Despite the prevented planting deadline for corn looming on Sunday, it looks like the market is providing enough enticement for farmers to continue planting.
On Sunday many U.S. producers have a decision to make. Plant. Or don’t.
With the Eastern Corn Belt far behind
(Ohio at 19% finished on Tuesday, compared to the average 93%) normal progress and the prevent planting deadline looming Sunday, some farmers may choose to forego planting altogether and take the assured payments with crop insurance. Or, do they risk yield drag and continue planting well into June and hope for a crop a continued high prices?
For a while this week it appeared the trade believed farmers will choose the former and take the assured money from crop insurance as the December 2011
corn reached a contract high. But something changed overnight and the markets closed lower on Friday, erasing most of the week’s gains.
The Gulke Group is a market analysis firm at teh Chicago Board of Trade. To learn more about them and their advisory services, visit www.GulkeGroup.com
"I look at the closes instead of the absolute highs," says Jerry Gulke, president of the Gulke Group, a Chicago-based market advisory firm. "That’s where people vote at the end of the day. It’s awfully close to $7.00/bu. and if you’re a speculator going into the weekend, you have to wonder how much you’re going to get planted in Indiana and Ohio."
Gulke believes many farmers in these areas will choose to plant beyond this weekend’s prevent planting deadline. Driving this is the fact that many farmers believe there will still be enough acres unplanted to push prices even higher, effectively making planting a more profitable option, despite historical data showing a drop in yield at later planting dates.
Favorable weather this past week and the outlook for continued good weather, particularly in Ohio, lends support to these beliefs.
Throughout the spring, trader attention has focused on the Dakotas and the lack of corn seeding there. Now, the wet weather that impacted corn planting is starting to affect movement of wheat. The July Minneapolis wheat contract closed 41 cents/bu. higher on Friday as the ground underneath railroads was too wet to allow traffic.
Many elevators that were hedged in July tried to roll contracts forward to September, Gulke says. With the wet conditions affecting rail traffic and road traffic, is creating a short supply of spring wheat for export markets.