May 21, 2013
U.S. farmers planted a record amount of corn last week, gaining some on the slow season, but rains have returned to slow that momentum. Emergence remains delayed and is likely to be a bigger issue than the number of acres planted as much of the crop remains late heading into the summer. Lower yields may play the biggest role in pricing corn through the summer of 2013, just as they did in 2012.
Limited economic data today left the door open for the markets to respond to Fed comments about the continued prospects for their bond purchasing program. Stocks began the day lower, but moved higher after the Fed comments. The major stock indexes were trading from 0.2% to 0.5% higher at the commodity close.
The dollar index bounced back after the big drop yesterday as continued strength in U.S. markets and discussion of quantitative easing have the market unsure of direction. The strong dollar and anticipation of tighter supplies in tomorrow's report has the price of crude oil holding on to the $96 level.
Corn traded mostly lower today after yesterday's crop progress report brought corn planting numbers up to 71% of the crop. Seeding 43% of the 2013 crop suggests that farmers were able to plant 41.8 million acres of corn in one week. New technology that allowed for 24-hour operation of planters and bigger equipment has increased the ability to plant in a hurry. The 71% planted remains behind the 5-year average of 81% for this week, so work still needs to be done to get this crop completely in the ground as Memorial Day approaches. The other discouraging value in the crop progress report was 19% of the corn crop emerged at this time. Most of the corn crop remains either in the bag or below the surface as June approaches, making this a later crop and lowering yield potential.
Heavy rains fell in parts of Illinois as severe storms have moved across the country for the past two afternoons, and look to be building for yet another run today. The widespread moisture will delay planting from the Delta to the Canadian border for a few days after last week's great seeding weather. Some farmers are beginning to discuss replanting corn after these storms.
July corn futures were down 9.50 to $6.40. December corn was unchanged on the day to close at $5.2025.
Bottom line: Exceptional planting progress has brought the crop closer to normal, but emergence is still well behind as additional rains move across the Corn Belt. Reduction of corn acres from 0.5 million to 1.5 million acres is rumored, helping to hold December futures above $5 for the time being.
Old crop soybeans continue to move higher as tight supplies have and strong basis values have end users competing for the remaining crop. July futures are looking to test the $15 mark again as export buyers and domestic users continue to compete for the few remaining beans. New crop prices slipped a little as concerns about corn acres moving toward soybeans seem to have trumped the slow planting progress as only 24% of the crop is seeded. The 5-year average for soybean planting is 42% at this time of year, so there is more work to be done before the large crop projected for this summer is in the ground.
July soybeans closed up 13.75 today at $14.7825. The November soybean contract was down 4.25 to close at $12.2075.
Bottom line: Tight supplies and planting issues are playing into soybean prices. New crop soybeans continue to hold above $12, and may strengthen as corn planting progress is over 70%. Old crop soybeans have moved above $14.50, presenting cash opportunity to move beans near $16 in many locations as basis remains strong.
Wheat markets traded mostly lower today as more severe weather brought moisture to parts of Oklahoma and Kansas. Rains have been mostly in the eastern part of both states over the past few days, leaving the driest part of the winter wheat crop with little relief. Farmers in the Northern Plains have seen moisture that will delay spring wheat planting once again, bringing to question how much more wheat will get seeded as Memorial Day is coming up quickly.
Harvest reports form the south should be upon the market soon, giving the market some early pictures of the impacts of the past year's weather. Harvest usually brings a seasonal drop in wheat prices, and rainfall across much of the Plains may help push prices lower as combines begin to roll.
July wheat on the Chicago board was down 4.75 to close at $6.805. The July 2014 contract closed the day down 4.5 to finish at $7.305.
July KC wheat was down 6.50 to close at $7.385. The July 2014 winter wheat contract was down 3.50 to finish at $7.775.
July Minneapolis wheat was up 2.25 today to close at $8.135. The September contract was down 2.25 to close at $7.97.
Bottom line: Wheat markets are pricing weather and export sales into the spring as new crop wheat is on the horizon. Opportunities for more wheat sales may come as harvest moves north and wheat yields are reported.
Severe storms moved out of the Plains and into the Midwest yesterday and will be moving back across the region through the next couple days before another series of weather moves out of Rockies over the weekend. Moisture is going to delay planting for many and has some looking at having to replant corn after heavy rains. Great weather last week, allowed growers to make unprecedented planting progress, but the last 25% of the corn crop looks to be delayed again.
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