Late planting blues?
It rained an inch here in Cass County last night. The ten day dry spell was broken by a half inch in the morning.
The rain was welcome! I know that does not sit well with those of you struggling to get your crops planted. Yesterday, I was at the parts counter at the local implement dealer. I heard two farmers discussing the fact that their soybean seed had gone into the soil in less than ideal conditions for germination. They said that some seeds were planted too deep and others not deep enough, considering the soil moisture. I thought that I was the only one with that problem. The rain will help get those bean plants up.
Corn planting is pretty well wrapped up in most of Nebraska. I am guessing that soybean planting is more than half finished. There is still plenty of time to get good yields if beans are planted in the next two weeks. Research done many years ago by Dr. Hanway at the University of Nebraska showed that little yield damage occurred when beans were planted the first week of June. That research was done with varieties that did not have the yield potential of today's high yielding soybeans. However, the rainfall pattern is more important than planting date in dry land areas that have a tendency to be too dry some time during the summer. I finished my soybean planting on May 19. That is pretty much ideal for this area.
Soybean and corn markets normally drop the last half of May. This move accompanies the completion of planting and the reduced fear that the crops will not get into the ground in a timely manner. With the extended wet spell this year, the normal pressure on grain prices has not materialized. If the current weather continues, we may not get the expected low in early June. However, even if planting is late, there will be a time when the market stops focusing on planting dates and becomes more interested in growing conditions.
Cash soybean basis has been all over the board this week. It seems as if things other than delayed planting have had a big effect on what futures prices do. The failure of the negotiations in Argentina has jerked around soybean prices all week. Days like today when the talks are stalled, prices react very positively. When it appears that settlement is in sight, prices drop.
The issue of hedge fund participation in the futures market bears watching. If regulatory agencies decide to limit positions or specific strategies, it will have a dramatic effect on grain futures. The result would almost certainly be lower prices in the short term. Basis would take up much of the slack, but the immediate reaction in futures would be to the down side. In the long run, prices should reflect the true fundamentals better if there were more restraints on these huge traders. It is difficult for a farmer several hundred miles from the exchange to understand all of the implications of this issue. What I understand is that I bought 25 gallons of gasoline yesterday to mow lawns and it cost almost a hundred dollars. Multiply that by the number of gallons of petroleum products needed to produce the crop and haul it to market and it is easy to see why unregulated speculation is bad for the economy.