Corn: More rain and a continued wet forecast are catching more attention than ever. Even though the entire national forecast shows a slight reduction in rain for the next two weeks, rain that has fallen, and is falling, is the current focus.
Monday’s forecast called for slightly drier conditions to the north and west planting areas while keeping the south and east regions quite wet. What this will mean is that some areas will see extensive flooding while others have at least a chance at planting by late week. Most important, we want to see planting progress hit 50% by May 4 to anticipate trendline yield. That just doesn’t look likely.
Monday afternoon’s crop progress was a surprise. Only 9% of the corn crop is planted. That is only 2% more than the previous week! We missed the 13% estimate the trade was expecting. Speculators took over control of the old crop corn again, buying it past the new crop price by nearly 10 cents. Some of that added buying might have been sympathy buying from another very strong day in the wheat. It remains that fundamental traders should stay in December as trading the old crop might require watching wheat, crude and the dollar to get short-term direction correct.
Bears will make a case for selling overnight looking for that turnaround Tuesday and will want to stay in old crop. Bulls point to the radar and forecast claiming that planting will remain slow for two weeks. In all, this market will need a drier forecast than the one seen Monday to see a turn lower…Ryan Ettner
Soybeans: Beans were trading lower for most of the session but ended higher from spillover strength from corn and wheat. As corn and wheat surge higher, traders are focusing on the opportunity for more acres.
Planting delays are the main focus in the corn, and the trade believes this will end up with more bean acres on the June acreage report. We expect to see more of this choppy trade like we have seen today as we move through the next few weeks. The long-range weather maps are still showing rain in the forecasts. South America’s bean harvest is mostly done and traders are shifting their focus to the Midwest and Delta regions here in the United States. Fundamental news is light and should still see strength on pullbacks…Steve Georgy
Wheat: Wheat started a new week of trading on a strong move. All the exchanges gapped higher on the open Sunday night and the strength continued throughout the day session. Weather is the driving force behind the run with a little support from the corn market for good measure.
The market continues to put weather premium into all three exchange markets. The hard red wheat (KC) is pricing in production losses due to the severe drought hitting that region of the country. The spring wheat (Minneapolis) is continuing to get too much rain and snow and that is preventing the planting of this year’s crop. The soft wheat (Chicago) is pricing in damage due to heavy rains that are causing flooding in the Ohio River Valley and into Arkansas.
The United States is not the only part of the world having weather problems. Canada is dealing with too much moisture and cannot get its spring wheat planted. There are some reports that show planting in some parts of the country will be as much as three weeks behind normal. Europe is dealing with dry conditions. The corn market continued its run higher and that also gave wheat some spillover support. Monday's crop ratings, released after the close, showed that the wheat crop continues to deteriorate. The report showed 35% of the wheat crop was rated good to excellent while 40% of the crop was rated poor to very poor. Spring planting progress was also delayed with 6% of the spring wheat planted compared to 39% at this time last year and 25% for the five-year average…Jim McCormick
Ryan Ettner is a registered commodities broker and grains analyst at Allendale, Inc. Steve Georgy is a Sr. Broker/Manager at Allendale, Inc. Jim McCormick is a Sr. Broker at Allendale, Inc. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.