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Exciting time

Agriculture.com Staff 02/06/2016 @ 5:23pm

April and May are traditionally exciting times in the grain markets. This year is certainly no exception. Markets are normally very volatile in these two months.

This year there are more supply and demand factors than ever tugging prices in both directions. Two things seem to be pulling in opposite directions. Anticipated demand caused by the booming ethanol industry is very positive. A negative factor is the fact that prices now are already high. Charts seem to indicate that a lot of the bullishness of big demand has already been factored in.

Throw into the mix the weather problems that sometimes happen while farmers are trying to plant and you have the formula for wild price swings like we have had the past week. I do not usually get too excited by a couple of rainy weeks at planting time, because in 38 years of farming I have seen too many instances of prices going down at the same time as the weather is not cooperating.

Conditions in Nebraska have changed just like they have in other parts of the country. Here in Cass County, soil moisture conditions are adequate to excessive. A very hard rain on Wednesday dropped between 2.50"-5.00". It did a lot of damage to conservation structures if they were not in perfect shape to start with. Water is standing in low spots and terrace channels. However, our drainage is generally good and a few days of warm weather will get us back in the field. Flat areas in the central part of the state are not so lucky because the topography is not so forgiving.

Parts of the southcentral and southwestern areas that had been in prolonged drought got big rains. However, the precipitation was not far enough west to replenish Lake McConaughy. Much of the irrigation water for some of the best corn land in the world comes from that reservoir.

Some say that prices will not follow seasonal trends this year because of the unusual fundamentals. I cannot say whether that is true or not. Based on history, odds are about two out of three that corn prices will be lower the last week of May than the first week of April. Odds are about the same that soybean prices will be lower the first week of June than the first week of May.

If you have corn that needs to be priced, selling on any sharp day higher has good probability of being a good move. The situation is similar for soybeans. Volatility during planting season in most years is a selling opportunity. I do not expect this week's rally to be the last one before the combines roll next fall. Weather is going to be the key more than ever before. If delayed planting causes reduced yields, it may take months for the markets to react. Conversely, with the demand situation so tight, markets could anticipate a problem that never materializes. It is going to be a fun summer!

April and May are traditionally exciting times in the grain markets. This year is certainly no exception. Markets are normally very volatile in these two months.

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