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Corn Planting, Winter Wheat Conditions LImiting Factors For Bulls

April 3, 2012
By: Brian Grete, Pro Farmer Editor

What Traders are Talking About:

* Corn crop 3% planted. As of Sunday, 3% of the U.S. corn crop was planted, according to USDA data. While ahead of year-ago and the five-year average of 2%, the corn planting figure was at the low end of traders' expectations. In the Corn Belt, Illinois has 5% of the crop is planted, while Indiana, Nebraska and Ohio each have 1% planted. Neither Iowa nor Minnesota report any corn planting progress yet. Unless there's a dramatic shift in weather back to cold temps, traders expect the corn planting pace to remain quick.

The long and short of it: Expectations for a huge jump in planted corn acres and the quick planting pace have traders anticipating a record corn crop. That's a limiting price factor unless tight old-crop stocks are strong enough to pull old-crop futures higher.

* Winter wheat crop conditions improve. The condition of the winter wheat crop improved over the winter, which was widely expected based on condition ratings from individual states the past three months. USDA reports 58% of the crop is rated "good" to "excellent," which is 6 points better than when the crop entered dormancy last fall, while 12% of the crop is rated "poor" to "very poor" compared to 13% in late November. When USDA's crop condition figures are plugged into the state-weighted Pro Farmer Crop Condition Index (0 = crop failure; 500 = perfect crop), the HRW crop stands at 352 versus 336 last fall and 271 on April 1, 2011, while the SRW crop is at 373 compared to 366 last fall and 372 last year.

The long and short of it: While there are some concern areas, notably Texas, the overall health of the winter wheat crop is very solid. Barring a spring freeze, it's going to be hard to get traders concerned about the winter wheat crop.

* Global economic watch continues. The head of China's central bank warned of global economic risks, saying there are "new elements" that could lead to recession, without giving details. He also says the U.S. should take "more responsibility" in trying to promote global economic health through monetary policy easing. Meanwhile, an official with China's National Development and Reform Commission (NDRC) said data points to 8.4% economic growth in the first quarter. To maintain desired economic growth, the NDRC official said China must use "prudent monetary policy and proactive fiscal policy." In the U.S., the Fed will release minutes from its latest Federal Open Market Committee meeting today. Traders are hoping there will be some insight into possible further quantitative easing.

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