Corn weather market heats up
The corn weather market continues to heat up, as planting delays are becoming more and more critical.
As of Monday, we have the latest planting progress since 1993 at only 10% planted vs. 35% average. The weather forecast is not encouraging, with the next 2 weeks back to forecasting more wet conditions for the Corn Belt. Some planters are moving in fringe areas, but not nearly enough to turn the situation around.
The past few days, the outside markets have been preventing the corn market from rallying further, with energy and metals lower to sharply lower. Although Dec futures made new highs, the nearby May contract has not. This is often indicative of shrinking demand when the nearby month fails to run to new highs. Bear spreads are working, a sign that demand might be slowing. We've noticed a slowdown in the pace of exports, while many policymakers (Congress and the President) are talking about scaling back the ethanol supports. This is a double edged sword for demand, and one that could derail the bull market. Tuesday corn futures formed a daily downside reversal on charts, a negative technical signal. If not for the negative technicals and sagging outside markets, corn would be roaring higher now t based on terrible planting weather. It's almost like the market is waiting for improving weather to head lower!
The soybean/corn price ratio has also shrunk to 1.9, with soybean prices sagging further relative to corn prices. With delayed planting, the market is trying to maintain corn acres by rallying relative to soybeans. We need this, as many producers might have their hand forced by the weather towards soybeans, especially in MO, ILL, IND, and OH as well as eastern IA where planting progress is pathetic.
Corn prices are starting to look like a shining star in the marketplace, still strong while the other grains have gone through their struggles. The degree of planting delays is becoming more serious with each passing day. Of some concern besides the wet weather is how the cool pattern has maintained itself all spring. There are areas that are in drought, too, but still the progress is behind in these areas as well due to cold soil temperatures. This could become a critical issue in the northern corn/soybean production areas, as not only is planting late, but a continued cool weather pattern would be a worst case scenario behind late planting. There aren't many crops that can mature at 4-6 degrees below normal temps and late planting!
While everyone is aware of planting delays, we have to keep an eye on weather as we have noticed a slight change to more normal temps and less precip falling in IND, OH, and many ILL areas. They could get a window of opportunity if they miss a rain or two, and given the improved mechanization of production many producers can get the whole crop planted in 10 days. So weather is clearly the critical animal for bulls, as verification of planting problems through the ideal season (into Mid-May) would clearly spell trouble for corn national yields. And so far, that's exactly what we've got!