Spring has sprung, and it’s leaking all over us right now. The rain started outside my house about 5 a.m. March 27, and the WKYC app on my android phone shows rain for nine of the next 10 days.
In other words, nothing to see here! Spring has started out as it usually does here in northeast Ohio. We had a few extra days of snow, then a lot of rain.
An article in USA Today yesterday reported that some sheriff in eastern Pennsylvania was trying to arrest Punxsutawney Phil because winter extended past his six-week prediction. Something about the fourth snow-filled nor’easter in three weeks put him over the edge.
The booking photo on the wanted poster is better than the famous one of Nick Nolte, but he does not look humble and lovable. I am sorry the sheriff is disappointed, but things are just about normal in my neck of the woods.
Disappointing start
We are used to spring coming without spring weather. Along with the normal bad weather has come a grain market that has disappointed those producers looking to sell if we just went a little higher.
We didn’t, and the skid, especially in soybeans, has been ugly. The chance to sell looks like a no-brainer in the rear view mirror.
May soybean futures gained over a buck and a quarter from the middle of January to the first couple of days in March. Then, they went away to hide. The high was on March 2 at 10.82 1/2 May futures.
The low came three weeks later, at 10.09 1/4, March 23. We have rebounded for two sessions, and are trading 10.27-1/4 on this Tuesday morning.
May corn has not been as dramatic, but the trend is similar. The low was Jan. 12 at 3.53 3/4. The recent high came March 13, at 3.95 1/4, a rally of over 40 cents.
Then, we dropped 29 cents to 3.69 1/4 on the 23rd. We are currently trading 3.76 this Tuesday morning, which is a good recovery, but not a thrilling price.
New crop
The new crop contracts of corn and beans followed similar patterns, but with less range. The new crop at this point is priced higher than the old crop, but it remains to be seen if that trend continues.
A lot hinges on the USDA Prospective Plantings Report that will be released at noon March 29. The traditional date for the report is the 31st, but that came on a Saturday this year, and the 30th is a Good Friday government holiday. (I am guessing I am supposed to still be working. Maybe nobody would notice. If my phone rings an extra time Friday, the call is being transferred to my cell phone on the couch in the sun room…)
That Prospective Plantings Report is the most-watched fundamental piece of news in the entire year. The market starts out being defined by what acres of what crops get planted. Supposedly we will know that by the end of the week, but we will really just know our government’s best guess of acres.
The trade will act like it is a fact, however. Now that the soybeans have broken, the reaction to the report may be more interesting than the report itself, as normal. It has been widely speculated all month that American farmers would likely increase soybean planting by one million acres over last year.
This is mainly a reaction to the relative prices of corn and soybeans, but also has to do with the cost of planting crops in a year where the marketing is behind and wallets are slim from cheap commodity prices.
Looking ahead
The thing is, with the 72-cent break in the soybean rally, is the increase in acres already “in” in the market? What if they gave a negative report, and nobody came?
That is, like the old saw of the anti-Vietnam War era (“What if they gave a war, and nobody came?), what if the increase in soybean acres does not mean anything after the market break?
A negative report could be laughed off, and prices could firm. We can hope.
