The continuation of the coronavirus grain markets are still bouncing on the bottom of recent ranges, the victim of possibly inaccurate United States Department of Agriculture statistics and of collateral damage from the pandemic.
As discussed regularly in this space, many market observers are dubious about the USDA take on last year’s crop production and on usage numbers this year because of ethanol yield from lower test weight corn and feed usage from the same reason.
On top of the market depression from assumed high production came the impact of the virus. This especially was demonstrated when numerous meat packing facilities were shut down because of the virus spreading among the workers.
Double bottom
Last week, we bounced off the 3.01 May corn futures low and felt a little better. Then April 29, we broke to 31⁄4. Technically that is a new low, although it feels more like a double bottom. It would feel a whole lot more like a double bottom if we could get significantly higher, and we could breathe a little better.
On May 5, we are trading 3.13 May futures, up a couple of cents after a down day most of May 4. At one point, we were down more than a nickel, and I had to turn my screen off. This is a train wreck that I have seen before, and I can close my eyes this time.
Soybeans for a long time were trading as much as 80 cents above the lows. In March and the first part of April, beans were stronger than corn, but that has changed. May soybean futures bottomed at 8.081⁄4 April 21, and the bounce off that only got to 8.50. On May 5, we are trading 8.363⁄4, but that is up almost 3 cents.
Hog futures
There are worse things than being a grain farmer looking at new lows two weeks in a row in May corn futures. How about being a hog farmer, for example?
Live hog futures were at $72 March 11. As the problems developed in the packing houses, futures dropped to almost $35 April 14. Since then, we have seen steady improvement until we are back to $68 May 5.
If those were corn prices, farmers would have left the corn in the bin and been excited to see the rebound. A hog farmer can’t hold hogs off the market for a month, so it has been a disaster for those with finished hogs.
Fast planting
Most grain farmers right now are ignoring markets and working to plant crops. Much of the Midwest is seeing unusually fast planting progress.
Some of this is because of the fear “planted” with last year’s crops. Once you plant your corn in June, you can plant a lot of corn in a little time the next year when the ground gets dry.
Some farmers in southern Illinois were reported to have planted all their corn and beans in one week. Sleep is optional after a year like 2019. The result of the quick planting is that some areas are done, and the nation as a whole is reported by USDA to be at 51% finished for corn planting, and 23% finished on the soybeans.
Lagging behind are Ohio at 10% and Michigan at 11%. Pennsylvania is barely started, at 1%. Ohio gained 7% in the last week. The eastern areas saw temperatures that discouraged planting, and then enough rain to keep farmers out of the field.
Locally, I saw one farmer planting beans May 4 and heard of one planting corn. Others have told me they may be started May 5. A lot of farms still have flooded spots from the rains of the last few days.
The trend the last few years is to plant beans as early as corn. Ohio has 7% of the beans in, a gain of 5% in a week. The U.S. went from 8% to 23% in a week. It remains to be seen what progress is made this week, as there is rain in the forecast over much of the Midwest. Some important regions actually had no progress last week because of rains.
There is already a collective sigh of relief, however, that so much progress has been made after the mess last year.
