Sorting through grain market news right now is a test of objectivity. An observer can see pretty much whatever he or she wants to see.
Take planting progress, for example. This is the time of year when the market focuses on how much corn and soybeans are getting planted. An early planting season tends to lead to better yields, which lends credibility to ideas of lower prices. Planting progress is often in the eye of the beholder, however.
Planting progress
On Monday mornings, I participate in a regional conference call of market advisors scattered over the midwest states. From the call on April 24, the conclusion would be that planting would not be early and could be late.
Yes, Southern Illinois had farmers who were actually done, and Nebraska had irrigated land planted, but the northern states, like Minnesota and the Dakotas, still had snow cover. In fact, snowmelt was causing high water and the closing of the Big Muddy above Quincy, Illinois.
The conclusion of the group was that planting was not going to be at full pace for another 10 days because of cold, wet weather. And yet, when the U.S. Department of Agriculture released the Crop Progress Report, after the phone call, I read that the country is actually ahead of normal in planting pace.
The 18 states that make up the report statistics were actually 14% planted on corn, against an 11% average. Ohio, normally at a token 2%, was at 6%. Yes, the northern states had nothing in, but their lack of planting was more than made up for elsewhere. The early planting was a reflection of the unseasonably high temperatures in much of the region 10 days ago.
As I mentioned last week, corn was actually planted in Ashtabula and Trumbull Counties in Ohio in early April because the ground was dry and the sun was shining, and because the farmers could not resist. They are a little nervous this week with snow and sleet one day and lows in the 30’s and 40’s, but right now they are feeling smug that they got started.
Partly because the early planting affects market outlook, it is interesting that the new crop corn low price often comes on the same day each year — April 21. The good news was that when we had a bad three-day run on corn that dropped the July futures price 33 cents, we had that April 21st date for an excuse.
It was easy to tell ourselves that there was nothing to see here. Then, the prices went down some more, and we are still slightly lower here as this is written April 25, although we have gained a quarter of a cent overnight.
Hard to watch
Grain prices have been hard to watch this year. In October, July futures were over $7. They finished the calendar year over $6.77. By the middle of January, they were down to $6.47 1/2 and were down to $6.47 1/2 April 18. We were at $6.07 3/4 the morning of April 25, and I found a little hope in commenting that we gained a quarter of a cent overnight. Big whup!
The soybeans have been even more ugly. July futures were at $15.46 the end of the year. By Feb. 22, we were still at $15.41 1/2 after a drop before that. In a month, we put in a low at $13.83 3/4, however. We got back to $15 in early April, but were back to $14.34 the morning of April 25. So, if it stays cool and wet for 10 days, the mood of the farmers will be cranky, but we might put some support in the market.
Wheat
The wheat market has been the real disappointment. July Chicago wheat futures have lost almost $1.60 since the middle of March. We lost 20 cents last week alone. We are now trading under $6.52 after being $8.10 March.
This comes while the Kansas City crop is in very poor condition from an extended drought that had Kansas farmers planting in the dust, praying for snow that didn’t come, and watching a crop stagger toward heading.
The soft winter wheat crop is as good as the hard winter wheat crop is poor; Ukraine is loading out half a crop, with that loading probably stopping in May, and the Russian crop is normal at best. None of that has wheat rallying yet.
Ukraine speculation is mostly that the Russians will probably not renew the Black Sea agreement again, unless pressure from China causes them to relent. Right now, the market talks about this, but it doesn’t seem to really care until it happens.
Remember that the planting date on the calendar that matters is not April 21. The date traders watch is May 15. Historically, 75% of the corn needs to be planted by then, or we start to see declines in yields that affect prices. Right now, May 15 seems a long ways away, but a couple of weeks of slow planting will have the trade sweating a little.
