The pace of planting corn and soybeans has slowed in the U.S. although not in Ohio. Ohio farmers have now planted, according to the U.S. Department of Agriculture, 36% of the intended corn crop as of May 15 — well ahead of the 24% five-year average.
The Ohio pace is an exception, and is the reverse of last year when Ohio lagged. Last year, wet weather stalled planting in the Eastern Corn Belt. This year, the rain has stalled the planting west of Indiana. The U.S. as a whole is only 47% planted, against the average of 54% for this week.
The slowed planting is reflected in grain prices, which are now seeing some futures contracts at notable highs. May corn futures put in a high May 13 at $4.61 1/2 — the highest price since $4.63 on Jan. 25. So, the horrible drop to $4.08 3/4 that we saw Feb. 26 is now in the rear view mirror.
It was only two or three weeks ago that we were talking about the possibility of corn dropping below $4. That is starting to seem unlikely unless we have 10 days of fabulous planting weather followed by perfect summer crop progress. Improvement in the currently-downgraded Argentine corn crop could be another factor.
Exports of corn have slowed dramatically, maybe hurt by our rally in corn prices. For the last week reported, ending May 9, we shipped less than 1 MMT of corn for the first time in 13 weeks. That is 27% less than the previous week, and more than 20% less than the same week last year.
One measure of market direction is the position changing, but the managed money and spec funds also contribute to overall sentiment. We are told that the soybean short has gone from 149,236 contracts to only 41,453 net short contracts in one week. Meanwhile the corn short has decreased from 218,040 contracts to 102,513 contracts. A contract is 5,000 bushels, so this is a huge change, but still not net long. They have been long soybean meal, but have added more length there, going from 43,596 contract long to 87,991 contract long.
Sadly, the enthusiasm currently for the rallies hides the fact that we have a huge cost of production, and we likely are still not at profitable levels for most producers.
Price factors
A recent article by Kevin Braun for Reuters, published online, outlines current price factors. The first is the pest problem in Argentine corn. According to another Reuters article, the leafhopper is becoming a plague, cutting millions of tons of production.
Secondly, heavy rains continue to “devastate” the soybeans in southern Brazil. Then, third, Reuters mentions the rains that have slowed the planting in most of the Midwest, as noted above.
The most exciting market move on the Board recently was the 23 1/2 cent bounce in Chicago wheat futures May 13, to $6.87 on one contract. Wheat has been a market mover the last couple of weeks, after a months-long general slide. Now, there are fundamentals that are adding to a technical rally. The biggest is the news that Russia is reporting a large cut in wheat prospects. They are now expecting a crop of 86 MMT, down 5 MMT from the last published estimate, and 2 MMT lower than the current USDA projection of Russian production.
Another interesting note in the Crop Progress Report is that the U.S. wheat crop (all classes) is 57% headed, and we are not to the middle of May. That is 15% ahead of normal. I would expect that the earlier the crop, the better the yield, since it is often late drought that hurts the crop. More rain is better, except that we can have quality problems if there is too much rain during the flowering that will come soon.
Finally, for wheat, we have good exports this last week. We shipped 13.5 mbu for the week ending May 9. That is more than 39% better than this week last year, and 8% better than the shipments the previous week. Interestingly, China was the biggest receiver. They are trying to get corn and soybeans from South America, but they still need American wheat.
In other Crop Progress data from Uncle Sugar, we have U.S. soybean planting just ahead of the five-year average. The Monday report shows 35% planted against an average 34%. Ohio, again, is actually way ahead of the normal pace. Ohio producers have 27% of the crop planted, although the average is only 18%. It should be noted that at this time last year the nation’s farmers had planted 44% of the crop.
The soybean exports, in opposition to the corn exports, were actually at a three-week high of 15 mbu for the week ending May 9. That is also twice the level for this week last year, but it is 17% less than this time last year. We have now shipped 1.45 bbu this marketing year. Unfortunately, that is almost 18% less than at this time last year.
Current price, at midnight as we go into the morning of May 14 are as follows: July corn, $4.73 1/4, up three quarters; December corn $4.93 1/2, up three quarters; July soybeans, $12.13 1/2, down 6 cents; November soybeans $12.06 1/2 and July Chicago wheat at $5.89, up 2 cents.
