Without the normal amount of corn in the ground, the corn market searches for its correct level.
Last year was an exception. Normally, 46% of the U.S. corn crop is not in the ground by the last full week of April. Normally, 23% of the U.S. corn crop is planted by April 24. But, this year, only 9% of the country’s corn crop was tallied as planted. See the April 24 USDA Crop Progress reports
With the cool, wet weather patterns taking a toll in the Central and Eastern Corn Belt, the potential exists for delayed plantings all the way until the late May or beyond.
Bob Utterback, president of Utterback Marketing and Farm Journal columnist, says we’ll be lucky if we’re beyond 15% planted at the May 2 USDA Crop Progress reports. (You can find the May 2 data shortly after its release at 3 p.m. CDT today.)
“I think the crop will get planted,” he says. “But, it’s going to get planted later in the cycle and in less-than-ideal planting conditions.”
Even if good weather prevails over much of the corn-growing states this week, Utterback says 90% of the corn crop will not be planted by the third Monday of this month.
“I think we’ll be planting a lot of corn in the Eastern Corn Belt in the later part of May,” he says. Much of this year’s crop has the likelihood of being planted in a cool and wet period, which is expected to be followed by a warm and dry pattern. “Mother Nature tends to have a history of going from one extreme to another. If that were to occur, you would have a case for a below trend-line average yield.”
Utterback says with the slow planting progress, the bull will have two chances to blow the bear out of the market. “If we get to May 15 and crops aren’t in the ground, we get into pollination, heat and weather scares. If you go beyond May 25, you start talking early frost scare.”
With all eyes on planting, Utterback says May 5 to May 20, are the most important days we’ll have in the market for the next two years.
Factors Supporting High Corn Prices
Kevin Van Trump of Farm Direction says along with the weather issues, extremely tight ending stocks and a very "optimistic" USDA estimated 162 bu./acre average are cause for enough concern to push corn prices higher.
“You have to believe with corn prices at these levels, every producer out there will be doing absolutely the most to get as much corn in the ground as humanly possible this year,” he says. “This crop has the potential to mean more to producers here in the U.S. than any single crop in our lifetime.”
Justin Kelly, Ehedger president, agrees that the recent wet and cold weather has supported the corn market’s high levels. “The market is still watching the forecast and planting progress reports very closely for direction. Just like last week, when the extended forecast improves we could see a quick drop from profit taking.”
The main difference in the market today, Utterback says, is the constant demand for U.S. corn. “What’s so different from anything we’ve seen in the last 40 years is China and India. Their demand is solid.”
Utterback says he is also closely watching the dollar, as it can be a clue to where commodity prices will fall. “When the dollar starts going down and has a key reversal in, that’s going to be very telling for commodities.”
It’s not doubt that weather is always critical for the grain markets. But, when you mix weather with all of these other market factors, Utterback says it’s like TNT. “All you need is the final catalyst to make the market extremely volatile.”
Now, Utterback says, it’s a game of technique. “Volatility is opportunity, but it requires a game plan of how to play.”
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