Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.
Bearish Crop Progress, Grains Lower Overnight
May 01, 2012
· Grain markets down overnight after a strong close yesterday; July soybeans closing over $15 yesterday, Nov beans now within 20 cents of recent highs
· Crop Progress seen as bearish yesterday; Corn planting at 53% vs. 28% last week and 27% on average, Iowa planting at 50% vs. 9% last week; Beans 12% planted vs. 6% last week and 5% on average; Spring wheat 74% planted vs. 57% last week and 32% on average; Winter wheat rated 64% good-excellent vs. 63% last week
· Unseasonable warmth to engulf much of the central US this week; Some rains will accompany the warm weather later this week
· CME announcing yesterday that grain trading hours will be extended; There has been confirmation of the new schedule; Many believe the grain will trade 22 hours per day, closing only from 4pm to 6pm; This action coincides with the The ICE’s launce of grain products this month; Action could mean that markets would actually be open during the release of USDA reports
· Export Sales released on Thursday morning at 7:30am CST; May Crop production on the 10th at 7:30am CSt
· Outside markets mostly supportive for grains this morning, US$ lower, equities higher, crude flat
Yesterday’s bearish crop progress number is not a surprise to most farmers around the Corn Belt. Favorable weather patterns have allowed planting to move along without a problem, overall. We continue to believe that the market will need to perceive some sort of weather threat in order to see a significant rally in new crop corn prices. Put options are still very cheap relative to past years, as are call options. The protection is available for those who need it.
We believe that a minimum of 1m corn acres will be switch into soybeans. We also recall the 2007 experience in which both corn and soybean acreage increased from prospective to final. We believe this type of increase is very possible this year due to favorable weather and an early spring.
As always, call the office with questions or concerns.