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Warm/wet weather bullish or bearish?

Agriculture.com Staff 05/04/2007 @ 8:25am

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.

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