Crop ratings G/E
TW LW AVG
Winter wheat 64% 64% 45%
TW LW AVG
Corn 30% 23% 66%
Beans 9% 6% 29%
China talks have all but broken down and the threat of more bean acres (weather) had soys 18 cents lower at the close. The S&D picture for soybeans is hardly bullish even with some weather issues and below trendline yields this year. The “normal” corn/bean price ratio could get interesting if the wet weather continues and corn carryout drops below 1.2B. If such a situation should occur the US could very well plant close to 100M acres of corn next year to make up the deficit. The current weather has given corn a short in the arm as it once again closed in the green. Sunday’s nights weather forecast, and Monday’s planting progress report are of the upmost importance now. If the US only has 50% of the corn in the ground that leaves 46 million (intended) acres to be planted after optimal dates have passed. We cannot stress enough how important the next 10-14 days are when it comes to the corn market.
The midday weather models have added moisture for the Midwest once again causing Funds to bail out of shorts and rally the market. Parts of the belt are seeing unprecedented amounts of rain for this time of year. The reality of the largest Prevent Plant acreage option on record becomes more of a possibility with each passing day. The market may rally to the point where planting becomes viable again (Price) but field conditions maybe just too poor. We cannot stress enough how important the 2 weeks are as far as price discovery for 2019-20. Weather markets are in full force.
The market rally slowed midday with futures closing well off session highs. Its all about the weather in Chicago even though the midday forecast advertised extremely wet conditions for IA, MO, MN, & WI short covering slowed, and the rally stalled. It’s hard to run straight up and we expect to see some pull back from time to time to consolidate the trade. Its getting a bit concerning given the recent weather maps and prevent plant deadlines in the NW Belt. Unless the market can convince those areas to plant the producer may very well opt for PP option. Those without crop insurance will be forced to go to “plan B” (whatever that may be… most likely soybeans) or risk a late planted corn crop. Locally we can still successfully plant corn well into the first part of June (2013) and still come out ok with a little help from mother nature. Its good to remain disciplined and adhere to sound marketing strategies as one change in the forecast(drier/warmer) and the party will end on the CBOT. A wider trade range is expected with volatility on the increase.
The slow planting progress of the US has finally caught the attention of those in Chicago. Markets soared today posting double digit gains for most contracts. With only 30% of the nation’s corn crop in the ground and threating weather in the forecast Funds are now covering shorts. Wet weather has plagued the Midwest all spring long with very little relief in sight. There will be pockets where planting will take place this week but those look to be few and far between. There is a very real possibility of planting to be less then 50% complete on the all-important May 20th crop progress report. This is the day agronomist (kind of used as a catch all for the Midwest) will say yield potential drops dramatically the later we get the crop into the ground. With the reduced yield and possible PP acres increase some analyst are projecting a carryout reduction of some 500-1000mb. This takes the 2.485 number from last week down to a manageable level of 1.5-2.0mb depending how this all plays out. With the current conditions PP has never looked so attractive (in the NW belt especially) but a market rally over the 10 days or so can really alter that picture and get producers to plant. (think 2013) This is a critical timeframe for the market and what happens over the next 3-4 weeks could set the tone for price direction well into 2020.