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I have been away from the grain/soy markets for the past week or so and it would appear that I missed the first “official” weather rally of the season. Be that as it may, with the exception of the wheat trade, the upside action remains well entrenched in the existing trading ranges, and even for wheat, all we managed to do was to reach up to a tag a couple upside measuring targets in the process. Not only has a little moisture and significantly improved crop ratings/progress pulled back on the reins hard, news from Washington that the administration is still threatening to move ahead with tariffs on $50 billion against Chinese goods appears to have disillusioned the bulls as well.
Delayed one day, crop progress/ratings were released yesterday afternoon, and we now find the corn crop ahead of schedule and rated exceptionally well too boot. As of the 27th, 92% of the crop is now in the ground, which compares with last year and a 5-year average of 90%. Emergence is at 72% versus the normal 69% and the inaugural conditions report for this fresh year have the good/excellent category at 79%, which sets a new record for this date. Granted, we all recognize that exceptional ratings today by no means assure an exceptional crop, but it certainly does not hurt either. Note that Iowa shows up at 82% good/excellent, Illinois at 83%, Minnesota 86% and Nebraska 83%. I saw an interesting comment this morning on Illinois weather, and it turns out after experiencing the second coldest April on record, my state in on track to record the warmest May since 1895. I guess that means on average, things are pretty normal. Of course, that is akin to saying if you have one foot in the fire and the other on a block of ice, on average you should feel comfortable. Bean planting now stands at 77%, which is 15% ahead of the 5-year average and emergence is at 47%, also 15% ahead of the norm. No ratings as of yet. The one market that has turned hot this week (no pun intended) is cotton. By no means is it because of planting issues as we are at 62% planted versus 59% on average but rather the ongoing severe drought in West Texas. Wheat conditions continue to improve little by little with the good/excellent raking for the winter crop up 2% to 38%, and 91% of the spring wheat is now planted, which is 2% ahead of average. Spring wheat emerged is still 5% behind the norm at 63% but increased 26% during the week. Beers drinker can finally breathe a sigh of relief, as barley planting is now 2% ahead of average with good/excellent rating at 69%. Whew!
As I commented previously, ahead of schedule planting progress and better than average ratings in May certainly do not assure a good crop, but it is worth noting that on the longer-term charts, we have reached levels, particularly in corn and beans, that should be given close attention. This general range has stopped advances for the past several years and just as important, we have reached good cycle counts and have indicators overbought and moving sideways. Granted, weather trumps all else in the weeks ahead, but unless conditions take a turn for the worse, it may be a challenge to see prices move much higher than the present for the time being.
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