Market Monitor

By Marlin Clark

The quick trip from cry to dry

Most of the spring the talk has been about how wet it has been. Farmers have been struggling to plant crops between the raindrops. There were some close-your-eyes days when the ground got worked wet because the forecast was for wetter.

Now is the spring of our discontent. Now we are starting to talk about how dry it has gotten. Now we are wishing we had not poked seed into mud that might crust over it. Now we are remembering the year we planted 80 acres of beans behind Dad's house when he was adamant that it was two days too early. Well, at least I am remembering it. The beans crusted over and we hit the field with a rotary hoe twice trying to get some plants through the ground. Dad was never much for "I told you so," but the beans put out 35 bpa and I got a lesson in patience.

Last night Squeeze and I returned from a day of wandering to finish celebrating her "birthweekend." (Birthday is not enough!). As we turned in the drive, she asked if her white lilac had ever bloomed, so I just turned left and drove her by it. We ended up taking a crop tour of the yard, checking out the late-budding trees and some new plantings in our little arboretum. The lawn that I was churning holes in with my ZTR mower last week is bone dry this week. I could not hurt it, even with my All-American land yacht.

It was a nice drive. I mow six acres, which is my way of downsizing from 1200 acres of farming.

So, if it is dry, is the party over? The Board crashed overnight, with corn down seven and beans down nearly ten cents. But, that might just be a reaction to the gains going into the long weekend. It feels like the crop is still late, and we will know more this afternoon. There are several more days of rain in the forecast, though we are sneaking through with overcast and no rain right now.

And, even if we dry off and finish planting in the west, continued dry weather would just change the focus of a continued weather market. We can focus on damage from lack of rain, which is the favorite game on the Chicago Board of Trade. Nothing gets the attention of the guys in the pits and (these day) at their computer trading terminals as a good dry spell.

A look at the charts shows gains in beans that are surprising, and gains in corn more than make sense. July soybean futures have gained nearly $3.50 since early March. The high was on last Wednesday at 11.89-1/2, but we have slid 33 cents off that since.

July corn futures gained nearly 65 cents from the end of April to last Wednesday. We hit at or near the same high four times, which is a sign of a top. We have lost11-1/2 cents off the high to the overnight close on this Tuesday morning.

July wheat futures have rallied into the harvest, a common phenomenon for wheat. We hit the same low on the Chicago Board of Trade three times, on March 3^rd, March 20^th, and April 20^th. Since then we have rallied from 5.10 to almost 6.20 on the overnight this morning. The last leg is being pushed by wet weather that is holding up the harvest in the Southern Plains.

All this means that, as usual, there is a lot of price activity this time of year. There may be more. If the crop gets finished and normal rains come back, the prices will decline. Don't miss this opportunity, but beware of more to come in June.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

Crop Tour is Ugly

I put in 750 miles in Ohio and Michigan over the weekend, and I was amazed how far behind we are in reality. Yes, the Planting Progress Report from USDA said that Ohio, Indiana, and Illinois are the problem with the U.S. being so far behind, but looking at miles of Northwest Ohio bare as far as the eye can see, which is several miles in the Black Swamp area, was startling.

Sunday I drove east from Maumee and didn't see a field planted until I got to the Ottawa County line. Even the light soils south of Castalia only had some fields planted. It was then I remembered that going out Friday, I only saw three tractors moving between Cherry Valley, Oh and Dundee, MI. None of them was bringing up dust.

We were going to a nephew's graduation at Spring Arbor College, which of course means you stay overnight in Dundee. That left Squeeze two hours at Silver Bell Christmas shop and two hours for me at Cabela's. Sure, I am willing to drive that far for a graduation—just let me stop at Cabela's! (I resisted the $10,000 shot gun and bought a belt and a laser boresighter. You can tell how the grain business is going by how much I buy here.

Actually, business has gotten busy as corn got above the magic $4.00 mark. We dropped back, then went through it again. Meanwhile, the soybeans are making new highs right through the Sunday-Monday overnight session. July futures hit 11.61 overnight, even with talk about switching acres to beans.

Exports are driving the beans right now, as the market ignores the unknown acre change and looks at a weekly export of 15.7 million bushels, when they expected 10 to 14, We only needed 12.9 million bushels to maintain the projected pace, so we remain ahead and gaining.

This is the week when the acres come into question, as now we are into reduced yields from delayed corn planting. The country as a whole is only 62 percent planted, up from 48 last week, but well off the 85 percent average. Even the slow pace of last year had us at 70 percent. Last year we still raised a big crop. This year it is getting smaller. Ohio is at 39, up from 22 last week. We should be in the 80's. Indiana and Illinois are in the 20's, and should be nearly done. Michigan (I don't give a darn, but the stats matter) has doubled acres planted to 41 this week, half of normal.

The market was defensive Monday, with good weather for the week projected. Corn was sharply lower overnight, but traded up four cents by the close. The reality is that the wet areas need this week to dry, and wet weather is returning next week. Ohio will get a lot in this week, but PA and Illinois will get dried out just in time for more rain.

So, this is a critical week for marketing, but more critical for planting.

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.

Market Monitor

By Marlin Clark

One-day age of Aquarius

The planets are aligning this morning in a manner that will be easier to interpret by the end of the day. Unfortunately, I have to write this on Tuesday morning, not Tuesday evening.

The planets are aligning, or even colliding, in the form of the USDA Planting Progress Report, out Monday afternoon, and the USDA Supply and Demand Reports, out before the open today. All make interesting reading, and all indicate another bounce in this bullish market.

I have said that the market had run out of steam and needed more fundamental news to sustain it. That would happen if we continued a slow pace of planting, I have told callers. Now, that is true, and there is more news besides.

The USDA US and World Supply and Demand Reports out this morning indicate a drawdown of supplies and point to higher prices. The grain trade was expecting a 1.71 billion-bushel carryout in corn at the end of this year. It got an estimate of 1.6 billion. That is not a lot, but it is in the right direction. It is also below the lowest trade guess of 1.645 billion. The soybeans came in as expected, at 130 million bushels. The significance there was not that it was not a surprise, but that it was 35 million below the April estimate.

The Planting Progress Report contains the immediate market-making news. However, the least surprise is in this report, as the market has been trading delayed planting for several days. This would be the reason why the bullish enthusiasm in the market recently had changed clothes. The last few days corn has gained at times when beans were lower. This is a reversal of a market that has been led by the beans, ever since the March 31^st acreage surprise. At that time we found out the corn acres would stay closer to last year instead of declining, and that we would plant several million acres fewer beans.

Now it remains to be seen if the acreage projections are correct. Corn planting in the country, led by the East, is sadly behind normal. In addition, there is disagreement as to how fast we catch up. Some forecasters think the wet patterns will hold us back this week and next. Some have stirred the chicken entrails and see clearing and a catch-up of planting. You roll the dice on this one.

What were the numbers? The U.S. as a whole, which is represented by the 18 major corn states, is behind 23 percent compared to the five-year average. We normally plant 71 percent of the crop by this time, but are at 48 percent. Last year we were also slow, and still raised a huge crop, however. This time last year we were also at 48 percent. That is the good news.

The bad news is that last year Ohio was similar to the country as a whole, but this year we are one of the laggards. Ohio as of Sunday was at 22 percent planted, up from 13 last week. We have a normal average of 68 percent, so are less than a third of normal planted. Indiana and Illinois are even further behind, and they are two of the four largest states for acres. Indiana is 11 percent planted, and Illinois is only ten percent done.

The soybeans are a similar situation. The U.S. is 14 percent planted, with 25 being normal. Ohio is at 13, but we normally are 37 percent planted.

Historically, even though we got away with it last year, this is the week that late planting starts to hurt yields. In Ohio the best yields come when we are done the first week of May. You can argue that the magic day is maybe the tenth or after for Northern Ohio.

Regardless, the late planting adds an immediate bullish factor to the bullish supply situation. The next week will make critical differences for the crop and the markets.

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.