We're Not Done Planting Yet
May 26, 2015
TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.
Corn and soybean planting progress remained well ahead of the 5-year average according to the USDA while corn and wheat conditions were also reported as very good. The fast planting pace has been weighing on the corn and soybeans markets. Improving wheat conditions despite heavy rains has also been a drag on the wheat market. While planting pace and crop conditions are good at face value there are still potential concerns.
The USDA is reporting that as of May 24th 92% of the corn crop has been planted compared to 86% last year and 88% for the 5-year average. The corn crop condition is reported at 74% good to excellent. Corn is 74% emerged compared to 56% last year and 62% for the 5-year average. This puts corn ahead of pace in all categories and in very good condition according to the USDA. Soybeans were 61% planted as of May 24th, compared to 55% last year and 55% for the 5-year average. The USDA also reported the soybean crop was 32% emerged compared with 23% last year and 25% for the 5-year average.
Wheat conditions remained unchanged or improved despite regular rounds of heavy rains. The USDA reported that 45% of the winter wheat crop was in good to excellent condition, unchanged from last week and 15% better than this time last year. The spring wheat crop was reported at 69% good to excellent, up from 65% last week.
We have some complimentary 2015 commodity reference calendars available. They are a little bigger than pocket sized and very useful if you follow markets. You can sign up for yours here - http://www.zaner.com/offers/calendar.asp
At face value it is difficult to see a bullish story when looking at the USDA crop progress numbers. We are getting corn and soybeans in the ground quickly and conditions are good. Wheat conditions are also good despite damage concerns form heavy rains. However, the wheat conditions could be deceiving as some of the damage may have occurred after the 24th and we will have to see what next week's report says to get a better handle on the quality of the wheat crop.
What may be more concerning is getting the last 9% of the corn crop planted. This 9% that remains to be planted represents a little over 7 million acres of corn and it is the areas that are behind that leave the door open for issues. In particular, North Dakota, while ahead of the 5-year average may have a hard time getting the last 17% of the corn crop planted. There has been a big push in Northern stated toward soybean acres due to poor corn basis and this could result in more of a shift in acreage. Colorado is another potential problem area with only 66% of the corn crop planted, they too could be running out of time.
In most years we would not be terribly worried about getting 100% of the corn crop planted in areas like North Dakota or Colorado, but this is a different year. With producers intending to plant a relatively small corn crop compared to the last few years every acre may count. A 1 million acre decrease in corn acreage could be the difference between a comfortable carry over and a relatively tight carry over. Soybeans will also need to keep up the brisk pace of planting to reach to more lofty acreage expectations the market seems to have factored in. While I am not saying that corn and soybean prices are going to rally sharply in the coming weeks based on loosing corn acres I am saying that this is not a done deal just yet.
Please give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action. Ted Seifried - (312) 277-0113. Also, feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit. Follow me on twitter @thetedspread if you like.
July Corn Daily chart:
July Soybeans Daily chart:
July Wheat Daily chart:
Producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie
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