There is an old saying, plant the corn in the dust the bin will bust. Well this year may be where we test the validity of that phrase. I’ve talked to producers all over the Corn Belt and many from southern Indiana to Missouri are almost done with corn planting. In fact, I’m getting reports that nitrogen has run out in the Missouri area and all distributors have been shut down for 6 to 8 days. Bottomline: Corn crops are going in at a record rate!
While some producers are planting beans it appears most of them are not as excited about getting soybeans planted this early. The risk of a mid-to late May frost is on everybone’s mind. I would not be surprised to see producers simply work up the fields and sit until the end of April to get their beans in the ground.
Overall, Mother Nature is allowing a great spring planting window. The big question now is: Will we turn off hot and dry like 1988 or will we have timely rains and more heat than last year but not destructive? The current opinion seems to be moving to a good production year.
Technically, I would suggest the corn market has now told us as sellers where we need to be evaluating our positions. I will be watching closely the 50-day moving average and previous month’s high after May 15th. I would suggest the odds are less than 20% now that December corn will close above the $4.05 level and force sellers to become extremely defensive.
In regards to beans the market did break out above the $9.50 level last week which forced us into a defensive position on beans. If November beans closes below $9.25, it is going to get very rough on all the bulls. The last chance for the bulls to move to the sidelines will be a close below $9.05. Once this occurs we believe it will be all over unless a major dry weather event occurs in late July to early August.
IN SUMMARY: All hedgers are now being nicely rewarded for their continued conviction of selling into strength. While we are enjoying financial rewards today, it’s necessary you establish the rules you are going to use to manage your short position as we move into the critical May 15 to July 15 time period. All clients working with UMS knows what they are going to do. Do you have a plan? If not give us a call at (800) 832-1488.
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