You are here
A typical April weather market?
Typically, in April, the grain market is all about weather, weather, weather. So far this spring, the weather has been nearly ideal, with an extremely warm March readying the ground for planting well before the season typically allows it.
So, once planting season rolled around the ground was ready to go. That has resulted in early planting of nearly all crops (record fast for many, in fact) in spite of an April thus far that has been about normal in temperatures and rainfall.
The early planting of most all crops is especially bearish for wheat, as HRS wheat plantings are well ahead of normal at 37% planted vs. only 9% normally at this time (as of Monday, April 16). The rapid planting pace corresponds to all small grains, with barley planting at 33% planted vs. only 17% normally, and oats planting at a similarly advanced stage.
Corn planting is also advanced, in spite of many growers holding off planting until the calendar catches up to the conditions; we now are 17% planted vs. 5% normally. Weekend rains are delaying planting early this week, but planters should be back in full swing by the weekend, with an open week ahead for much of the corn belt (except southern MN and northern IA, the two driest areas).
Winter wheat is also well advanced vs. normal, with 29% headed vs. only 8% normally at this time. That's the good AND bad news, as early development leaves the winter wheat less susceptible to hot weather during June/July as it will be mature by then, and also allows more double-cropping of soybeans following wheat production. But early heading and advanced stages leaves the crop also susceptible to a major cold snap in April were it to occur, as headed plants are very susceptible to severe yield damage if frost occurs at heading. So, that remains a worry for the marketplace, especially any early signs of cold weather yet for April.
So, this month is a critical time for winter wheat. Current conditions and advanced stages of development mean winter wheat yield potential is record high (Pro Ag yield models are at a record shattering 48.8 bu/acre, almost 2 bu/acre above 'trend' yields). If we can avoid freeze damage to headed wheat in April, its likely the record large yields will be realized; if freeze damage occurs it would be trimmed significantly.
That leaves April a critical month for winter wheat!
Early planting of other crops will likely lead to above average yields, as it helps crops avoid the typically hot periods of summer for reproductive stages, and allows early harvest to propel stocks (which are tight this marketing year) to replenish in a "just in time" inventory system. Corn is the 'big dog' of grains, and early planting typically
means USDA will hike yields 2 bu/acre in their May report (above trend yields). That could mean another 180 mb production numbers in the May report, and could pressure corn as it would surprise the market to see that 166 bu/acre projection (virtually record large yields projected).
And of course, we cannot forget the impact of early planting and an ideal spring on total planted acreage. Recall that over 10 million acres were prevented planted last year, and it's likely with an ideal spring for planting that the majority will be planted in 2012. As of the March 30 planting intentions report, only two million of them showed up. So, there are still eight million acres 'available' for planting yet this spring that are not accounted for. If planting conditions remain ideal, it's likely a large share of them will show up in June 30 planted acreage reports (or later in FSA summary numbers).
So, weather is bearish - leading to lower priced commodities into Wednesday this week. But, overnight trade was higher on China corn purchase rumors and colder weather forecasts in the 8-14 day forecast; but can those scares push markets up in spite of good weather thus far?
The next week might tell the tale. But, if Thursday morning export sales are any indication (very slow for corn), these Chinese rumors might just be that - rumors!
The information contained, while not guaranteed as to accuracy or completeness, has been obtained from sources we believe to be reliable. The opinions and recommendations contained are based on our judgment and do not guarantee that profits will be achieved or that losses will not be incurred. Recommendations should not be construed as an offer to buy or sell commodities.
There is substantial risk of loss in trading futures and options on futures