Will tough spring lead to stronger prices?

first_imgShare Facebook Twitter Google + LinkedIn Pinterest Spring has brought extremely varied planting conditions to Ohio’s producers and many others in the eastern Corn Belt. Illinois has seen record levels of crop insurance corn replant claims. Many seed corn companies scrambled to get inventory to affected areas. The last half of May brought sunshine while some parts of Ohio again were slow in planting corn and soybeans as fields dried slowly when unexpected rains fell. It also brought some heavy rains, which drowned out the replanted corn in Madison and Licking counties and other parts of Ohio. Numerous producers were planting corn for the third time. Moods were tense with producers anxious to finish the job. Northwest Ohio and particularly Paulding county had rainfall totals of five to eight inches or more that flooded fields for days while miles of electric poles were doing everything but standing straight and tall.The season’s first weekly corn condition report of May 30 had the U.S. good and excellent total at just 65%. It was less than expected, bringing a quick corn rally of five cents the following day. This rally was exactly like other corn rallies this year, a one-day wonder that fell apart with price declines in the days that followed. Looking at more detail, the May 30 report had some interesting revelations in several states for the good and excellent totals: Illinois 52%, Indiana 43%, Iowa 73%, Nebraska 76%, Minnesota 68%, and Ohio 49%. At first glance it would appear U.S. corn conditions are going to struggle to reach the highs of good and excellent totals seen in the past. Typically those totals peak by mid-July and then start to decline. With the eastern Corn Belt good and excellent totals struggling to reach 50%, it will take ideal temperatures and rainfall to reach the 80% mark in those same states in coming weeks.With the poor start to corn conditions in the east, some are already suggesting the trend line corn yield will be difficult to achieve. While there is little correlation between early crop ratings and the final yield, current ratings suggest a yield below 170.7 bushels. USDA currently has the U.S. corn yield at 170.7 bushels per acre. The market will see greater volatility in coming weeks as the weekly condition report is digested in conjunction with weather forecasts. Summer weather forecasts on June 4 suggested normal rains for the west, with normal to below normal rains in the east. Temperatures for much of the Midwest are seen as normal. Analysts will be closely monitoring drought conditions in the Dakotas to see if they move beyond those areas.NASS has sent out surveys to U.S. producers during the first two weeks of June as they gather information on planted acres and grain stocks. As NASS and USDA complete these reports, for a June 30 release, it must be noted that with the March Planting Intentions Report and the March Grain Stocks Report producers returned surveys in or near record low levels. It certainly is a big concern for USDA, having done producer surveys for decades upon decades.July CBOT corn remains in tight range between $3.60 and $3.80. If July corn moves above $3.80, many are expecting heavy producer selling. Heavy producer selling beyond just a few days could easily see basis levels drop five to 10 cents or more in rapid fashion. Old corn basis levels improved two to eight cents late May and early June for several Ohio ethanol plants. With producers holding record amounts of unsold corn, large corn users will work diligently to secure needed supplies for the next three months.Funds continue to be short corn, soybeans, and wheat at near record levels. They will need to see strong evidence of changing weather or declining ending stocks to abandon many months holding short positions.last_img

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