For a couple of weeks, the bullish markets have been explained by the cold weather which was seen to slow the pace of planting. Now we have a new planting progress report from the U.S. Department of Agriculture that confirms a huge week of planting.
It seems we are well ahead of the average pace for planting corn and soybeans, yet the market continues to perform its bullish magic. Part of the bullishness comes from the fact that it is just too dry.
Dry soil
Reports from the heart of the Midwest are that planting is finished in many areas, but the pleasure of fast planting has been replaced by the fear of low germination because of dry topsoil.
The fast planting is a function of planting that has never been delayed by rain. I have heard of seed being ordered by dealers for possible replanting of soybeans that germinate poorly.
My personal experience with corn is that it will come up sometime. I remember three years in a row of early planning where corn planted around the April 20 finally appeared the last week of May after cool, damp weather for the month of May.
I live in Ashtabula County, so I have no experience with an extended dry spell in the spring. I suspect that being too dry is eventually corrected, and the corn eventually grows, although I suppose it could start to germinate, and then die.
It has been dry even in the Eastern CORN Belt this spring, but we have had significant rain every few days recently. This would be the biggest reason that Ohio is lagging the rest of the region in planting.
Ahead of average
USDA reports that, as of May 2, Ohio had planted 22% of its corn. This is 4% above the five-year average, and represents a gain of 14% in the last week. Last year at this time, we were only 9% planted. The U.S. is at 46% planted for corn, ahead of expectations. This is a gain of a whopping 29% for the week, and puts us 10% ahead of average.
Ohio farmers have now planted 17% of the soybeans, up from just 8% last week. Since the average is 6%, it is apparent that the trend toward early planting is moving along in Ohio.
The U.S. is a little further along, at 24%. That is a huge move from the 8% of last week, and more than double the usual pace of 11% This memorable market has now given us new record for monthly gain in corn futures.
May corn futures were up $1.75 in April. Cash sellers have not seen these gains, since we have switched cash bids to being versus July futures, and they have been up “only” 40 cents.
Those technicians drawing continuation charts will be challenged with the 56-cent inverse to the July futures currently. December futures were up only 13 cents for the week, reflecting the fact that rallies are mostly expressed in the nearby contract.
July futures did make a contract high the morning of May 4. We traded as high as $6.943⁄4 going in to May 4, and were at $6.891⁄2, up a dime for the day. December futures have not seen a new high since the $5.93 of April 27. We were at $5.681⁄4 the morning of May 4.
Exports
Besides dry weather, corn prices are being helped by the continued fast pace of exports. We have now sold 99.6% of the USDA projection for the year, with four months to go. Our actual shipments are averaging slightly more than the pace required to hit the USDA export projection. Thus, it is possible we will exceed the projection.
Soybeans have surged back near the contract highs, but have not made new highs yet. July futures had a high of $15.743⁄4 on that same April 27. The July gained 18 cents last week. We were as high as $15.41 the morning of May 4 and were most recently at $15.353⁄4, up $113⁄4.
The soybean exports continue to amaze, with contracts out on 98.5% of the USDA projections of 2.28 billion bushels. If we sell any more, we will have to import more this summer. Carryout is going to be near pipeline supply, and it is getting smaller in every report.
