Getting it in the ground
Adding to upside pressure because of tight supplies is an unusually cold, wet spring, which has some analysts concerned the planting could be delayed.
“Last year we had the heat that boosted the market up and now we are at these levels because of the colder temperatures. Farmers aren’t able to be planting as early as they would like,” Mooses says.
Rich Nelson, chief strategist at Allendale, notes that “As of [April 29] we are looking at the lowest planting pace since 1984. That is actually going to get worse. That is where the issue is. The trade is excited about planting delays.”
However, Mooses points out that the wet spring could offer benefits as well. “We are hearing that even though they haven’t gotten to their planting yet [because] of rain, cooler temperatures and even snow in some areas, [those factors] are able to give some good moisture to the ground,” Mooses says. “So once they do plant, we might see some good crops coming. That may give us even more of a reason to stay around these prices or go lower.”
Nelson adds, “Planting delays are short-term exciting, but [the added moisture is] helping to recharge some soil in the Western corn belt, which was dry. So I could see things from both angles.”
However, Allendale’s proprietary research questions the importance of soil moisture content.
“There actually is little evidence that soil moisture carries into corn yields,” Nelson says (see “Quick and easy guide to summer grain trading,” page 28). “It is each year’s particular weather, both temperature and moisture, that determines corn yields, it is not [carryover] soil moisture, which is what most people believe.”
The cool spring also could affect planting intentions because long delays in planting could force farmers to replace corn with beans.
“Most planting still will favor corn over beans through the end of May in prime growing regions,” says Andy Waldock, founder of Commodity and Derivative Advisors. “Planting delays beyond this will encourage a bigger soybean crop at the expense of corn.”
Mooses says, “We are behind schedule with the planting, but longer term, people think we are going to be able to plant. Farmers can catch up pretty quickly; we can see those weekly reports all of a sudden catch up to speed.”