What everyone knows
I had planned to start planting corn on April 15. The plan was working well. After lunch, I had some flags to set to mark a new waterway and then I was going to dump seed into the planter and try it out.
There were clouds in the sky as I placed the flags along the edge of the field. I was almost back to the pickup when the sky opened up. I got only slightly wet, but the rainfall ruined my plans to try out the planter on the targeted day. Light rain continued to fall until late evening. Checking the rain gauge Friday morning showed six tenths of an inch. That is enough to delay planting until the soil dries out enough so that the planter units work well. I anticipate that will be some time Friday afternoon. Meanwhile, I have the planter and tractor completely checked out and serviced so that I can go full speed when the weather cooperates. It never ceases to amaze me how much maintenance there is on the old machinery! While I am waiting to plant I can install the new seat cushions I got for the Allis tractor I recently had restored.
Planting did not go as expected yesterday. But, the grain markets were a different story. Strength in the cash corn market on Wednesday was enough for me to pull the trigger on a sale of the increment of cash corn for April. Then just before lunch a call from my broker informed me that the order on November soybeans I had placed several weeks before was finally filled. I plan to sell at least 60% of my 2010 crop soybeans using November futures. I have no storage for soybeans, so forward pricing using futures locks in a return while maintaining flexibility to take advantage of basis improvement at harvest time.
The situation in the soybean market today reminds me of the Murphy's Law "What everyone knows ain't worth knowing". Soybean futures have remained above my cost of production for most of the last year. Market analysts have repeatedly said that as soon as the huge South American crop becomes available prices will crash. By now the Southern Hemisphere crop is old news. Their harvest is well underway. But, soybean prices were extremely strong on Thursday's close. So much for the expert analysis!
Markets frequently act in illogical ways. Expecting prices to drop based on a historically large crop south of the border is one example. The other side of the issue is that this is historically the time for a rally in grain prices. In my workshops I point to the period between April 1 and May 15 at selling time for grains. While we are probably not going to see yearly highs this year during that period, current prices offer most farmers enough to beat cost of production if yields are average or better.
Soybean prices are about a dime below a chart gap that will be tough resistance to further gains. Corn prices are still almost 40 cents below the early January gap. It is probably too much to expect to see that gap challenged unless there are major weather problems this summer. With weather nearly ideal for getting the crop in the ground, it is time to implement another of Murphy's laws " When the plate of cookies goes around the table, don't forget to take a couple". I took some cookies yesterday. How many you take and how fast you fill your dessert plate is up to you.