prospects control the thinking of every market trader. That thinking has changed this year as the planting season has developed.
Early concerns of late planting because of early delays were quickly alleviated by great weather and fast planting progress. Two weeks ago, Ohio farmers put in 40 percent of the crop in one week, going from 15 percent to 55 percent planted. This week, Northern Plains farmers cranked out nearly half of the spring wheat planting, going from 47 percent to 94 percent.
The wheat crop has dominated the markets, with wheat futures putting in the biggest gains of the three major commodities. Even though the concerns are mostly for the hard red winter wheat in the Plains, the fear of crop problems carried over to the Chicago wheat futures which represent our soft red winter wheat class.
Chicago July wheat futures gained almost 70 cents from the recent low on May 5th at 4.60 3/4 to the high Monday at 5.30 1/4. Currently we are trading 5.12 1/2 down over none cents on this Tuesday morning as this is written.
The wheat fears involve the double whammy of too much rain in the forecast for the stage of growth now reached combined with frost fears for the Northern Plains. We need to sneak through this cold spell that comes as cool and wet weather is dominating this week. If we escape without damage, the rain will then be seen as a boon to production and prices will run in the other direction.
This means now is the time to price wheat if you want to believe we escape the frost. The frost will not hurt the spring crop, just the winter crop that is far enough along to be flowering. Hopefully this means that any frost will be farther north than where the crop is not that far along.
‘Normal’ planting talk
That gets us back to corn and beans, which have been trading at cross purposes. This is normal with planting talk. That conversation has switched back to worrying about finishing corn planting. Planting has been delayed this week after great progress last week. Ohio is now at 77 percent planted, up from 55 last week, and well over the 59 percent average. The U.S. as a whole only gained 10 percent for the week, to 85 percent. That is, again, well above the 75 percent average.
So, what’s the problem? Maybe not much, maybe just market jitters. In theory, we could switch some corn acres to beans, but that is only likely if the wet spell continues another week. Most would rather plant corn the third week of May than soybeans.
In my mind, this is just something to provide an excuse to trade, but it can become a small problem if we continue delays.
With the current wet spell came a rally from the “planting progress” low of 3.55 3/4 July futures on May 5 to the high Monday, May 18, of 3.71 1/4. We have already broken that back to 3.64-3/4 this Tuesday in early trading. Most of that came Monday after the high, but we are down an additional three and a quarter cents this morning.
The July bean futures have been weak at the same time. We are currently trading July futures at 9.6-53 1/4, down one and a quarter. The high was April 30 at 9.95. The low was Monday at 9.50. So, we lost 45 cents while we planted and while we speculated that we might increase soybean acres.
I personally will be very interested to see what the real planted acres end up being. Put me in the class of people who were surprised that USDA did not cut expected planning acres more in the March 31 report.
I have held the hope, but not necessarily the opinion, that final acres would be lower and that corn prices could get better. Don’t could me a bull, but I do hope to pay my farmers $4 for corn. That seems a long way off, and I really pushed for some purchases this week when we got above $3.50.
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