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Warm/wet weather bullish or bearish?

Grain markets are trying to decide if warm/wet weather is bullish or bearish
following this week's relatively dry period. As of Monday, only 23% of the
nations corn was planted vs. 42% average, with 3% soybeans planted vs. 7%
average so we are behind normal planting paces in both crops.

Cold/wet
weather in the first half of April was the culprit, taking until about the
third week in April to just warm up, and another week to dry out most of the
Corn Belt. Now as we go into May, weather forecasts have
been rather dry the past week in many areas with temps well above normal.
Rapid planting has taken place this week, although some intermittent showers
have popped up in a few places.

By Friday, though, weather takes a turn to the wet side again, starting first
in the western Corn Belt (SD, ND, NE) and moving east slowly. By midweek
next week, even the eastern Corn Belt is forecast to be soaked. One key
question to the market right now is how much crop will be planted by the next
rain system, and how long will it last? Projections indicate roughly 50% of
the corn and 10-12% of the soybeans will be planted by next week.

The
eastern Corn Belt might very well be finishing corn planting by midweek, and
start focusing on soybean planting. How much gets planted in this current
planting window is important, as if the percentage is high (say 65% corn
planted), then warm/wet weather might not be bullish. Instead, warm/wet
weather could be ideal greenhouse conditions for crop growth in early spring,
helping plants pop up quickly after planting and establishing a strong early
stand.

If planting progress is only 40% next week when rains arrive, then warm/wet
weather that keeps planters out of fields will have a much more bullish
outlook than if progress was not rapid this week. Pro Ag understands some
producers are done planting corn in areas ranging from ND to MO, so its
possible that a fair amount of corn was planted this week.

Much has been made about the task of planting 90 million acres of corn.
Actually, many of those additional acres will come from other crops, so Pro
Ag is not so sure the corn planted acreage is such a big task. While
producers are planting 12 million acres more of corn, they also are planting
8 million acres less of soybeans, HRS wheat, and cotton. So Pro Ag is not
convinced that the corn planting task is such a difficult task.

With today's forecast of warm and wet weather for much of the corn belt over
the next 2 weeks, a key question is whether this is bullish or bearish? With
late planting, its certain that wet weather is bullish. But warm weather?
If temps were going to cool down, Pro Ag would expect the market to get a
whole lot more excited about planting delays (especially if this week's open
planting window wasn't presented). And if temps were warm/hot and rain
wasn't falling, the market could get excited about the prospects for a
drought this summer (as it has for Europe). But warm/wet isn't really the
type of weather forecast that puts either bulls or bears on a warning bell.
Instead, its more of a benign forecast - one that doesn't elicit high
response in either drought or late planting worriers.

So here we sit, with so far late planting in most crops and a fair amount of
weather premium. What's the next direction for grains? Until we get a little
more clear picture of the weather forecast impacts (cold/wet would be bullish
in a late planting scare and warm/dry in the southeast US - where soil
moisture is very low). But warm/wet? It isn't necessarily a bullish or
bearish forecast, making it difficult to decide if this is significant
weather or not. Generally speaking, if we don't know whether weather is
helping or hurting crops, its generally bearish. So as long as the 'warm' is
as prominent in forecasts as the 'wet', Pro Ag doubts the market can move
sharply higher.

It was also interesting to see winter wheat conditions improve this week in
spite of some alarmingly bullish information out last week. Pro Ag yield
model projections for winter wheat actually rose over 0.5 bu/acre, indicating
the crop is now improving again, not declining. This is the first crop
improvement since the freeze, but it does indicate that the warm/wet weather
is helping the wheat crop recover from the freeze problems it encountered.

We note winter wheat technical chart formed downside weekly reversals last
week. Are the charts trying to tell us something?

With the right weather (cold/wet) under delayed planting, Pro Ag could get
bullish grains again. But a warm/wet forecast isn't one to elicit a strong
bullish response.

Grain markets are trying to decide if warm/wet weather is bullish or bearish following this week's relatively dry period. As of Monday, only 23% of the nations corn was planted vs. 42% average, with 3% soybeans planted vs. 7% average so we are behind normal planting paces in both crops.

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